Better Market Initiative (Plan for Strengthening the Competitiveness of Japan’s Financial and Capital Markets)

In order to sustain the growth of Japan's economy as the population is aging, it is essential that the country’s financial and capital markets provide good investment opportunities to the financial assets held by Japan's household sector that amount to more than 1,500 trillion yen (about 14 trillion US dollars), and to supply domestic and foreign companies with adequate amount of capital for growth.

Given ever-intensifying global competition among markets, strengthening the competitiveness of Japan's financial and capital markets has become a pressing policy issue so that they will be able to serve the needs of both domestic and foreign users and fulfill their roles sufficiently.

It is also expected that, with such markets, Japan's financial services industry will be able to generate high value added, thereby contributing to sustainable economic growth.

From this viewpoint, the FSA conducted extensive examinations on the issue of strengthening the competitiveness of Japan’s financial and capital markets, and published the Better Market Initiative (Plan for Strengthening the Competitiveness of Japan’s Financial and Capital Markets) on December 21, 2007.

Better Market Initiative centers on the following four pillars.

1. Creating reliable and attractive markets

   → Creating markets for professional investors; diversifying exchange-traded funds (ETFs); reviewing the administrative monetary penalty system in accordance with the Financial Instruments and Exchange Act (FIEA)

2. Enhancing the business environment

   → Revamping the firewall regulations among banking, securities and insurance businesses; broadening the scope of businesses permitted to banking and/or insurance groups.

3. Improving the regulatory environment (better regulation)

   → Enhancing dialogue with the industry; increasing transparency and predictability of regulation and supervision.

4. Improving the broader environment surrounding the markets

   → Nurturing and securing financial experts; upgrading urban functions as an international financial center.

• Plan for Strengthening the Competitiveness of Japan’s Financial and Capital Markets(PDF:349KB)

• Outline of Plan for Strengthening the Competitiveness of Japan’s Financial and Capital Markets(PDF:252KB)

Amendment of the Financial Instruments and Exchange Act

The articles to be amended as part of the Better Market Initiative were collated in the form of the Bill for the Amendment of FIEA, which was submitted to the 169th Diet session on March 4, 2008. This bill was approved and enacted on June 6, 2008, and the Act for the Amendment of FIEA was promulgated on June 13, 2008.

The amendment stipulates that the following measures be put in place.

1. Development of a framework for markets intended for professionals
2. Diversification of ETFs
3. Revamping of the firewall regulations among banking, securities and insurance businesses
4. Broadening of the scope of businesses permitted to banking and/or insurance groups
5. Review of the administrative monetary penalty system in accordance with the FIEA

Progress of Better Market Initiative

We also promote the implementation of measures that do not require legislation, such as the agreement with financial institutions and other relevant parties on ‘The Principles in the Financial Services Industry’ (April 18, 2008), and the efforts to improve the quality of financial regulation (Better Regulation).

The FSA is determined to continue its efforts in a timely manner toward raising the attractiveness of Japan’s financial and capital markets.

Please refer to the following documents for further details.

• Outline of the Progress of the Better Market Initiative (PDF:64KB) (Published June 27, 2008)

• Status of Implementation of the Better Market Initiative (PDF:101KB) (Published June 27, 2008)

Related Material

• Publication of the “Report by the Roundtable Committee on Fundamental Issues of the Financial System Council” (December 16, 2009)
• Publication of the “Report by the Financial System Council’s Study Group on the Internationalization of Japanese Financial and Capital Markets” (June 18, 2009)
• "Report by the First Subcommittee of the Sectional Committee on Financial System of the Financial System Council : Toward Building Reliable and Vibrant Markets" (December 17, 2008)
• Study Group on the Internationalization of Japan's Financial and Capital Markets : Interium Summary of Issues (PDF:201KB) (June 13, 2007)
• Speeches
  • Speech by Takafumi Sato, FSA Commissioner : "Strengthening the Competitiveness of Japan’s Financial and Capital Markets"(Third Japan CFO Roundtable, February 20, 2008) presentation material (PDF:138KB)
• Statement by Minister of State for Financial Services - Enactment of the Bill for the Amendment of the FIEA (June 6, 2008)