August 8, 2001
Financial Services Agency
Outline of the ''Program for Structural Reform of Securities Markets''
Toward the creation of the securities market where individual investors play a major role
- It is now indispensable to promote the structural reforms of our economy by reallocating capital from less-efficient sectors into more-efficient growth sectors serving greater social needs, through encouraging the participation of independent individual investors in the securities markets and ensuring the efficiency of their assets management, and through supplying risk capital to rising companies including venture businesses.
(Note: The percentage of stocks held as individual financial assets: 4.6% in Japan; 18.7% in the United States; 12.7% in Germany. Equity ratio of business corporations: 22% in Japan; 37% in the United States)
- Consequently, in accordance with the policy change from the emphasis on savings to the encouragement of investment, it is of urgent necessity to push forward the dynamic and comprehensive structural reform of securities markets and thereby to develop the environment favorable for the active market participation of individual investors, and to enhance the function of direct financing through securities markets.
- Four primary factors have hitherto impeded the market participation of individual investors:
|(1)||Lack of confidence in securities markets (such as securities companies and issuer companies) and inadequate market infrastructure (rules);|
|(2)||Underdevelopment of investment trusts market which is attractive to individual investors;|
|(3)||Inadequate institutional framework which encourages investment;|
|(4)||A premature pro-investment culture.|
- In light of the foregoing considerations, the program intends to build securities markets where individual investors play a major roles through the following four policy areas;
|(1)||Development of infrastructure for enhancing confidence of individual investors in securities markets;|
|(2)||Realization of investment trusts which are attractive to individual investors;|
|(3)||Tax reforms for encouraging provision of risk capital from individual investors;|
1. Development of infrastructure for enhancing confidence of individual investors in securities markets;
(1)Measures for encouraging shifts in business postures of securities companies
- Public announcement of every administrative disciplinary measures taken against violations of behavioral rules;
- Encouragement of building individual-investor-oriented business models;
- Introduction of regularly scheduled system for evaluating qualifications of securities sales representatives.
(2)Strengthened surveillance of securities markets by administrative authorities
- Augmentation of the staff for administrative surveillance activities emphasizing the benefit for individual investors by Securities and Exchange Surveillance Commission;
- Strict enforcement of administrative measures for the protection of individual investors;
- Enhancement of concerted action between the Inspection Bureau and the Securities and Exchange Surveillance Commission in response to financial sector conglomeratization, etc.
(3)Development of market infrastructure
- Promotion of the delivery of electronic-form prospectus;
- Realization of lowering the minimum amount for per unit stock investment;
(4)Strengthened market surveillance by self-regulatory organizations
- Public announcement of disciplinary measures taken against securities sales representatives, etc.
- Active disclosure of measures for grievance handling and dispute resolution.
(5)Establishment of shareholder-oriented management style by issuer corporations
- Inclusion of numerical targets such as ROE(Return on Equity) and specific measures which would enable to strive for such targets in the Summary Business Report issued by issuer corporations.
- Promotion of financial information disclosure through quarterly reports by issuer corporations.
2. Realization of investment trusts which are attractive to individual investors
(1)Development of environment for the purpose of realizing investment trusts which are attractive to individual investors
- Improvement of the contents of prospectus for facilitating understanding by investors;
- Review of the format of prospectus to induce lowering sales commission of investment trusts;
- Expansion of the scope of exchange-traded funds (ETFs) and their promotion.
(2)Tax reforms of stock investment trusts (described below)
(3)Promotion of PR activities for investors
3. Tax reforms for encouraging provision of risk capital from individual investors (requests)
(1)Drastic reforms of capital gain taxation on stocks, etc.
- Improvement of separate self-assessed taxation
Creation of carry-over system of capital loss; lowering of tax rate (26% at present); expansion and perpetuation of the favorable treatment of long-term holdings of listed stock, etc. (special deductions up to one million yen at present), etc.
- Formation of a simple tax payment system for investors (creation of declaration-exempt system)
- Temporary measures for facilitating smooth system transition
Temporary measures concerning stock whose acquisition costs are unknown.
With regard to continuing users of separate taxation, subject to an increase (for example, to approximately 2.0% of transfer price) in tax rate (1.05% of transfer price at present), the separate withholding taxation system shall, for the time being, continue to exist.
- Improvement of separate self-assessed taxation
(2)Improvement of taxation on dividends
- Raise the ceiling amount on declaration-exempt system for small-amount dividends (100 thousand yen per issuer at present), etc.
(3)Tax reforms of stock investment trusts
- While maintaining the withholding taxation system, where investors declare, aggregation of profit and loss, loss carry-over, and favorable treatment for long-term holdings shall be permitted.
(4)Creation of special measures concerning gift tax for the purpose of utilizing savings held by elder citizens for revitalization of the economy
- Creation of special measures concerning gift tax on gifts between parent and child, etc. on condition that gifts be used for long-term investment in stock, etc.
4. Investor education
- Creation of a school education support site on the homepage of the Financial Services Agency
- Expansion of Q&A page for investors
For further information, please contact with the following;
Communications and Policy Division
Planning and Coordination Bureau
Tel: 03 3506 6000
Deputy Director: Naohiko MATSUO (ext.3180)
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