State of affairs of the discussions of the five councils concerned with the Financial System Reformation

Council name
State of affairs up to the present of the Council (Subcommittee)
The Securities Exchange CouncilThe General Committee will further discuss following individual matters provided in Summary of Discussions.

o Utilization of stockholding companies

o Promoting smooth advancement and withdrawal of intermediary companies

o Improving convenience of investment trust

o Diversification of business

o Liberalization of commissions

o Excluding the mutual holding of stocks

o Strengthening of asset management services (investment advisory, investment trust)

o Reconsideration of the definition of securities

o Enhancement of corporative vitality (the introduction or the expansion of ABS, MTN, DR, stock options, etc.)

o Expansion of offering of information

o Enhancement of supervision, disposition, and dispute settlement schemes

o Improvement of disclosure

Below the General Committee, three working parties (WP1 (investment products), WP2 (market), WP3 (market intermediaries)) were established, and concrete discussions about the individual matters are ongoing.

The Special Committee on derivatives is scheduled to compile a report on environment adjustment (stock related over-the-counter derivative transactions, etc.) for the expansion of derivative transactions by the spring of 1997.
The Financial Systems Research Council In the December 26, 1996 the Committee for Advancement of Financial System and Services, which items require further examination in regard to being incorporated into the Financial System Reform plan. These include the following items: (including items that have been examined by other related research groups)

o Authorization for establishing bank holding companies

o Abolition of regulations for specialization of banking industry

o Extending the scope of business which banks are permitted to directly engage in (dealings in security-related derivatives, over-the-counter sales of mutual funds and insurance, dealings in new kinds of securities such as Asset Backed Securities)

o Revision of the range of activities of separated subsidiaries and related fire wall restrictions

o Loan sales and securitization

o Electronic money and Electronic money transfer

o Financial futures exchange

o Maintenance of the short-term money market

o The role of regional financial institutions

o Nonbank-banks

o Customer and consumer protection

o Introduction of Prompt Corrective Action (PCA)

o Necessary improvement in existing systems which relate to financial market reform

In the future, the Committee for Advancement of Financial System and Services will hold discussions centering on the above items, with a compiled report scheduled by June of 1997.

The round table conference (held in conjunction with the Foreign exchange council) concerning electronic money and electronic settlements scheduled to compile a report related to these issues aiming for sometime around May of 1997.

Council name
State of affairs up to the present of the Council (Subcommittee)
The Insurance CouncilA General Council meeting is held on December 20, 1996. After receiving directions from the Prime Minister, a decision is reached to establish the "Fundamental Issue Subcommittee" in order to examine fundamental issues on insurance businesses and insurance supervision administration.

The Fundamental Issue Subcommittee will proceed with examinations focussing on the following items, the report is scheduled to be compiled by June 1997.

o Deregulation measures such as reform of the rating organization system

o Promotion of entry into insurance business from other businesses, and vice versa

o Introduction of the shareholding company system

o Insurance distribution by banks, etc.

o Application of the market price evaluation in trading accounts

The Committee on Foreign Exchange and Other Transactions With the Special Subcommittee for Legislative Study, and the contents being concerned with the abolishment of the authorized foreign exchange bank system intense debate is held on revisions to the Foreign Exchange law, the report of the December 19, 1996 the Special Subcommittee is compiled and submitted to the Committee on January 16, 1997.

As for the Ministry of Finance, based upon Q&A, proposals are compiled on the Foreign Trade Law amendments, on March 4, 1997 a cabinet decision is passed and submitted to the Diet. With this, completion is aimed for the realization of the deregulation of domestic/foreign trading and foreign exchange businesses and systems based upon the global standards of the same level as those of the advanced countries of Europe and the U.S..

Business Accounting CouncilIn the first Subcommittee, from October, 1995, discussion is held concerning the fundamental reconsideration of consolidated information and consolidated procedures.

Consolidated accounting standard revision policies are compiled and announced on February 7, 1997. The report is scheduled to be compiled by summer of 1997, after the gathering of various opinions (further work for around, one more year is scheduled to compile guidelines in practice regarding consolidated procedures and disclosures)

The three councils of the Financial Products Subcommittee, the Business Pension Subcommittee and the Research and Development Costs Subcommittee are scheduled to compile the final opinion reports by summer of 1998, in consideration for international trends on accounting standards, including the discussion relating to the International Accounting Standards aiming for March 1998, and efforts being made in each country based on the IAS. The interim report on accounting standards concerning financial products is scheduled for announcement as soon as is possible (possibly, summer of 1997).

[About the financial system reformation (The Japanese version of the Big Bang)]