fs001b

Report of the Working Group on Wholesale
and Retail Financial Transactions

Contents

1.	Basic understanding of issues and object of discussion of Working Group (1) Basic understanding of issues (2) Object of study of Working Group
		i.	Division between wholesale and retail, and professionals and non-professionals
		ii.	Appropriate rules for sales of financial products and solicitation for customers
		iii.	Establishment, administration and enforcement of rules
		iv.	Education of users and consumers
	(3)	Premises of discussion
		i.	Aims of the "Financial Services Law"
		ii.	Types of users targeted
		iii.	Risks and costs associated with financial transactions
		iv.	Relationship between rules for transactions and rules for institutions (financial service providers)

2.	Division between wholesale and retail financial transactions, and professionals and non-professionals (1) Basic approach concerning method of classification
		i.	Purpose of classification
		ii.	Classification criteria
		iii.	Method of classification
	(2)	Concrete classification criteria
		i.	Standards directed at types of trading entities
		ii.	Standards directed at types of transactions
		iii.	Standards directed at combination of types of trading entities and types of transactions
	(3)	Selection between wholesale and retail, and conversion between professionals and ordinary users
		i.	Basic position
		ii.	Method of selection and conversion
		iii.	Scope of entities selectable and convertible
		iv.	Scope and effects of selection and conversion
		v.	Selection and conversion procedures
	(4) (5)	Classification of instances where the user cannot be held to have own responsibility Other related issues
		i.	Handling of public service corporations
		ii.	Handling of foreign entities
		iii.	Handling of non-face-to-face transactions

3.	Rules concerning sales and solicitation actions
	(1)	Definition of and relation between information provision requirements and suitability rules
	(2)	Information provision requirements
		i.	Information provision requirements as rules governing transactions and their relation to ordinary private law
		ii.	Requirements and effects of transaction rules
		iii.	Types of information that must be provided
		iv.	Information provision requirements as rules for institutions
		v.	Scope of application of information provision requirements (reduction of and exemption from information provision requirements, etc.)
		vi.	Civil liability and rules for institutions
		vii.	Procedural rules concerning information provision requirements
		viii.	Burden of proof, requirements for exemption from liability and estimation of damages
	(3)	Suitability rules
		i.	Suitability rules in the narrow sense
		ii.	Suitability rules in the broad sense
	(4)	Rules concerning solicitation, etc.
		i.	Definition of solicitation and advertising acts, etc.
		ii.	Prohibition of improper solicitation acts, etc.
		iii.	Rules on improper solicitation for customers
		iv.	Rules on advertising
		v.	"Cooling-off" and "warming-up"
		vi.	Handling of "back finance", etc.
		vii.	Handling of electronic commerce (e.g. via the internet) in financial products
	(5)	Scope of liability of sellers/solicitors
		i.	Relation to advisory activities (provision of information at time of sale/solicitation and after-care)
		ii.	Obligation of institutions to warn customers
		iii.	Sharing of responsibilities among sellers/solicitors and other concerned parties

4.	Creation, administration and enforcement of rules
	(1)	Creation and administration of rules
		i.	Basic position on creation and administration of rules
		ii.	Creation of rules concerning sale of financial products, solicitation for customers and compliance by businesses
	(2)	Monitoring and enforcement of rules
		i.	Basic position on monitoring and enforcement of rules
		ii.	Application of rules on compliance by institutions
		iii.	Requirements of self-regulating bodies
	(3)	System for simply and swiftly settling disputes out of court, etc.
		i.	System for settling disputes out of court
		ii.	Relationship with judicial procedures, etc.
		iii.	Creation of single point of contact for dealing with complaints

5.	Education of users and consumers
	(1)	The need for education of users and consumers
		i.	Effective measures in the light of new trends in finance
		ii.	Diverse and wide-ranging measures and improvement of access to information
		iii.	Use of electronic media, etc.
	(2)	Response in specific fields
		i.	Industry
		ii.	Consumers
		iii.	Administration
		iv.	Elementary and secondary education
		v.	Continuing education

Report of the Working Group on Collective Investment Schemes

Contents

1.

Basic understanding of issues

(1)
Significance of collective investment schemes in the context of new trends in finance

(2)
Current state of rules and legislation on collective investment schemes in Japan

(3)
Basic understanding of issues of the Working Group

2.

Scope of application of rules and legislation on collective investment schemes

(1)
Definition and standard of collective investment schemes

(2)
Scope of application of rules and legislation on collective investment schemes

3.

The need for and basic approach to rules concerning collective investment schemes

(1)
The need for rules concerning collective investment schemes

i.
Solving problems caused by the passive and collaborative nature of investment

ii.
Location of risk and embodiment and clarification of allocation of risk

(2)
Use of information disclosure

(3)
Use of governance functions

i.
Codes of conduct for vehicle operators

ii.
Exercising of investors·rights

iii.
External checks by third parties

(4)
Embodying and clarifying fiduciary duty

i.
The need to embody and clarify fiduciary duty

ii.
Content of rules on fiduciary duty

iii.
Methods and procedures for embodying and clarifying relations of responsibility

iv.
Enforcement of fiduciary duty

4.

Framework and basic content of rules on collective investment schemes

(1)
Framework of rules for collective investment schemes

i.
Rules on arrangement of schemes

ii.
Rules on operation of schemes

iii.
Rules on transactions in financial products formed through schemes

(2)
Rules on asset management schemes

i.
Rules on the use of governance functions

ii.
Rules on arrangement of schemes

iii.
Rules on asset management and advice

iv.
Rules on custody of assets

(3)
Rules on asset securitization schemes

i.
Rules on the use of governance functions

ii.
Rules on arrangement of schemes

iii.
Rules on custody of assets

(4)
Fit and proper structure of schemes

(5)
Other issues

i.
Rules on "fit and proper" for financial service providers

ii.
Rules on other types of arrangement of schemes

iii.
Differences in rules depending on attributes of investors

iv.
Cross-border transactions

5.

Rules on transactions in financial products formed through schemes

(1) Rules on sales and solicitation

(2) Market rules

i. Rules on disclosure

ii. Other market rules

6.

Suitable legislative framework for broad-ranging schemes

7.

Development of a suitable environment for legislation and rules on new collective investment schemes

(1) Development of tax and accounting systems

(2) Development of system of enforcement

(3) Other improvements

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1.	Basic understanding of issues
	(1)	Significance of collective investment schemes in the context of new trends in finance
	(2)	Current state of rules and legislation on collective investment schemes in Japan
	(3)	Basic understanding of issues of the Working Group

2.	Scope of application of rules and legislation on collective investment schemes
	(1)	Definition and standard of collective investment schemes
	(2)	Scope of application of rules and legislation on collective investment schemes

3.	The need for and basic approach to rules concerning collective investment schemes
	(1)	The need for rules concerning collective investment schemes
		i.	Solving problems caused by the passive and collaborative nature of investment
		ii.	Location of risk and embodiment and clarification of allocation of risk
	(2)	Use of information disclosure
	(3)	Use of governance functions
		i.	Codes of conduct for vehicle operators
		ii.	Exercising of investors·rights
		iii.	External checks by third parties
	(4)	Embodying and clarifying fiduciary duty
		i.	The need to embody and clarify fiduciary duty
		ii.	Content of rules on fiduciary duty
		iii.	Methods and procedures for embodying and clarifying relations of responsibility
		iv.	Enforcement of fiduciary duty

4.	Framework and basic content of rules on collective investment schemes
	(1)	Framework of rules for collective investment schemes
		i.	Rules on arrangement of schemes
		ii.	Rules on operation of schemes
		iii.	Rules on transactions in financial products formed through schemes
	(2)	Rules on asset management schemes
		i.	Rules on the use of governance functions
		ii.	Rules on arrangement of schemes
		iii.	Rules on asset management and advice
		iv.	Rules on custody of assets
	(3)	Rules on asset securitization schemes
		i.	Rules on the use of governance functions
		ii.	Rules on arrangement of schemes
		iii.	Rules on custody of assets
	(4)	Fit and proper structure of schemes
	(5)	Other issues
		i.	Rules on "fit and proper" for financial service providers
		ii.	Rules on other types of arrangement of schemes
		iii.	Differences in rules depending on attributes of investors
		iv.	Cross-border transactions
5.	Rules on transactions in financial products formed through schemes
	(1)	Rules on sales and solicitation
	(2)	Market rules
		i.	Rules on disclosure
		ii.	Other market rules
6.	Suitable legislative framework for broad-ranging schemes
7.	Development of a suitable environment for legislation and rules on new collective investment schemes
	(1)	Development of tax and accounting systems
	(2)	Development of system of enforcement
	(3)	Other improvements