When the above reform package is completed, the Japanese market
should become comparable in its market infrastructure to US and
European markets. However, reforming the market system and supervisory
framework will not, by itself, achieve the ultimate objective
of reinvigorating the securities market and thereby helping Japan
maintain the vigor of its economy. That will ultimately depend
on factors that lie beyond the securities market.
One is the basic legal system such as that embodied in Civil and
Commercial Codes. The issue here is whether it can be made to
comply with international financial market practices while still
conforming to Japan's traditional values and the realities of
the Japanese society. Germany and France, which have similar legal
structure as Japan's, have recently introduced a number of legal
reforms aimed at invigorating capital market. Japan should follow
their lead in revamping some of these basic laws. For clear and
transparent rule to be applied speedily and consistently, judicial
underpinning is also important.
Another factor is the issue of the tax system, in relation to
increasing efficiency and international competitiveness of the
market. It is hoped that an urgent review of the tax system will
be undertaken in the Tax Research Council and other venues, and
that the review will taken into account the views of this Council
expressed in this report.
However, it must be said that the most fundamental factor in reviving
the market is the ability of Japan's intermediaries, firms and
investors to use this new found freedom. Whether a free and efficient
market framework will indeed lead to a revitalized market in its
true sense, rests squarely on the actions of market participants.
Intermediaries must show creativity and dynamism and lead the
market in the new environment. Freedom requires discipline and
responsibility. Market participants should all make maximum use
of the freedom given them, and act with integrity and discipline
backed by a high ethical standard.
The Securities and Exchange Council believes in the ability and
the awareness of the Japanese people. The Council urges the Government
to proceed to refine the details of this reform package, and provide
the required institutional framework without delay, taking into
account as wide a range of public opinion s possible. By laying
the ground for the development of Japan's securities market, it
is hoped that the securities market will contribute towards providing
a basis for the creation of a fair and dynamic economy and society.