WORLD TRADE ORGANIZATION RESTRICTED
ORGANISATION MONDIALE DUCOMMERCES/FIN/W/1
14March 1995
ORGANIZACI ÓNMUNDIAL DEL COMERCIO(95-0553)
Committee onTrade inFinancial Services Original: English
Anglais
Inglés
COMMUNICATION FROM JAPAN AND THE UNITED STATES
Measures bytheGovernment oftheUnited States andthe
Government ofJapan regarding Financial Services
Inresponse totherequest made during themeeting oftheInterim Group onFinancial
Services on3February 1995, theattached communication*iscirculated bythedelegations of
Japan andtheUnited States fortheinformation ofparticipants.
Comité ducommerce desservices financiers
COMMUNICATION DUJAPON ETDESETATS-UNIS
Mesures prises parlegouvernement desEtats-Unis etle
gouvernement duJapon enmatière deservices financiers
Donnant suiteàlademande formulée aucours delaréunion du3février 1995 duGroupe
intérimaire desservices financiers, lesdélégations duJapon etdesEtats-Unis ontfaitdistribuer
auxparticipants, àtitred'information, lacommunication ci-jointe.*
Comité delComercio deServicios Financieros
COMUNICACI ÓNDEL JAPÓNYDELOSESTADOS UNIDOS
Medidas adoptadas porelGobierno delosEstados Unidos yel
Gobierno delJapón conrespecto alosservicios financieros
Enrespuesta alasolicitud formulada durante lareunión delGrupo Provisional sobre
Servicios Financieros del3defebrero, lasdelegaciones delJapón ydelosEstados Unidos
distribuyen alosparticipantes lacomunicación adjunta*, parasuinformación.
*English only/Anglais seulement/Inglés solamente.S/FIN/W/1
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MEASURES BYTHE GOVERNMENT OFJAPAN AND
THE GOVERNMENT OFTHE UNITED STATES
REGARDING FINANCIAL SERVICES
13February 1995
Washington, D.C.
Asaresult ofconsultations under theJoint Statement ontheJapan-United States
Framework foraNewEconomic Partnership regarding measures inthefinancial services sector,
theGovernment ofJapan andtheGovernment oftheUnited States eachhasdecided toimplement
themeasures onfinancial services described herein.
_________________ ___________________
Takakazu Kuriyama Robert E.Rubin
Ambassador ofJapan Secretary oftheTreasuryS/FIN/W/1
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TABLE OFCONTENTS
Page
I. STATEMENT OFBASIC OBJECTIVES 6
II. TRANSPARENCY AND PROCEDURAL PROTECTIONS 7
(2) Regulatory Administration andEnforcement 7
(3) Advisory groups 8
(4) Participation inindustry groups 8
(5) Access toFinancial Services regulatory information 8
(6) Administrative Appeals 8
III. FUND MANAGEMENT ACTIVITIES 9
(3) Access byInvestment Advisors totheManagement
ofNempuku Investments 9
(4) Access toOther Pension Funds 10
(a) Employees 'Pension Funds 10
(b) Mutual AidAssociations 10
(c) TaxQualified Pension Plans 10
(5) Permission toSpecialize 10
(6) Market-Value Accounting andPerformance Evaluation 11
(7) Investment Trusts 11
(a) Conducting Investment Trust Business and
Discretionary Investment Management Business inOneEntity 11
(b) Retailing Investment Trust Products 12
(c) Enhancing Disclosure ofPerformance Data 12
(d) Newly Permitted Investments 13
(e) Sales ofForeign Investment Trust Products 14
(8) Measures bytheUnited States 14
(a) Access byForeign Fund Managers 14
(9) Recognition ofMeasures Undertaken 14
IV. SECURITIES 14
(1) General Principles 14
(2) Procedures forClarifying andExpanding theDefinition ofa
Security andApproving Securities Companies 'Other Business 15
(3) Accommodating Future Innovation 15
(4) Expanding theScope ofSecurities Business Under theSEL 16
(a) Asset-Backed Securities 16
(b) Derivatives 16
(c) Confirmation ofNewSecurities Products 16
(d) Reconfirmation ofExisting Securities Products 17
(5) Securities Firms 'Other Business 18
(6) Introduction ofCurrency-Related Derivatives 18
(7) Additional Liberalization ofCorporate Bond Issues 18
(8) Liberalizing theDistribution ofSecurities Products 19
(9) Liberalizing ofCommercial Paper 19S/FIN/W/1
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Page
(10) Abolition ofAdministrative Notices onOffshore Warrants 19
(11) Measures bytheUnited States 19
(a) Abbreviated Exams 19
(b) State Level Securities Regulation 20
(12) Recognition ofMeasures Undertaken 20
V. CROSS-BORDER CAPITAL TRANSACTIONS 20
(1) General Principles 20
(2) Liberalization ofSecurities Issued byNon-Residents 21
(3) Liberalization ofSecurities Issued Offshore byresidents 21
(4) Liberalization ofSeasoning Requirements 22
(5) Access byResidents toForeign Financial Instruments 22
(a) UseofOverseas Deposit Accounts 22
(6) Access byNon-DFIs toForeign Listed Options andFutures 23
(7) DFIAccess toDerivative-Related Instruments and
Other Portfolio Investments 24
(a) Currency SpotOptions 24
(b) Ex-Post Reporting 24
(8) Other Cross-Border Business 24
(a) Foreign Exchange Transactions Conducted bySecurities Companies 24
(b) Ability toEngage inNetting 25
(c) Sales ofFinancial Claims 25
(9) Future Steps 25
(10) Recognition ofMeasures Undertaken 25
VI. BANKING 27
(1) Interstate Banking 27
(2) Harmonization ofRegulation 28
(3) Citizenship Requirements forBoard Members ofUSFinancial Institutions 28
(4) Mutual Entry Between Banks andSecurities Firms 28
(5) Recognition ofMeasures Undertaken 29
VII. COMPETITION POLICY 29
VIII. CONSULTATIONS 29
IX. ASSESSING IMPLEMENTATION OFTHE MEASURES 30
(2) General 30
(3) Securities Activities 30
(4) Cross-Border Capital Transactions 30
(5) Fund Management Activities 31S/FIN/W/1
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Page
APPENDIX 1:DISPOSITIONS TOAPPLICATIONS 32
APPENDIX 2:UNFAVOURABLE DISPOSITIONS 44
APPENDIX 3:EXEMPTIONS FROM ANTI-MONOPOLY ACT (AMA) IN
FINANCIAL SERVICES INTHE MEASURES 50
APPENDIX 4:THE ANTI-MONOPOLY ACT GUIDELINES CONCERNING
DISTRIBUTION SYSTEMS AND BUSINESS PRACTICES 51S/FIN/W/1
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I. STATEMENT OFBASIC OBJECTIVES
(1) ThegoalsoftheFrameworkaretodealwithstructuralandsectoralissuesinordertosubstantially
increase access andsales ofcompetitive foreign goods andservices through market opening and
macroeconomic measures; toincrease investment; topromote international competitiveness; and
toenhance bilateral economic cooperation between theUnited States andJapan.
(2) Toaccomplishthesegoalswithrespecttothefinancialservicessector,thisdocument,"Measures
bytheGovernment ofJapan andtheGovernment oftheUnited States Regarding Financial Services"
(the"Measures") hasbeenadopted. Itaddresses reform ofrelevant government laws, regulations,
andguidance which havetheeffect ofsubstantially impeding market access forcompetitive foreign
financial services suppliers withtheaimofsignificantly improving market access forcompetitive foreign
financial services suppliers.
(3) Theobjectives oftheMeasures are:
(a) toincrease substantially access tofinancial markets forcompetitive foreign financial
services suppliers;
(b) topromote thedevelopment ofmoreliquid andefficient financial markets thataremore
fullyintegrated withglobal financial markets;
(c) toenhance transparency andprocedural protection intheregulation offinancial activity;
(d) toensure thesafety andsoundness ofthefinancial system andtheintegrity offinancial
markets; and
(e) toprovideamechanismforongoingconsultationandreviewtoassesstheimplementation
oftheMeasures, toresolve problems affecting foreign financial services suppliers in
eachmarket, andtopromote further progress toward theobjectives oftheMeasures.
(4) BothGovernments recognize theimportance ofprudential regulationing thefinancial services
sector andofaddressing suchprudential concerns inafairandtransparent manner.
(5) Each Government reaffirms itscommitment totheprinciples ofnational treatment andmost-
favoured-nation treatment withrespect tobanking, securities andother financial services covered by
theMeasures. Each Government reaffirms theimportance ofthese principles forcommitments, in
accordance withparagraph 2oftheSecond Annex onFinancial Services oftheGeneral Agreement
onTrade inServices ("GATS"), byallGATS members. EachGovernment confirms itscommitment
toaccord financial services suppliers from theother Government 'scountry most-favoured-nation
treatment,marketaccessandnationaltreatmentinbanking,securitiesandotherfinancialservicescovered
byMeasures, including withrespect totheexpansion ofexisting operations, establishment ofanew
commercial presence, andtheconduct ofnewactivities*,provided thattheMeasures arebeing
implemented bytheother Government inaccordance withthespecific commitments described inthe
Measures.
*Thecommitment inthissentence willnotpreclude either Government from enforcing existing
measures, provided thatsuch enforcement willnotmaterially impair thecommitments undertaken inthe
Measures.S/FIN/W/1
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II. TRANSPARENCY AND PROCEDURAL PROTECTIONS
(1) TheGovernments confirm thatfairandtransparent regulations andpolicies governing the
activities offinancial services suppliers areimportant infacilitating boththeaccess offoreign financial
services suppliers to,andtheiroperations in,domestic markets. BothGovernments reiterate their
commitments tocontinuing topromote transparency infinancial services.
(2) Regulatory Administration andEnforcement
(a) TheGovernment oftheUnited States welcomes theprogress thattheGovernment of
Japan hasmade inimproving transparency through theimplementation ofthe
Administrative Procedures Law(the"APL").
(b) TheAPL seeks toensure fairness andenhance thetransparency ofadministrative
operationsbyestablishingcommonproceduresfordispositions,administrativeguidance,
andtheprocessing offilings, thereby contributing totheprotection oftherights and
welfare ofcitizens.
(c) TheGovernment ofJapan confirms theapplicability oftheprovisions oftheAPLwith
regard toregulation, administrative measures, andother actions affecting themarket
forfinancial services andproducts inJapan. Inparticular, inaccordance withtheAPL:
(i) Standards relating tothelicensing andapproval offinancial activities, which
arespecified inAppendix 1,andinclude theentryoffinancial services suppliers
andtheprovision offinancial services andproducts, havebeen orwillbe
compiled, published, andmade available tothepublic, except incases of
extraordinary administrative inconvenience**;
(ii) Persons subject toadverse dispositions regarding thelicensing andapproval
offinancial activities, which arespecified inAppendix 2,willbeafforded a
clear explanation. When adverse dispositions arerendered inwriting, the
reasons willalsobesetforth inwriting, except incases ofextraordinary
administrative inconvenience;
(iii) Administrative guidance should notgobeyond thejurisdiction oftherelevant
authority;
(iv) Compliance withadministrative guidance isvoluntary; persons conducting
administrative guidance willnottreatthesubjects ofadministrative guidance
disadvantageouslyowingtothesubjects'non-compliancewiththeadministrative
guidance inquestion;
(v) Administrative guidance thatisdelivered orally will,uponrequest, bedelivered
inwriting, setting outaclearstatement ofthepurpose andcontent, except in
cases ofextraordinary administrative inconvenience;
**"Extraordinary administrative inconvenience" asused intheMeasures isintended tobeused onlyin
exceptional circumstances.S/FIN/W/1
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(vi) Whenconductingthesametypeofadministrativeguidanceonamultiplenumber
ofpersons with thesame setofconditions andtoachieve thesame
administrative purpose, anadministrative agency should stipulate inadvance,
according toeachcase, theitems which arecommon tothose administrative
guidances, andshould make them public, unless such publication causes
extraordinary administrative inconvenience.
(vii) Arequirement fornotification which meets requirements setoutbystatute
and/or relevant government orders willbefulfilled upon itsarrival atthe
administrative office designated bystatute.
(3) Advisory Groups
(a) When theGovernment ofJapan establishes orregularly seeks recommendations from,
inamanner indicative ofaformal advisory rolefor,anycouncil, association,
committee, group orsimilar organization withapurpose orfunction relating tothe
provision offinancial services, which includes theparticipation ofmembers ofthe
private sector, theGovernment ofJapan willstrongly request theentity toallow
interested foreign financial services suppliers established inJapan, andassociations
orother organizations representing suchcompanies, toattend itsmeetings andsubmit
statements toittotheextent possible.
(4) Participation inIndustry Groups
(a) InJapan andtheUntied States, foreign financial services suppliers canjoinrelevant
trade associations suchastheFederation ofBankers Associations ofJapan, theJapan
Securities Dealers Association, theSecurities Investment Trust Association, andthe
Investment Advisory Company Association.
(b) TheGovernmentofJapanconfirmsthattradeassociationsandothersimilarorganizations
accord foreign financial services suppliers rights, privileges,and opportunities equal
tothose accorded todomestic firms subject tosimilar feesandother obligations, in
accordance withtherules setoutbytheorganizations. Such rights, privileges, and
opportunities include rights, privileges, andopportunities regarding representation and
governence oftheassociations.
(5) Access toFinancial Services Regulatory Information
(a) TheGovernment ofJapan willensure thatforeign aswellasdomestic financial services
suppliers areaccorded meaningful andfairopportunities tobeinformed of,comment
on,andexchange views withofficials regarding, measures relating tooraffecting the
provision offinancial services inJapan.
(6) Administrative Appeals
(a) TheGovernment ofJapan confirms theapplicability oftheAdministrative Appeals
Inquiries Law(Gyosei fufuku shinsa ho)andtheAdministrative CaseLitigation Law
(Gyosei jikensosho ho)toalldispositions relating totheprovision anduseoffinancial
services inJapan.S/FIN/W/1
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III. FUND MANAGEMENT ACTIVITIES
(1) Prudence andefficiency aretwoessential elements ofpension fundmanagement. Theprudent
andefficient management ofpension assets isbestachieved through competition among fundmanagers,
greater opportunities fordiversification andspecialization byfundmanagers, andthrough transparent
andappropriate prudential regulation.
(2) BothGovernments confirm, inprinciple, thatitisimportant tomanage public pension funds
inasound, effective, andprudential manner, andthatpriority should begiven tothesafemanagement
ofassets. Inthiscontext, theGovernment ofJapan isoftheposition thatpublic pension funds are
tobeinvestedininstrumentsofwhichprincipalmaybeguaranteedregardlessofwhethertheyareactually
guaranteed ornot,andthattheyarenottobeinvested ininstruments ofwhich principal isprohibited
tobeguaranteed bylaw.BothGovernments alsoconfirm theimportance ofensuring that,inthecontext
ofJapanese public pension fundmanagement, relevant government andquasi/governmental institutions
arenotinaposition todeliberately select individual stocks foraportfolio purpose; andthatpublic
officials, aswellasquasi-public officials, arenotinaposition todeliberately order theselection of
individual stocks inhis/her capacity asagovernment official oraquasi-government official.
(3) Access byInvestment Advisors totheManagement ofNempuku Investments
(a) Inorder todiversify theinvestments ofthePension Welfare Service Public Corporation
("Nempuku") andtoimprove itsfundperformance, theGovernment ofJapan has
decided, inthefiscal yearof1995 budget formulation process, topermit investment
advisorycompanies("IACs")toparticipateeffectivelyinthemanagementofNempuku's
fundassets through avariation onthe"Shiteitan" framework. Twonewinvestment
vehicles forthispurpose willbeputintoplace, oneinvolving asecurities investment
trust, theother alimited partnership.
(b) With respect tothese vehicles:
(i) Nempuku willhavefullauthority todetermine theallocation ofitsfunds to
private financial institutions thatmaybemanaged byIACs using either ofthese
vehicles;
(ii) Nempuku willbegiven theopportunity toinvest infunds investing ina
specialized classofassets managed byspecialized fundmanagers through either
ofthese vehicles;
(iii) IACs willbegiven theopportunity toparticipate inthedevelopment ofthe
specific mechanisms through which thenewscheme willbeimplemented;
and
(i) subject toDietapproval ofthe1995 budget, these vehicles willtakeeffect
within fiscal year1995.
(c) ItistheviewoftheMinistry ofFinance thathisnewscheme willprovide aneffective
means inpractice forIACs toparticipate inthemanagement ofpublic pension funds.
(d) Atthetimeofthenextcomprehensive review oftheJapanese pension system in1999,
thisscheme would bereviewed.S/FIN/W/1
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(4) Access toOther Pension Funds
(a) Employees 'Pension Funds
(i) TheGovernment ofJapan intends tocontinue toimprove themarket access
ofIACs tothefundmanagement ofEmployees 'Pension Fund accounts by:
A. shortening the8-year requirement to3years fortheapproval of
discretionary fundmanagement ofEmployees 'Pension Fundaccounts;
and
B. gradually enlarging thecurrent onethirdceiling ondiscretionary fund
management ofEmployees 'Pension Fund accounts.
(ii) TheGovernment ofJapan confirms thatthefundallocation ofEmployees '
Pension Funds among pension fundmanagers, andchanges inthoseallocations,
aredetermined bytheEmployees 'Pension Funds, meeting thegovernment
regulations andsubject tocontractual obligations.
(b) Mutual AidAssociations
(i) TheGovernment ofJapan intends toimprove access tothefundmanagement
ofMutual AidAssociations:
A. bypermitting theFederation ofNational Public service Mutual Aid
Associations toemploy IACs through discretionary investment
contracts; and
B. bypermitting theMutual AidAssociation oftheNippon Telegraph
andTelephone Corporation toemploy IACs through discretionary
investment contracts.
(ii) TheGovernmentofJapanreconfirmsthatIACsarealreadypermittedtomanage
fundsofthefollowingMutualAidAssociationsthroughdiscretionaryinvestment
contracts:theFederationofLocalPublicService,TokyoPrefecturalPersonnel,
Local Public Personnel, Designated Cities 'Employees, Federation ofCities
andMunicipal Personnel, thePolice MAA, thePublic School MAA, andthe
MAA oftheAgricultural, Forestry, andFishery Institution Employees.
(c) TaxQualified Pension Plans
(i) TheGovernment ofJapan confirms that,through thecurrent TaxQualified
Pension Trust framework, atrustbankcaninvest funds under suchframework
ininvestment trusts, based onitsowndiscretionary investment judgement.
(5) Permission toSpecialize
(a) ThepresentassetallocationguidelinesappliedtoindividualfundmanagersforNempuku
willbechanged within fiscal year1995sothatsuchguidelines areapplied totheentire
fundofNempuku (excluding thecommingled funds ofaninsurance company).S/FIN/W/1
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(b) TheGovernment ofJapan alsointends toeliminate theassetallocation guidelines on
individual fundmanagers forthediscretionary fundmanagement partoftheEmployees '
Pension Fund accounts.
(6) Market-Value Accounting andPerformance Evaluation
(a) TheGovernment ofJapan intends toreform theactuarial standards ofEmployees '
Pension Funds bymid-1996 from theviewpoint oftaking amarket-value basis into
account, based ondiscussion ofastudy group oftheMinistry ofHealth andWelfare
which willoutline theconclusions inafinalreport bymid-1995. TheGovernment
ofJapan intends toimplement thenewstandards notlaterthanfiscal year1997.
(b) Inaddition, theGovernment ofJapan:
(i) welcomes therecent developments made bypension fundsponsors andpension
fundmanagers todevelop standardized performance dataalong thelinesof
aninternationally accepted format;
(ii) welcomes increased usebypension fundsponsors ofindependent performance
evaluation companies andwillcontinue toensure thatpension fundsponsors
havetheopportunity toobtain anindependent assessment oftheperformance
ofindividual fundmanagers; and
(iii) willencourage pension fundmanagers toprepare performance dataoffunds
under their management onacurrent market-value basis andinan
internationally accepted format. TheGovernment ofJapan alsowillencourage
theparties concerned, such aspension fund sponsors andpension fund
managers, torelease theperformance datanecessary toconduct performance
evaluation tointerested parties suchasperformance evaluation companies used
bypension fundsponsors.
(7) Investment Trusts
(a) Conducting Investment Trust Business andDiscretionary Investment Management
Business inOneEntity
(i) TheGovernment ofJapan willpermit adiscretionary investment management
company toconduct, inoneentity, investment trustbusiness anddiscretionary
investment management business, provided thatsuch company meets the
requirements setforth below andobtains alicence asaninvestment trust
management company and, similarly, willpermit aninvestment trust
management company toconduct, inoneentity, bothsuchbusinesses, provided
thatsuchcompany meets therequirements setforthbelow andobtains alicence
fordiscretionary investment management business, withaviewtoimproving
access to,andpromoting competition in,theinvestment trustmarket.
(ii) Therequirements referred toinparagraph (7)(a)(i) above arethefollowing:
A. adiscretionary investment management company wishing toobtain
alicence asaninvestment trustmanagement company oraninvestmentS/FIN/W/1
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trust management company wishing toobtain alicence forthe
discretionary investment management business must:
1. havehadaverage assets under management ofnolessthan
300billion yenoverthemostrecent three-year period; inthe
case ofaforeign discretionary investment management
company inJapan, suchaverage assets willbetheaverage
assets under management bytheparent company ofsuch
company; and
2. havemarked apositive current balance forthelatest period;
inthecasethatacompany hasmarked anegative current
balance, under thespecial circumstances, itisstilleligible if
itmarked apositive current balance during anyofthethree
most recent periods***;
B. aninvestment trustmanagement company must beincorporated in
Japan.
(iii) Inconnection withparagraph (7)(a)(i) above, theGovernment ofJapan will
remove thecurrent minimum capital requirement onaninvestment trust
management company (300million yen)andreplace itwiththerequirement
thatanadequate amount ofcapital beprepared tomaintain netassets ofno
lessthan50million yen,which willalsoapply toadiscretionary investment
management company which istoconduct investment trust management
business.
(b) Retailing Investment Trust Products
(i) TheGovernment ofJapan confirms thatsecurities subsidiaries ofcommercial
banks arepermitted tosellinvestment trustproducts andthatinvestment trust
management companies arepermitted tosellsuchproducts directly; suchretail
channels willbeutilized tothemaximum extent possible inorder toexpand
business opportunities ofinvestment trustmanagement companies.
(ii) TheGovernment ofJapan alsoconfirms thatinvestment trustmanagement
companies mayuseanymedia toadvertise theperformance ofinvestment trust
products, except unit-type spotfunds, under thecurrent relevant rule.
(c) Enhancing Disclosure ofPerformance Data
(i) TheGovernment ofJapan willenhance disclosure ofinvestment trust
management performance dataonacurrent market-value basis and,tothis
end,willasktherelevant self-regulatory organization todevelop andpublish
onamonthly basis aperformance chart onnewstock investment trusts and
toimprove itsperformance disclosure system onexisting investment trusts,
***Inaddition totheabove requirements, thelicensing criteria foraninvestment trust management
company andthose ofadiscretionary investment management business alsoapply respectively.S/FIN/W/1
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inorder thatinvestors arebetter informed ofeach fund'sinvestment
performance.
(ii) TheGovernment ofJapan willasktherelevant self-regulatory organization
toestablish amechanism through which basic performance dataofinvestment
trust products areprovided toprivate entities forperformance evaluation
purposes.
(iii) TheGovernment ofJapan willrequire investment trustmanagement companies
toenhance disclosure ofinvestment trustproducts byamplifying thecontents
ofprospectuses andregular reports onanannual basis inorder thatinvestors
maymake investment decisions based onmore detailed information onsuch
matters asinvestment policy, dividend distribution policy, riskprofiles, fees
andassetallocation.
(d) Newly Permitted Investments
(i) TheGovernment ofJapan willpermit investment trustmanagement companies
toinvest uptobutnotincluding 50percentofeachfundininstruments other
thanthose defined under Article 2oftheSecurities andExchange Law(the
"SEL") andwillpermit suchcompanies toinvestment inyenCDs, yencall
money andsecuritized realproperty. TheGovernment ofJapan will
fundamentally deregulate thecurrent restrictions onthetypes ofinstruments
thatfunds willbeallowed toinvestment insubject tominimum prudential
requirements inorder toencourage investment trustmanagement companies
todevelop original products andinvestment policies andtomeetdiversified
investor needs by:
A. abolishing therequirement thatfutures andoptions trading beused
onlyforhedging purposes andpermitting theuseofsuchtrading for
general fundmanagement purposes;
B. permitting investment trustmanagement companies toinvestment in
foreign anddomestic privately placed bonds;
C. expanding thepermissible range ofmargin transactions inwhich stock
maybeborrowed andsold;
D. abolishingtherequirementwhichlimitsinvestmentinforeignsecurities
tothose securities trading inparticular foreign securities markets and
permitting investments insecurities trading inallmarkets;
E. permitting investment inother investment trustproducts;
F. permitting investment insecuritized products backed byrealproperty;
and
G. permitting trading inforward interest rateagreements andforward
exchange agreements.S/FIN/W/1
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(ii) TheGovernment ofJapan alsoconfirms thatinvestment trustmanagement
companies willbeabletoinvest inagrater range ofsecurities asaresult of
anyexpansion ofinstruments orinvestments deemed tobesecurities under
Article 2oftheSEL.
(e) Sales ofForeign Investment Trust Products
(i) TheGovernment ofJapan willpermit, atamaximum, five-sixths ofaforeign
country fundtobesoldinJapan andwillpublish aministerial notice inorder
toensure transparency ofthecriteria onthesaleofforeign investment trust
products inJapan.
(8) Measures bytheUnited States
(a) Access byForeign Fund Managers
(i) TheGovernment ofJapan recognizes thatforeign fundmanagers havebeen,
andwillbeabletoorganize andregister USfunds under thesamerequirements
asUSfundmanagers.
(ii) TheGovernment ofJapan recognizes thatthestaffoftheUSSecurities and
Exchange Commission (the"SEC") hasalready taken anumber ofsteps to
liberalize access toUSmarkets byeasing restrictions onforeign advisers who
haveUSandforeign clients. Thestaff'saction hasenhanced theability of
advisers located inJapan toserve bothJapanese andUSclients.
(iii) TheGovernment oftheUnited States hasencouraged thestaffoftheSECto
explore possible additional measures, consistent with investor protection
concerns under USlaw,toaddress therestrictions imposed onaccess byforeign
investment trusts, aswellasissues raised bytheGovernment ofJapan that
concern investment advisers. ThestaffoftheSECiswilling toconsult with
therelevant administrative authorities oftheGovernment ofJapan attheir
request, withaviewtoward exploring and,where appropriate, implementing
administrative action toaddress suchrestrictions andissues regarding access
byforeign investment trusts andadvisers. Inthiscontext, theGovernment
oftheUnited States notes thatSection 7(d)oftheInvestment Company Act
provides authority toaddress suchissues onacase-by-case basiswithrespect
toinvestment trusts.
(9) Recognition ofMeasures Undertaken
(a) TheGovernment oftheUnited States recognizes thattheGovernment ofJapan has
eliminated thedistinction between "old" and"new" money forEmployees 'Pension
Fund accounts.S/FIN/W/1
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IV. SECURITIES
(1) General Principles
(a) TheGovernments recognize thatopen, competitive capital markets areessential tothe
efficient allocation ofresources inaneconomy. Tothisend,theGovernments are
oftheview thatrestrictions ontheability ofcorporations toissue orsellsecurities
indomestic andforeign markets andontheability ofinvestors topurchase freely such
securities should bekepttotheminimum necessary toaddress prudential concerns.
TheGovernments alsorecognize thattransparency regarding theprocess ofclarifying
whether aninstrument constitutes, ormayconstitute, a"security" under theirrespective
securities lawsisimportant toenhance efficiency intheissuance orsaleofsecurities.
(2) Procedures forClarifying andExpanding theDefinition ofaSecurity andApproving Securities
Companies 'Other Business
(a) TheGovernment ofJapan:
(i) confirms thatanyinstrument willconstitute asecurity totheextent thatit
satisfies thedefinition ofa"security" setforthinArticle 2oftheSEL. Any
rights toissue, distribute, sellorpurchase orotherwise transact insucha
security willbesubject onlytoregistration orother requirements setforthin
applicable lawsandregulations. Anyinterested person canmake aninquiry
when theyarenotcertain whether aninstrument constitutes a"security" under
Article 2oftheSEL, buttheyarenotrequired todoso;
(ii) uponinquiry, willstudy inafairandexpeditious manner whether aninstrument
constitutes a"security" under Article 2oftheSELinlightoffairstandards
ofinvestment value andtransferability andwillrespond promptly withan
appropriate explanation tosuchaninquiry, inwriting ifrequested, except in
cases ofextraordinary administrative inconvenience. Inaddition, the
Government ofJapan willmake itsresponse available tothepublic, provided
thatpublication ofthatresponse would notjeopardize confidentiality;
(iii) upon written request, willstudy inafairandexpeditious manner whether an
instrument should bedesignated byCabinet Order asa"security" under
Article 2oftheSEL inlight offairstandards ofinvestment value and
transferability andinlightoftheneedtoprovide forinvestor protection under
theSEL(inparticular, where noother lawprovides suchprotection); will
respond promptly withanappropriate explanation tosuchawritten request,
inwriting ifrequested, except incases ofextraordinary administrative
inconvenience; andwillmake itsresponse available tothepublic, provided
thatpublication ofthatresponse would notjeopardize confidentiality; and
(iv) confirms thatsecurities companies wishing toengage inbusinesses related to
investment products notconstituting securities under Article 2oftheSELmay
apply toengage inbusinesses under Article 43oftheSEL, andthattotally
orpartially denying suchanapplication willconstitute a"Disposition denying
thepermission etc." under theAPL andapplicants willbeentitled tothe
procedural protections thereunder.S/FIN/W/1
Page16
(3) Accommodating Future Innovation
(a) TheGovernment ofJapan intends to:
(i) fullyutilize theexisting mechanisms available toit,including theinterpretation
ofArticle 2oftheSEL, designation byCabinet Order, orapproval forother
business, inorder torespond appropriately todevelopments andinnovations
insecurities products andmarkets; and
(ii) continue toreview relevant lawsandregulations, including theSEL, witha
viewtoward accommodating thedevelopment ofnewsecurities products and
changes insecurities markets while ensuring themostappropriate supervision
ofsuchmarkets.
(4) Expanding theScope ofSecurities Business Under theSEL
(a) Asset-Backed Securities
(i) TheGovernment ofJapan willaccelerate theon-going review among the
relevant ministries ofsuchissues asanappropriate framework forinvestor
protection andconsistency withother relevant lawsandregulations inorder
toidentify anappropriate legal approach fortheintroduction inJapan of
securities backed byclaims covered bytheLawRegarding Regulation of
Business Concerning Specified Claims; make utmost efforts tofinalize the
review bytheendofMarch 1995; andpositively consider theintroduction
ofsuchsecurities afterhaving ensured anappropriate solution totheabove
issues.
(b) Derivatives
(i) TheGovernment ofJapan emphasizes itspolicy priority tofurther expand
transactions ofexchange-traded derivatives based onequities andwillcontinue
toreview wide-ranging issues relating toover-the-counter derivatives based
onequities, including potential risksassociated withthose products, systemic
effects onthecashmarket possibly arising fromthose products andtherelevant
legal constraints, withdueattention torecent andfuture developments and
concerns inother major financial markets.
(c) Confirmation ofNewSecurities Products
(i) Inthecontext ofparagraph (3)ofSection IV,theGovernment ofJapan intends
tonewly confirm andpublicly statethatthefollowing securities fallwithin
thedefinition ofa"security" under Article 2oftheSEL:
A. Asset-Backed Securities
1. Non-agency pass-through securities backed byfinancial
institution mortgages, issued byforeign private institutions;
2. Foreign pass-through securities backed bycashloans made
byfinancial institutions, including, butnotlimited to:S/FIN/W/1
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- home equity loans
- automobile loans
- boatloans
B. Other securities
1. Exchangeable Bonds;
2. Strippable Bonds issued offshore other thanstrippable US
Treasury Bonds; and
3. Dual Currency Bonds withCurrency Options.
(d) Reconfirmation ofExisting Securities Products
(i) TheGovernment ofJapan reconfirms andpublicly states thatthefollowing
securities fallwithin thedefinition ofa"security" under Article 2oftheSEL:
A. Asset-Backed Securities
1. Asset-backed bonds (pay-through securities) issued byforeign
institutions inlinewiththescheme announced inthepublic
statement bytheMinistry ofFinance on16September 1994;
2. Foreign pass-through securities backed bycredit cardloans
which arecashloans made byfinancial institutions (CARDs);
3. Collateralized Mortgage Obligations (CMOs);
4. Stripped Mortgage Backed Securities (IOs/POs);
5. GNMA pass-through securities;
6. FNMA pass-through securities;
7. FHLMC pass-through securities;
8. REIT (corporate type).
B. Other Securities
1. Foreign Closed-End Funds;
2. Bonds withDebt Warrant;
3. Step-up/Down Bonds; and
4. Strippable USTreasury Bonds.S/FIN/W/1
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(ii) Inaddition, theGovernment ofJapan confirms thatthere isnolegal or
administrative regulation imposed onNoteIssuance Facilities oronRevolving
Underwriting Facilities.
(5) Securities Firms 'Other Business
(a) TheGovernment ofJapan confirms thatsecurities firms willbepermitted, upon
application, toengage inafullrange ofyeninterest rateswaps, subject totherelevant
criteria thatisconsistent withtheIOSCO riskmanagement guideline.
(6) Introduction ofCurrency-Related Derivatives
(a) TheGovernment ofJapan confirms thatwithrespect tocurrency-related derivatives
notdefinedassecuritiesunderArticle2oftheSEL,itwillundertakeproduct-by-product
studies andconsultations withgovernment offices concerned aspromptly aspossible
withregard tosuchderivatives consistency withdomestic laws, andthat,based on
theresults ofthese studies andconsultations, necessary measures willbetaken within
theForeign Exchange andForeign Trade Control Law toexpand therange of
currency-related derivative instruments.
(b) Inthemanner setforthinparagraph (6)(a) above, theGovernment ofJapan willstudy
thefeasibility ofintroducing currency warrants afteridentifying theneedforthose
instruments inthedomestic market.
(c) TheGovernment ofJapan isprepared torespond withanappropriate explanation to
aninquiry regarding theintroduction ofcurrency-related derivatives thatarenotdefined
assecurities under Article 2oftheSELaspromptly aspossible, andtoreply tosuch
aninquiry inwriting ifrequested, except incases ofextraordinary administrative
inconvenience.
(d) TheInternational Finance Bureau oftheMinistry ofFinance plans tofacilitate studies
regarding theintroduction ofcurrency-related derivatives notdefined assecurities under
Article 2oftheSELthrough additional staffing forthispurpose.
(7) Additional Liberalization ofCorporate Bond Issues
(a) TheGovernment ofJapan alsointends totakethefollowing measures:
(i) assurethatnorestrictionisimposedonthematuritystructureofcorporatebonds
issued inJapan oroffshore;
(ii) steadily promote diversification instructures, including interest ratestructures,
ofcorporate bonds issued inJapan byresidents ornon-residents; and
(iii) concerning theminimum rating requirements andfinancial criteria onall
domestic issues byJapanese residents, fundamentally review and,afterpublic
hearing, announce arelaxation programme, bytheendofMarch 1995,
including possible elimination oftheminimum rating requirements ina
reasonable transitional period, atamaximum within oneyear after the
announcement.S/FIN/W/1
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(8) Liberalizing theDistribution ofSecurities Products
(a) Noting thattheGovernment oftheUnited States hasexpressed theviewthatinstitutional
investors 'ability topurchase shares ofprimary issues beexpanded, theGovernment
ofJapan confirms thatadesignated institutional investor isallowed topurchase, at
maximum, 50unit, 100unitand150unitshares ofaprimary issue, respectively,
according tothesizeoftheissue, classified intheJapan Securities Dealers Association
10Units Stock Distribution Rule. TheGovernment ofJapan recognizes thattherule
willbereviewedinaccordancewithfutureconditionsinsecuritiesmarketsandsecurities
transactions, aswellasfuture movement ofpublic opinion onthematter.
(b) TheGovernment ofJapan willinvite therelevant stock exchanges nottoapply the
5Units Stock Distribution Ruletoshares traded intheover-the-counter market which
aretobenewly listed onastock exchange.
(c) TheGovernment ofJapan willfundamentally deregulate thecurrent investment
guidelines applied toinvestment trustmanagement companies, asspecified above in
Section III.
(9) Liberalizing ofCommercial Paper
(a) Inaddition totheissuance ofyencommercial paper byforeign securities firmsunder
thecurrent rule, theGovernment ofJapan alsointends toallow bytheendof
March 1995suchfirms toissueyencommercial paper withaparent guarantee subject
totherelevant criteria, incases inwhich theyarenotabletoissue yencommercial
paper bythemselves under thecurrent rule.
(10) Abolition ofAdministrative Notices onOffshore Warrants
(a) TheGovernmentofJapanwillabolishtheadministrativenoticesissuedin1988regarding
theissuance offshore ofwarrants linked toJapanese Government Bonds andJapanese
stock indices, noting that,regardless oftheabolition ofthenotices, Article 201ofthe
SELremains applicable tothesaleofover-the-counter warrants toJapanese residents.
(11) Measures bytheUnited States
(a) Abbreviated Exams
(i) TheGovernment oftheUnited States notesthatforeign, including USsecurities
representatives whomeettherelevant requirements onstatus andexperience
relating toengagement insecurities business intheirhome countries areexempt
fromtaking theJapanese qualification examination towork inJapan fortheir
securities companies.
(ii) TheGovernment oftheUnited States agrees toencourage therelevant
self-regulatory organizations toimplement abbreviated examinations designed
toeliminate redundancy between therespective USandJapanese examinations,
whichwillenableJapanesesecuritiesrepresentativestoworkforabroker-dealer
intheUnited States without taking thefullUSexamination normally required.S/FIN/W/1
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(b) State Level Securities Regulation
(i) TheGovernment oftheUnited States supports thegoalofcoordination of
federal andstatesecurities registration requirements, consistent withthegoals
ofinvestor protection. Tothisend,theadministrative authority oftheUnited
States hasfacilitated theinitiation ofdiscussions between theNorth American
Securities Administrators Association andtheJapanese administrative authority
inaneffort toidentify areas where theGovernment ofJapan believes there
isanoverlap between federal registration requirements andstateregistration
requirements, andwhich itbelieves create impediments totheofferintheUS
ofsecurities ofJapanese issuers. TheGovernment oftheUnited States, noting
thatfederal securities lawdoesnotpre-empt statelawrelated tosecurities
offerings, willconsider theissues raised bytheGovernment ofJapan inthis
regard and,asappropriate, willexplore means ofaddressing these issues.
(12) Recognition ofMeasures Undertaken
(a) TheGovernment oftheUnited States recognizes thattheGovernment ofJapan has
made progress inliberalizing thedomestic securities market. Forexample, the
Government ofJapan has:
(i) steadilyrelaxedtheminimumratingsandfinancialrequirementsfortheissuance
ofbonds inthedomestic securities market;
(ii) promoted further diversification ofmaturities andinterest ratestructures for
domestic yenbonds, suchasfloating ratenotes andstraight bonds withparent
guarantees;
(iii) confirmed abroader range ofproducts (i.e., acertain class ofasset-backed
securities issued offshore andthesaleofforward yen-yen interest rate
agreements);
(iv) eliminated ceilings onbond issues; and
(v) limited theroleofcommissioned banks toafterissuance duties only.
(b) TheGovernmentsconfirmedinJune1993theimportanceofcertainprinciplesinguiding
theformulationofregulationsconcerningequityderivativemarketsintheUSandJapan.
The Governments reconfirm that the principles outlined inJune1993
arestilloperative.
V. CROSS-BORDER CAPITAL TRANSACTIONS
(1) General principles
(a) TheGovernments confirm thatopen, liberal markets andthefreeandnormal movement
ofcapital arenecessary totheeffective operation oftheinternational monetary system
andtotheefficient allocation ofresources among andwithin countries.S/FIN/W/1
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(2) Liberalization ofSecurities Issued byNon-Residents
(a) TheGovernment ofJapan intends tointroduce bytheendofMarch 1995 anew
comprehensive notification system forsecurities issued inJapan, including private
placements, bynon-resident issuers. Under thissystem, anissuer mayissuesecurities
inoneormore transactions overaperiod ofoneyearsubject onlytoex-post reporting,
providedthattheissuerrequestsanexemptionfromthestandardnotificationrequirement
from theMinistry ofFinance attheoutset oftheone-year period.
(b) Inaddition, theGovernment ofJapan intends tointroduce bytheendofMarch 1995
anewcomprehensive approval system forsecurities issued inyenoffshore, including
private placements, bynon-resident issuers. Under thissystem, anissuer mayissue
securities inoneormore transactions overaperiod ofoneyearsubject onlytoex-post
reporting, provided thattheissuer receives comprehensive approval oftheMinistry
ofFinance attheoutset oftheone-year period.
(c) Thecomprehensive notification approval under these newsystems willbeeffective
within fivebusiness days ofthereceipt bytheMinistry ofFinance ofthe
request/application forapproval, except inextraordinary administrative circumstances.
Suchrequest/application forapproval needinclude onlythename oftheissuer (address,
typeofindustry, andnationality). Ifavailable, thefollowing items mayalsobe
included, butonlyforinformational purposes:
- agent forissuer
- planned totalamount ofissues
- kinds ofplanned securities issues
- rating
- useofraised funds
- parties concerned (lead manager, fiscal agent, etc.)
(d) Inaddition, andrelated totheabove, theGovernment ofJapan intends totakethe
following measures:
(i) assurethatnorestrictionisimposedonthematuritystructureofcorporatebonds
issued byanon-resident either inJapan oroffshore;
(ii) imposenorestrictionsonsecuritiesstructures,includinginterestratestructures,
ofcorporate bonds issued offshore inyenbyanon-resident; and
(iii) steadily promote diversification instructures, including interest ratestructures,
ofcorporate bonds issued inJapan byanon-resident.
(3) Liberalization ofSecurities Issued Offshore byResidents
(a) TheGovernment ofJapan intends tointroduce bytheendofMarch 1995 anew
comprehensive notification system forsecurities issued offshore byresident issuers.
Under thissystem, anissuer mayissue securities inoneormore transactions overa
period ofoneyearsubject onlytoex-post reporting, provided thattheissuer requests
anexemption fromthestandard notification requirement fromtheMinistry ofFinance
attheoutset oftheone-year period.S/FIN/W/1
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(b) Thecomprehensive notification under thisnewsystem willbeeffective within five
business daysofthereceipt bytheMinistry ofFinance oftherequest, except in
extraordinary administrative circumstances. Sucharequest needinclude onlythename
oftheissuer (address, typeofindustry, andnationality). Ifavailable, thefollowing
items mayalsobeincluded, butonlyforinformational purposes:
- agent forissuer;
- planned totalamount ofissues;
- kinds ofplanned securities issues rating;
- useofraised funds;
- parties concerned (lead manager, fiscal agent, etc.)
(c) Inaddition, andrelated totheabove, theGovernment ofJapan intends to:
(i) assurethatnorestrictionisimposedonthematuritystructureofcorporatebonds
issued offshore byresidents;
(ii) imposenorestrictionsonsecuritiesstructures,includinginterestratestructures,
ofcorporate bonds issued offshore byresidents;
(iii) eliminate theminimum rating requirement onalloffshore bond issues by
residents inthecasethatderegulation ondomestic issues isputintoplace;
and
(iv) confirm thatnofinancial criteria willbeimposed onresident companies issuing
bonds offshore.
(4) Liberalization ofSeasoning Requirements
(a) TheGovernment ofJapan intends to:
(i) announce bytheendofMarch 1995aprogramme toabolish thecurrent 90-day
offshore seasoning period onnon-sovereign Euroyen bond issues by
non-residents withthetiming tocoincide withthederegulation oftheminimum
ratings requirement fordomestic bondissues, inaccordance withthetime-table
inparagraph (7)(a)(iii) ofSection IV;and
(ii) study whether theoffshore seasoning period onEuroyen bond issues by
residents could berelaxed considering suchfactsasthesituation ofthedomestic
market.
(5) Access byResidents toForeign Financial Instruments
(a) UseofOverseas Deposit Accounts
(i) TheGovernment ofJapan:
A. intends tointroduce assoonaspossible anewcomprehensive approval
systemunderwhichanindustrialcorporationsatisfyingcertainstandards
relating totheadequacy oftheframework ofsuch corporation 's
in-house legal, riskmanagement, andfinancial management systems,S/FIN/W/1
Page23
maymake overseas deposits ofanunlimited amount forthepurpose
ofportfolio investment. Comprehensive approval willbeforan
indefinite period oftime. Upon approval, suchcorporations willbe
permitted tomake overseas deposits, inexcess of100million yen
equivalent, forportfolio purposes, subject onlytoex-post reporting
onaperiodic basis; and
B. confirms thattheportfolio investments referred toabove mayinclude
anyfinancial instrument, including thosenotdefined assecurities under
Article 2oftheSEL, other thaninvestments thatareprohibited under
Japanese lawsrelating tocriminal activities, suchasArticle 201of
theSEL.
(ii) Inaddition, theGovernment ofJapan intends toallow, withnoadditional
approval, overseas deposits forthepurpose ofportfolio investment thatresult
from crediting dividends andsettlements related toredemptions andsalesof
foreign securities defined under Article 6oftheForeign Exchange andForeign
Trade Control Lawtotemporarily exceed 100million yenequivalent for
residents notcovered under thenewcomprehensive approval system described
above.
(6) Access byNon-DFIs toForeign Listed Options andFutures
(a) TheGovernment ofJapan intends to:
(i) permitnon-DFIs,bothnon-financialcorporateandindividualJapaneseinvestors,
todirectly invest, without solicitation, inallsecurities derivatives products
listed onoverseas exchanges, including alltypes ofcashoption onsecurities;
(ii) permit acorporate investor toinvest inforeign securities derivatives products
listed onoverseas exchanges foritsownaccount subject onlytoex-post
reporting under theForeign Exchange andForeign Trade Control Law.
Corporate investors willalsobeexempt fromseparate approval requirements
orwillbegranted comprehensive approvals under theForeign Exchange and
Foreign Trade Control Lawregarding associated overseas margin deposits and
thenetting ofsettlements inconnection withthose transactions; and
(iii) exempt from separate approval andprior notice requirements orgrant
comprehensive approvals permitting acorporate investor satisfying certain
standards relating totheadequacy oftheframework ofsuchcorporation 's
in-house legal, riskmanagement, andfinancial management systems, toinvest
infinancialfuturesandoptionslistedonoverseasexchangesforitsownaccount.
These corporate investors willalsobeexempt fromseparate approval andprior
notice requirements orwillbegranted comprehensive approvals under the
ForeignExchangeandForeignTradeControlLawregardingassociatedoverseas
margin deposits andthenetting ofsettlements inconnection with those
transactions aswellassales orpurchases offoreign means ofpayment and
other operations forthose transactions.S/FIN/W/1
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(7) DFIAccess toDerivative-Related Instruments andother Portfolio Investments
(a) Currency SpotOptions
(i) TheGovernment ofJapan intends toexempt securities companies, insurance
companies, andinvestment trustcompanies fromanyrequirements toobtain
prior approval under theForeign Exchange andForeign Trade Control Law
totrade incurrency spotoptions listed onoverseas exchanges fortheirown
account.
(b) Ex-Post Reporting
(i) TheGovernment ofJapan confirms thatallDFIs areexempt from theprior
noticerequirementontheircross-borderportfolioinvestmentsundertheForeign
Exchange andForeign Trade Control Lawifsuchinstitutions sorequest.
(8) Other Cross-Border Business
(a) Foreign Exchange Transactions Conducted bySecurities Companies
(i) TheGovernment ofJapan willcontinue totakenecessary measures under the
Foreign Exchange andForeign Trade Control Law onforeign exchange
transactions bysecurities companies inconsideration ofthenecessity ofsuch
transactions totheoperation oftheirunderlying businesses.
(ii) Inaddition, theGovernment ofJapan willfacilitate foreign exchange
transactions conducted bysecurities companies immediately through the
following specific measures:
A. confirming thatcurrently eligible currency swaps related toan
underwriting caneither fullyorpartially cover thetotalamount of
bonds issued insuchunderwriting;
B. changing theprior notice requirement intoanex-post reporting
requirement oncurrency swaps related toanunderwriting;
C. permitting securities companies toengage incurrency swaps with
Japanese investors thataresimultaneously conducted withtheinvestors
purchase offoreign securities inorder tofixyenamounts receivable
inconnection withinterest on,andredemptions of,suchsecurities;
and
D. permitting securities companies toconduct transactions ofcurrency
spotoptions listed onoverseas exchanges fortheirownaccounts.
(iii) Inaddition, theGovernment ofJapan willexplore appropriate ways for
securities companies toengage inforeign exchange transactions related totheir
underlyingbusinessesinlightoftheprogressmadeinthereformoftheJapanese
financial system.S/FIN/W/1
Page25
(b) Ability toEngage inNetting
(i) TheGovernment ofJapan willpositively study thepossibility ofgranting
comprehensive approvals toJapanese investors whoarenotsolicited byforeign
securities companies forthenetting ofsettlements ofrepurchase transactions
inoverseas bond markets, afterhaving taken intoaccount thelegal aspects
involved insuchtransactions inthecountries concerned.
(ii) TheGovernment ofJapan confirms thatthenetting ofsettlements inconnection
withsecurities transactions similar totheabove which arefrequently repeated
andforwhich itisexcessively inconvenient toobtain individual approvals will
beallowed under thecomprehensive approval system, except fornettings which
circumvent theForeign Exchange andForeign Trade Control Laworrelate
toillegal transactions under Japanese laws, suchasthosetransactions concerned
withcrimes.
(iii) TheGovernment ofjapan confirms thatthenetting ofsettlements inconnection
withother transactions willbeapproved, except fornettings which circumvent
theForeign Exchange andForeign Trade Control Laworrelate toillegal
transactions under Japanese laws, suchasthose transactions concerned with
crimes.
(c) Sales ofFinancial Claims
(i) TheGovernment ofJapan confirms thatsales offinancial claims willbe
approved, except forsuchsaleswhich circumvent theforeign Exchange and
Foreign Trade Control Laworrelate toillegal transactions under Japanese
laws, suchasthose transactions concerned withcrimes.
(ii) TheGovernment ofJapan alsoconfirms thatasalescontract ofdomestic assets
forthepurpose ofsecuritization overseas willbeapproved promptly.
(9) Future Steps
(a) Inlightofongoing deregulation ofthedomestic financial markets andfuture evolution
offinancial products andservices, theGovernment ofJapan willcontinue toconsider
further liberalization ofcross-border capital transactions asappropriate.
(10) Recognition ofMeasures Undertaken
(a) TheGovernment oftheUnited States recognizes therecent progress made bythe
Government ofJapan inrelaxing restrictions oncross-border capital transactions.
(b) TheGovernment ofJapan has:
(i) Seasoning rule
A. eliminatedthe90-dayoffshore-seasoningruleforEuroyenbondsplaced
bynon-resident sovereign issuers;S/FIN/W/1
Page26
(ii) Transactions byfinancial institutions:
A. introduced forward rateagreements andforeward exchange agreements
(October 1994); and
B. allowed financial institutions totrade incashstock options andstock
index options listed onoverseas exchanges fortheirownaccounts (by
theendoffiscal year1994);
(iii) Transactions byOthers:
A. raised theexemption ceiling beyond which approval isrequired under
theMinisterialOrdinanceregardingoverseasdepositsfrom¥30million
equivalent to¥100million equivalent (March 1994);
B. expanded therange ofcurrency swaps abletobeusedbysecurities
firms intheconduct oftheir overseas subsidiaries 'underwriting
business bytheendoffiscal year1994;
C. liberalized deposit andoffsetting transactions required ofnon-residents
inbidding forshares ofinitial public offerings inJapan (January 1994);
and
D. raised theexemption ceiling beyond which approval isrequired for
certain corporations, including trading firms, toengage innetting
between parent andsubsidiary, aswellasheadoffice andbranch, from
¥10million equivalent to¥100 million equivalent (April 1994).
(iv) Resident Foreign Bonds:
A. relaxed theminimum ratings to"BBB orbetter" (January 1994);
B. abolished thefinancial criteria onnetassets forBBB issuers
(July 1994);
C. committed toreview rating requirements/financial criteria bytheend
offiscal year1994;
D. abolished the"Three Bureaus Guidance" which restricted public
offshore bonds lead-managed bysubsidiaries ofJapanese banks
(April 1994);
E. expedited substantially thenotification procedure under the"Bond
Issuance Programme" (July 1993);
F. confirmed thataforeign-affiliated company inJapan canissueforeign
bonds withaparent company guarantee (June 1994); and
G. allowed residents toissue Euroyen bonds withaparent company
guarantee (July 1994).S/FIN/W/1
Page27
(v) Non-resident domestic bonds:
A. relaxed theminimum ratings to"BBB orbetter" (January 1994);
B. abolished thefinancial criteria onnetassets forBBB issuers
(July 1994);
C. committed toreview rating requirements/financial criteria bytheend
offiscal year1994;
D. confirmed thatsubsidiaries ofJapanese firms located overseas canissue
domestic bonds inJapan (June 1994); and
E. confirmed thatprivate foreign companies canissueprivate placements
inJapan (June 1994).
(vi) Non-residents Euroyen bonds:
A. abolished minimum ratings (July 1993);
B. allowed themajority ofEroyen bonds issued bynon-residents tobe
subject toex-post reporting (June 1989); and
C. eliminatedthe90-dayseasoningruleforEuroyenbondsbynon-resident
sovereign issuers (January 1994).
(vii) raised theexemption ceiling beyond which prior notification isrequired on
portfolio investments from ¥30million to¥100million (March 1994).
(viii) raised theexemption ceiling beyond which priornotification withexamination
isrequired forforeign direct investment from ¥30million to¥100million
(March 1994).
VI. BANKING
(1) Interstate Banking
(a) TheGovernment ofJapan welcomes theprogress thattheGovernment oftheUnited
States hasmade through theimplementation oftheRiegle-Neal Interstate Banking and
BranchingEfficiencyActof1994("Riegle-Neal"),whichensuresforeignbanksnational
treatment ininterstate banking andbranching activities. TheGovernment oftheUnited
States agrees thatforeign anddomestic banks should bepermitted toengage in
nationwide banking activity forforeign anddomestic banks tothefullextent possible
under Riegle-Neal, consistent withtheprinciple ofnational treatment embodied inthat
legislation.
(b) TheGovernment oftheUnited States notes that,even before theadoption ofthe
Riegle-Neal banking legislation, many states hadtaken action toliberalize interstate
acquisitions ofbanks onabasis thatprovided national treatment toforeign banks.
TheGovernment oftheUnited States welcomes further initiatives bystates toprovide
additional access onanon-discriminatory basis.S/FIN/W/1
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(2) Harmonization ofRegulation
(a) TheGovernment oftheUnited States notes theconcern expressed bytheGovernment
ofJapan regarding thepotential impact onforeign banks intheUnited States of
overlapping anddiffering stateandfederal regulations thatmayexistinanumber of
areas. TheGovernment ofJapan recognizes thatbanking haslongbeensubject to
regulation atboththefederal andstatelevel within theUnited States, andthatthe
structure ofthedualbanking system affects domestic aswellasforeign institutions.
(b) TheGovernment oftheUnited States notes thattheFederal Reserve, working in
cooperation withother supervisory authorities, isestablishing anenhanced framework
forthesupervision oftheUSoperation offoreign baking organizations ("FBO
Program"), which seeks torender thesupervisory process more efficient by,among
other things, stressing co-ordination ofannual exams oftheUSoperations offoreign
banks andproviding uniform guidance regarding examination policies withrespect
toclassification ofloansandcircumstances inwhich, forprudential reasons supervisory
requirements suchasassetmaintenance should beconsidered.
(c) Asevidenced bytheprovisions oftheFBOProgram, enhancing theefficiency ofthe
supervisory process asitapplies tostate-licensed branches andagencies offoreign banks
isanimportant objective oftheFederal Reserve.
(3) Citizenship Requirements forBoard Members ofUSFinancial Institutions
(a) TheGovernment oftheUnited States notes theconcern expressed bytheGovernment
ofJapan regarding citizenship requirements thatmaybeimposed formembers ofthe
boards ofdirectors ofUSfinancial institutions. TheGovernment oftheUnited States
alsonotes thattheNational Bank Actrequirement thatevery member oftheboard of
directors ofanational bankbeacitizen oftheUnited States maybemitigated inthe
caseofasubsidiary oraffiliate ofaforeign bank. Inthecaseofanational bankor
affiliate ofaforeign bank, theComptroller oftheCurrency mayathisdiscretion waive
thecitizenship requirement inthecaseofnotmore thanaminority ofthetotalnumber
ofdirectors.
(4) Mutual Entry Between Banks andSecurities Firms
(a) TheUnited States notes theGovernment ofJapan'sinterest inobtaining mutual entry
ofcommercial andinvestment banking business through subsidiaries oraffiliates.
(b) TheAdministration isreviewing theGlass-Steagall Actof1933. Atthispoint, the
Administration believes thatreform ofGlass-Steagall should: maintain thesafety and
soundness offederally-insured depository institutions; minimize risktothefinancial
system, thedeposit insurance funds, andthetaxpayers; avoid extending thefederal
safety net;provide appropriate supervision oftheactivities inquestion; andinclude
adequate safeguards against abuse. TheAdministration iswilling towork withthe
Congress toward achieving Glass-Steagall reform legislation thatwould beconsistent
withtheseobjectives andwould assure theinternational competitiveness ofUSfinancial
services providers.S/FIN/W/1
Page29
(5) Recognition ofMeasures Undertaken
(a) TheGovernment oftheUnited States highly appreciates thatJapan hasconcluded its
depositinterestratederegulationprogrammeandrecognizesthatallbankdepositsexcept
current deposits inJapan nowcarry liberalized ratesofinterest.
VII. COMPETITION POLICY
(1) TheGovernment ofJapan confirms itscommitment tostrictly enforce theAnti-Monopoly Act
("AMA") inallindustries, including thefinancial services sector, against practices that,inlightof
market structure andother factors asappropriate, constitute violations oftheAMA, suchasprivate
monopolization, unreasonable restraints oftrade, orunfair trade practices.
(2) TheGovernment ofJapan confirms thatthere arenoexemptions orregulatory regimes that
shield financial services suppliers from fullapplication oftheAMA, except forthose noted in
Appendix 3.
(3) TheGovernment ofJapan recognizes thattheJapan FairTrade Commission ("JFTC") issued
theAnti-monopoly ActGuidelines Concerning Distribution Systems andBusiness Practices on
11July1991, which isapplicable toallindustries including thefinancial services sector, which describe
specifically,withrespecttotheJapanesedistributionsystemsandbusinesspractices,thetypesofconduct,
including those indicated inAppendix 4,which mayimpede freeandfaircompetition andviolate the
AMA.
(4) Anyperson, including foreign financial service suppliers, mayreport totheJFTC suspected
violations oftheAMA. TheJFTC willreview suchreports promptly andwilltakeappropriate steps
toaddress suchsuspected violations depending onthecontent andreliability oftheinformation.
(5) BothGovernments understand (orrecognize) thatunder Article 28oftheAMA, theJFTC
istoperform itsduties independently.
(6) TheGovernment ofJapan confirms thatanEmployee Pension Fund ("EPF") isalegalentity
independent ofitssponsoring company, established forthepurpose ofensuring steady pension benefits
andimproving thewelfare ofitsmembers. Assuch, anEPFshould notbemanaged either forthe
benefit ofasponsoring company orofacompany withwhom suchsponsoring company hasanequity
affiliation.
(7) TheGovernment ofJapan confirms thatitwillensure, through application oftheEmployees '
Pension Insurance Law, thatpension funddirectors 'fiduciary responsibility isproperly performed.
VIII. CONSULTATIONS
(1) TheGovernment ofJapan andtheGovernment oftheUnited States willmeetannually, orat
anytimeuponrequest ofeither Government, toreview implementation oftheMeasures andtodiscuss
asnecessary other issues regarding themarket forfinancial services.S/FIN/W/1
Page30
IX. ASSESSING IMPLEMENTATION OFTHE MEASURES
(1) AssessmentoftheimplementationoftheMeasures,aswellastheevaluationofprogressachieved,
willbebased onanoverall consideration ofthefollowing objective criteria using dataprovided by
theGovernments. These criteria willbeconsidered asaset,andnoonecriterion willbedeterminative
oftheassessment oftheMeasures, ortheevaluation ofprogress achieved. These criteria donot
constitute numerical targets, butrather aretobeusedforthepurpose ofevaluating progress achieved
toward thegoals oftheUnited States-Japan Framework foraNewEconomic Partnership and,thegoals
ofthissector, assetforth inSection 1.
(2) General
(a) transparency andavailability ofstandards andmeasures inJapan, andmeaningful and
fairopportunities forforeign financial services suppliers inJapan tobeinformed of,
commenton,andexchangeviewswithofficialsregardingmattersrelatedtotheprovision
offinancial services andtoattend meetings andsubmit statements toadvisory groups;
(b) prompt andfairreview ofapplications andnotifications inJapan;
(c) changes thataddress impediments tomarket access inJapan, ifany,arising fromcertain
aspects ofmarket conditions andbusiness practices;
(d) efforts byforeign financial services suppliers andintermediaries toutilize new
opportunities created bytheMeasures; and
(e) implementation ofthemeasures intheMeasures bybothGovernments.
(3) Securities Activities
(a) change andrateofchange, from onereporting period tothenext, inthepercentage,
byvalue, ofnewcorporate issues inJapan andintheUSunderwritten byforeign firms
andunderwritten byforeign firms asleadorco-lead managers;
(b) diversification ofsecurities products andproduct types issued andsoldinJapan;
(c) thevariety ofmaturity andinterest ratestructures inuseintheJapanese corporate bond
market; and
(d) implementation oftheprocedural measures relating totheclarification andexpansion
ofthedefinition ofasecurity.
(4) Cross-Border Capital Transactions
(a) change andrateofchange, from onereporting period tothenext, in:
(i) thenumber ofresident andnon-resident Euroyen market issues;
(ii) thenumber ofnon-resident securities issues intheJapanese market;
(iii) thenumber ofcomprehensive approvals granted toestablish overseas deposit
accounts inexcess ofthe100million yenceiling; andS/FIN/W/1
Page31
(iv) thepercentage, byvalue, ofEuroyen issues underwritten byforeign firms and
underwritten byforeign firms asleadorco-lead managers.
(b) thevariety ofmaturity, interest rate,andother structures intheEuroyen market; and
(c) theextent towhich prior approval/notification requirements areeffectively changed.
(5) Fund Management Activities
(a) change andrateofchange, from onereporting period tothenext, in:
(i) thepercentage ofthenon-public pension funds market inJapan open to
participation byIACs;
(ii) theshare andvalue oftotalpension fundmanagement mandates awarded to
foreign andJapanese trustbanks, lifeinsurance companies andIACs inJapan;
(iii) thenumber offoreign andJapanese IACs newly licensed toengage in
investment trustmanagement business inJapan; and
(iv) thevalue ofinvestment trusts inJapan managed byforeign investment trust
management companies andthevalue offoreign investment trusts soldinJapan
andthevalue ofinvestment company assets intheUSmanaged byforeign
investment advisers.S/FIN/W/1
Page32
APPENDIX 1
Dispositions toApplications
Article Dispositions [provisionally translated]
1. Laws
Banking law
4(i) Licence forbanking business
5(iii) Approval forreduction ofanamount ofcapital
6(iii) Approval forchange oftrade name
7 Approval forconcurrent occupation ofanother postbyadirector
8 Approval forestablishment ofabusiness office, etc.
13(i) Authorization forexception totheceiling ofcredit facilities tooneperson
13(ii) Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis
16-2(i) Approval foracquisition, etc.ofstock shares ofsecurity firms, etc.
16-3 Authorization forexemption from regulations ontransactions, etc.withsubsidiaries
16-4(i) Approval foracquisition andpossession ofstock shares, etc.ofacompany established
abroad
20 Authorization forprolongation ofpublic notice ofabalance sheet andaprofit andloss
statement
30(i) Approval formerger
30(ii) Approval fortransfer oracquisition ofbusiness
30(iii) Approval foracquisition ofbusiness from shinkin banks, etc.
37(i) Approval fortermination ofbusiness, etc.
41(4) Authorization forextension ofvalidity oflicence
47(i) Licence forbanking business foraforeign bank'sbranch
47(ii) Approval forconcurrent occupation ofanother postbyarepresentative ofaforeign bank's
branch
Approval forestablishment ofabusiness office, etc.ofaforeign bank'sbranch
Authorization forexception totheceiling ofcredit facilities tooneperson ofaforeign bank's
branch
Approval fortransfer oracquisition ofbusiness ofaforeign bank'sbranch
Approval fortermination ofbanking business ofaforeign bank'sbranch
55 Authorization forextension ofvalidity ofapproval
annex 5(i)Approval forbusiness concerning government bond, etc.
Approval forchange ofbusiness concerning government bond, etc.
Lawconcerning concurrent operation oftrust business, etc.byfinancial institutions
1(i) Approval forconcurrent operation
5 Approval forchange ofsortsofbusiness, etc.
Approval forestablishment orabolishment ofanagency concerning trustbusiness
5-3(i) Approval forchange oftypical trustcontractsS/FIN/W/1
Page33
Long-term credit bank law
4(i) Licence forbusiness
13-2 Approval foracquisition, etc.ofstock shares ofsecurity firms, etc.
17 Approval forreduction ofanamount ofcapital
Approval forchange oftrade name
Approval forconcurrent occupation ofanother postbyadirector
Approval forestablishment ofabusiness office, etc.
Authorization forexception totheceiling ofcredit facilities tooneperson
Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis
Authorization forexemption from regulations ontransactions, etc.withsubsidiaries
Approval foracquisition andpossession ofstock shares, etc.ofacompany established
abroad
Authorization forprolongation ofpublic notice ofabalance sheet andaprofit andloss
statement
Approval formerger
Approval fortransfer oracquisition ofbusiness
Approval foracquisition ofbusiness from shinkin banks, etc.
Approval fortermination ofbusiness, etc.
Authorization forextension ofvalidity oflicence
20 Authorization forextension ofvalidity ofapproval
Trust business law
1(i) Licence forbusiness
11(ii) Approval formoney management concerning movable property
14 Approval formerger
15 Approval forchange ofthearticles ofcorporation, etc.
Loan trust law
4(i) Authorization fortrustterms
5(i) Authorization forchange oftrustterms
Secured bonds trust law
4(ii) Approval foruseofstocks asacollateral ofbonds
5 Licence forbusiness
17(i) Permission fortrustcontracts withforeign firms
97(ii) Permission forsuccession oftrustbusiness offoreign firms
98 Permission forresignation oftrustee
Foreign exchange bank law
4(i) Licence forbusiness
6(iii) Approval forloans, etc.which arenotnecessary foroverseas transactions, etc.
9-8 Approval foracquisition, etc.ofstock shares ofsecurities firms, etc.
10 Approval forsuccession ofbusiness onacquisition ofbusiness
11 Approval forreduction ofanamount ofcapital
Approval forchange oftrade nameS/FIN/W/1
Page34
Approval forconcurrent occupation ofanother postbyadirector
Approval forestablishment ofabusiness office, etc.
Authorization forexception totheceiling ofcredit facilities tooneperson
Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis
Authorization forexemption from regulations ontransactions, etc.withsubsidiaries
Approval foracquisition andpossession ofstock shares, etc.ofacompany established
abroad
Authorization forprolongation ofpublic notice ofabalance sheet andaprofit andloss
statement
Approval formerger
Approval fortransfer oracquisition ofbusiness
Approval foracquisition ofbusiness from shinkin banks, etc.
Approval fortermination ofbusiness, etc.
Authorization forextension ofvalidity oflicence
14 Authorization forextension ofvalidity ofapproval
Annex (ii)Approval formaintenance ofbusiness offices atthetimeoflicensing asforeign exchange
bank
Annex (iv)Approval forbusiness concerning government bond, etc.
Approval forchange ofbusiness concerning government bond, etc.
Foreign exchange andforeign trade control law
10 Authorization andlicence fordealing inforeign exchange business
11 Approval forcorrespondent arrangements
14 Authorization andlicence fordealing inmoney exchange business
16(i) Licence formaking apayment, etc.
17 Licence formaking apayment, etc.through aspecial way
18 Licence forexport andimport ofmeans ofpayment, etc.
21(i)(1)(2) Licence formaking capital transactions
22(i) Designation fordesignated securities companies
22(ii) Approval forlaying down aSpecial International Finance Transaction Account
Shinkin bank law
4 Licence forbusiness ofshinkin bankandfederation
30(1) Authorization forextension ofvalidity oflicence ofshinkin bankandfederation
31 Approval forchange ofthearticles ofcorporations, etc.ofshinkin bankandfederation
33(i) Approval forconcurrent occupation ofanother post,etc.byadirector, etc.ofshinkin bank
andfederation
44 Approval forsummons ofanextraordinary general meeting bymembers ofshinkin bank
andfederation
53(ix) Approval forunderwriting ofgovernment bond, etc.andforchange thereof byshinkin
bank
53(x) Approval forgovernment bond trading, etc.byshinkin bank
53(xi) Approval fortrustbusiness andforchange thereof byshinkin bank
53(xii) Approval forcommission business ofcorporate debentures, etc.byshinkin bank
54(iii) Approval fortaking deposits from non-members, etc.byshinkin bankfederation
54(viii) Approval forunderwriting ofgovernment bond, etc.byshinkin bankfederation
54(ix) Approvalforgovernmentbondtrading,etcbyshinkinbankfederationandforchangethereof
54(x) Approval fortrustbusiness byshinkin bankfederation andforchange thereofS/FIN/W/1
Page35
54(xi) Approval forcommission business ofcorporate debentures, etc.byshinkin bankfederation
54-2(iii) Approval forbond issuance business bynational federation ofshinkin bank
54-15(i) Approval foracquisition ofstock shares ofsecurity firms, etc.byshinkin bankfederation
54-16(i) Approval foracquisition ofstock shares, etc.ofacompany established abroad byshinkin
bankfederation
54-16(ii) Approval forpossession ofstock shares, etc.ofacompany established abroad byshinkin
bankfederation
58(iii) Approval formerger
87-3 Authorization forextension ofvalidity ofapproval
89(i) Approval fortermination ofbusiness, etc.ofshinkin bankfederation
Authorization forexception totheceiling ofcredit facilities tooneperson byshinkin bank
Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis byshinkin bank
Authorization forexemption fromregulations ontransactions, etc.withsubsidiaries shinkin
bankfederation
Labour credit association law
6 Licence forbusiness oflabour credit association andfederation
30(1) Authorization forextension ofvalidity oflicence oflabour credit association andfederation
33 Approval forchange ofthearticles ofcorporation, etc.oflabour credit association and
federation
36(i) Approval forconcurrent occupation ofanother postbyadirector, etc.oflabour credit
association andfederation
48 Approval forsummons ofanextraordinary general meeting bymembers oflabour credit
association andfederation
58(ix) Approval forunderwriting ofgovernment bond, etc.bylabour credit association
58(x) Approval forgovernment bond trading, etc.bylabour credit association andforchange
thereof
58(xi) Approval fortrustbusiness bylabour credit association andforchange thereof
58-2(ii) Approval fortaking deposits from non-members andleading loans tonon-members by
federation
58-(2)(vi) Approval forunderwriting ofgovernment bond, etc.byfederation
58-2(vii) Approval forgovernment bond trading, etc.byfederation andforchange thereof
58-2(viii) Approval fortrustbusiness byfederation andforchange thereof
58-2(ix) Approval forcommission business ofbonds, etc.byfederation
58-3(i) Approval foracquisition ofstock shares ofsecurity firms, etc.byfederation
62(iii) Approval formerger, etc.oflabour credit association andfederation
91-3 Authorization forextension ofvalidity ofapproval
94(i) Approval fortermination anddissolution ofbusiness oflabour credit association and
federation
Authorization forexception totheceiling ofcredit facilities tooneperson bylabour credit
association andfederation
Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis bylabour credit association andfederation
Authorization forexemption from regulations ontransactions, etc.withsubsidiaries by
federation
Lawforsmall business cooperatives, etc.
27-2(i) Approval forestablishment ofbusiness cooperatives, etc.S/FIN/W/1
Page36
48 Authorization forsummons ofanextraordinary general meeting bymembers
51(ii) Approval forchange ofthearticles ofcorporation
57-2 Approval forchange ofstatement ofbusiness methods, etc.offiremutual insurance
cooperatives, etc.
57-5 Approval forrelaxation oflimitation onsurplus funds management forfiremutual insurance
cooperatives, etc.
62(iv) Approval fordissolution offiremutual insurance cooperatives, etc.
63(iii) Approval formerger
Lawconcerning financial business conducted bycredit cooperatives
3(i)(1) Approval fordomestic exchange business
3(i)(2) Approval forunderwriting ofgovernment bond, etc.
3(i)(3) Approval forsecurity activities
3(i)(4) Approval forconcurrent operation oftrustbusiness
3(i)(5) Approval forcommission business ofbonds, etc.
3(i)(6) Approval fortaking deposits from non-members andlending loans tonon-members
3(i)(7) Approval forchange ofsortsofmethods ofbusiness
3(i)(8) Approval fortransfer ofanoffice
3(i)(9) Approval forestablishment orabolishment ofanagency
3(ii) Approval forchange ofbusiness methods, etc.concerning security activities andforchange
thereof
3(iii) Approval forchange ofsortsandmethods oftrustbusiness
6(i) Authorization forexception totheceiling ofcredit facilities tooneperson
Authorization forexception totheceiling ofcredit facilities tooneperson onaconsolidated
basis
Authorization forexemption from regulations ontransactions, etc.withsubsidiaries
Approval fortermination anddissolution ofbusiness
7-4 Authorization forextension ofvalidity ofapproval
Mutual loanbusiness law
3(i) Licence formutual loanbusiness
8 Approval forchange ofbasic business conditions
19 Approval forconcurrent occupation ofanother postbyadirector
21 Approval formerger, transfer andacquisition ofbusiness
21-7 Approval formanagement contract
21-11(iii) Approval forcancellation ofmanagement contract
27 Approval forabolishment ofbusiness, etc.
Credit guarantee corporation law
6(i) Approval forestablishment
23(iii) Approval fordecision ondissolution bydirectors
24(iii) Approval fordecision onmerger bydirectors
33(i) Approval forchange ofthearticles ofcorporation orstatements ofbusiness methods
Lawconcerning merger andconversion offinancial institutions
6(i) Approval formerger andconversion offinancial institutionsS/FIN/W/1
Page37
6(viii) Approval formerger andconversion offinancial institutions (incaseoflabour credit
association)
17(iii) Authorization forexception tosuccession ofbusiness
17-2(i) Authorization forexception tobond issuance (incaseofordinary banks)
17-2(iii) Authorization forexception tobond issuance (incaseofforeign exchange banks)
17-3(i) Authorization forexception toestablishment ofabusiness office, etc.
29(iii) Authorization forextension ofvalidity ofapproval
29(iv) Authorization forextension ofvalidity ofapproval (incaseoflabour credit association)
Securities andexchange law
24(i) Authorization ofexemption from therequirement tofileasecurities report
25(iv) Application forexemption ofregistration statement, securities report, etc.fromthepublic
inspection
28 Licence toengage inthesecurities business
33 Approval tochange astateofbusiness
34 Approval ofmerger, discontinuance anddissolution, etc.
42 Authorization foradirector ofasecurities company toengage inthemanagement ofother
companies
42-2(i) Authorization foradirector oranauditor ofasecurities company todouble asadirector,
anauditor, oranemployee ofitsparent corporation
42-2(ii) Authorization foradirector, anauditor oranemployee ofasecurities company todouble
asadirector oranauditor ofitssubsidiary corporation
43 Authorization toengage inabusiness other thanthesecurities business
43-2(i) Approval toestablish abanksubsidiary
50-2(i) Authorization ofexception totheFireWallmeasures
50-3(iii) Acknowledgment ofanaccident asthecause ofaloss
57(ii) Authorization touseareserve fortrading loss
59(ii) Authorization touseareserve forliabilities arising from trading insecurities
62(i) Registration ofrepresentatives
64-5(iii) Approvalofarticlesofincorporationofasecuritiesdealersassociationrelatingtoregistration
ofrepresentatives
65-2(i) Approval forabank, trustcompany orother financial institutions toengage inthesecurities
business
65-2(iv) Acknowledgment ofanaccident asthecause ofalossforanapproved financial institution
65-2(v) Authorization touseareserve forliabilities arising fromtrading insecurities byanapproved
financial institution
66-5 Authorization todothebusiness ofselling securities onaninstalment plan
68(ii) Approval tofound asecurities dealers association
74(ii) Approval toamend articles ofincorporation ofasecurities dealers association
76 Approval ofregulations ofsecurities dealers association relating toregistration of
over-the-counter securities
79-19(ii) Approval ofresolution passed byageneral meeting ofasecurities dealers association to
dissolve itself
81(ii) Licence tofound asecurities exchange
85-2(i) Approval toamend articles ofincorporations, etc.ofasecurities exchange
97(ii) Authorization ofdesignation ofsecurities tosubstitute foramembership bond
97(iii) Authorization ofthevalue ofsecurities tosubstitute foramembership bond
110 Authorization oflisting ofsecurities
112 Authorization ofdelisting ofsecurities
113 Prior authorization foranissuers 'delisting securitiesS/FIN/W/1
Page38
134(ii) Approval ofresolution passed byageneral meeting ofmembers ofanexchange todissolve
itself
156-3(i) Licence torunasecurities finance company
156-6(i) Authorization torunanybusiness other thanthebusiness oflending money orsecurities
tomembers ofsecurities exchanges
156-7 Approval tochange anyprovision ofarticles ofincorporation, etc.regarding asecurities
finance company
156-14 Approvalofresolutionofasecuritiesfinancecompanytodiscontinueitsbusinessordissolve
itself
174(ii) Authorization tohaveanattorney-in-fact appear attheMinistry forthemediation
193-2(i) Authorization ofexemption from therequirement toobtain audit report
Securities investment trust law
6(i) Licence tobecome aninvestment trustmanagement company
9 Approval tochange basic items ofaninvestment trustmanagement company
12(i) Authorization oftheterms ofthetrust
14(i) Authorization ofamendment totheterms ofthetrust
15(i) Authorization ofcancellation ofacontract oftrust
18(i) Authorization toengage inanynewbusiness notrelated tothecontract oftrust
20-3 Authorizationforadirectorofaninvestmenttrustmanagementcompanytoengageinregular
affairs ofanother company
20-4 Approval ofdiscontinuance, etc.ofbusiness ofinvestment trustmanagement company
23-2(iii) Authorization ofcontinuance ofacontract oftrust
24-5 Approval ofmaking orchanging aregulation oftheAssociation
25-2(iii) Authorization toextend thedeadline forlicence orapproval tocarry outbyinvestment
trustmanagement company
Lawonforeign securities firms
3 Licence foraforeign securities firmtoengage inthesecurities business
10 Approval tochange thelocation ofabranch ofaforeign securities company, etc.
11 Approval ofassignment oracquisition bytransfer ofsecurities business andof
discontinuation ofsecurities business
13(i) Permission ofapartoftheunderwriting business
17(i) Authorization foradirector, etc.toengage inthemanagement ofother companies and/or
todouble asadirector, etc.ofaspecified judicial person
Authorization toengage inbusiness other thanthesecurities business
Acknowledgment ofanaccident asthecause ofaloss
Acknowledgment ofexception totheFireWallmeasures
22 Registration ofrepresentatives
23 Authorization touseareserve fortrading loss
Authorization touseareserve forliabilities arising from trading insecurities
24(ii) Authorization touseareserve forlosses tomake upforanetlossofthebranch
27 Authorization tohaveone'sattorney-in-fact appear attheMinistry forthemediation
Lawforregulating securities investment advisory business
6(i) Registration ofaninvestment adviser
24 Approval toengage inthediscretionary investment management businessS/FIN/W/1
Page39
28 Approval tochange inthenature andmethod ofadiscretionary investment management
business
30 Authorization foradirector ofadiscretionary investment management company toengage
inthemanagement ofother companies
31 Authorization toengage inabusiness other thaninvestment advisory business anda
discretionary investment management business
Lawconcerning regulations ofmoney lending business
3(i) Registration ofmoney lending business
3(ii) Change ofregistration ofmoney lending business
Lawconcerning regulations ofmortgage companies
3 Registration ofmortgage company
8(i) Authorization forrenewal ofvalid term
27(i) Nomination oftheMortgage Securities Depository Corporation
28(ii) Authorization forpartial entrustment ofbusiness oftheMortgage Securities Depository
Corporation
29(i) ApprovalforbusinessruleoftheMortgageSecuritiesDepositoryCorporationandforchange
thereof
31(i) Approval forbusiness planandrevenue andexpenditure planoftheMortgage Securities
Depository Corporation andforchange thereof
32(i) Approval forappointment anddismissal ofadirector oftheMortgage Securities Depository
Corporation
Financial futures trading law
14 Licence forestablishment offinancial futures exchange
17(i) Approval forchange ofthearticles ofcorporation, etc.offinancial future exchange
27(iii) Authorization forprices ofsecurities eligible formembership deposits
30(ii) Approval forappointment anddismissal ofpresident
49(ii) Approval forgeneral meeting 'sdecision todissolve theexchange
56 Permission forafinancial futures trader
61(i) Authorization forrenewal forpermission forafinancial future trader
62 Approval forchange ofsortsandmethods ofbusiness
82(ii) Authorization ofutilization ofliable reserves fortrading
Lawconcerning regulations ofpre-paid cards
6 Registration ofthethirdparty pre-paid cardissuer
Lawonsimplification ofbusiness ofbanks, etc.
7(i) Approval forchange ofcollateral ofbonds
7(ii) Approval forchange ofpriority ofrights oncollateral ofbonds
Lawconcerningcentraldepositoryandbook-entrydeliveryforsharecertificatesandothersecurities
3(i) Designation ofasecurities depository centre
4(ii) Authorization ofpartial commission ofasecurities depository centre 'spowerS/FIN/W/1
Page40
5(i) Approval ofbusiness regulation
Approval tomake changes ofbusiness regulation
7(i) Approval ofannual business plan
Approval tomake changes ofannual business plan
8(i) Approval ofnomination ordischarge ofanofficer
2. Cabinet Orders
Enforcement order ofbanking law
5(ii) Authorization forholidays based onspecial reasons concerning location ofbusiness offices,
etc.
13(i) Authorization forcompensating losswithprofit reserve inforeign bankbranches
13(iii) Authorization forexception toprofit reserves among branches ofoneforeign bank
Enforcement order oflong-term credit bank law
6 Authorization forholidays based onspecial reasons concerning location ofbusiness offices,
etc.
Enforcement order offoreign exchange bank law
6 Authorization forholidays based onspecial reasons concerning location ofbusiness offices,
etc.
Enforcement order ofshinkin bank law
5(ii) Authorization forexcess possession ofshares ofshinkin bank
12(ii) Authorization forholidays based onspecial reasons concerning business offices, etc.by
shinkin bankandfederation
Enforcement order oflabour credit association law
6(ii)2 Authorization forholidays based onspecific reasons concerning location ofbusiness offices,
etc.
Enforcement order oflawconcerning financial business conducted bycredit cooperatives
4(ii)2 Authorization forholidays based onspecific reasons concerning location ofbusiness offices,
etc.
Cabinet order forenforcement ofthesecurities andexchange law
3-5 Authorization ofthefiling period ofasecurities report
Cabinet order forenforcement ofthelawonforeign securities firms
8(4) Authorization ofcancellation orchange ofacontract which substitutes fordepositing a
performance bond
10(i) Authorization ofwithdrawal ofaperformance bond
10(ii) Authorization ofwithdrawal oftheexcess amount ofaperformance bondS/FIN/W/1
Page41
Cabinet order forenforcement ofthelawforregulating securities investment advisory business
3(3) Authorization ofcancellation orchange ofacontract which substitutes fordepositing a
performance bond
5(i) Authorization ofwithdrawal ofaperformance bond
5(ii) Authorization ofwithdrawal oftheexcess amount ofaperformance bond
7(i) Authorization ofaperiod during which aforeign investment adviser shallfileitsbusiness
report
Enforcement order offinancial futures trading law
9 Authorization forprolongation ofsubmission period ofbusiness report byforeign financial
futures trader
Enforcement order oflawconcerning regulations onpre-paid cards
10(i) Authorization forrestoration ofdeposits forissuance
Cabinet order forenforcement ofthelawonrecording ofbonds
10-1 Approval ofacommission forrecording ofacorporate bond, etc.
3. Ministerial ordinances, etc.
Enforcement regulation ofbanking law
18(iii) Authorization forprolongation ofsubmission period ofinterim business report andbusiness
report
Enforcement regulation oflawconcerning concurrent occupation oftrustbusiness, etc.byfinancial
institutions
7-2(ii) Authorization forchange incontent oftrustbusiness ofagencies
11(iii) Authorization forprolongation ofsubmission period oftrustbusiness report
13 Authorization forextension ofvalidity ofapproval
Enforcement regulation oflong-term credit bank law
17(iii) Authorization forprolongation ofsubmission period ofinterim business report andbusiness
report
Detailed enforcement regulation oftrust business law
4 Authorization forprolongation ofvalidity oflicence
24(ii) Authorization forprolongation ofsubmission period ofbusiness report
Detailed enforcement regulation ofsecured bonds trust law
26-3(i) Authorization forprolongation ofsubmission period ofbusiness reportS/FIN/W/1
Page42
Enforcement regulation offoreign exchange bank law
19(iii) Authorization forprolongation ofsubmission period ofinterim business report andbusiness
report
Enforcement regulation ofShinkin bank law
20(ii) Authorization forprolongation ofsubmission period ofbusiness report ofshinkin bank
andfederation
Enforcement regulation oflabour credit association
16(ii) Authorization forprolongation ofsubmission period ofbusiness report oflabour credit
association andfederation
Enforcement regulation onlawconcerning financial business conducted bycredit cooperatives
12(ii) Authorization forprolongation ofsubmission period ofbusiness report
Detailed enforcement regulation onmutual loanbusiness law
6 Approval forexcess benefit ofmutual loan
9 Authorization forextension ofvalidity ofbusiness licence
12(i) Authorization forextension ofvalidity ofapproval forchange ofcapital amount, etc.
12(ii) Authorization forextension ofvalidity ofapproval forestablishment ofbusiness office,
etc.
12(iii) Authorization forcharge oflocation ofestablishment ofbusiness offices atthetimeof
application
14 Approval forchange oflocation ofagencies
15(ii) Authorization forprolongation ofsubmission period ofbusiness report
Ordinance oftheMinistry ofFinance onsecurities company
2-2(ii) Authorization ofnotmoving aplace ofbusiness backtoitsoriginal location within two
years
13(ii) Authorization toomitwhole orapartofdocuments relating tobusiness
Ordinance oftheMinistry ofFinance onforeign security firms
17-2(ii) Authorization ofnotmoving abranch backtoitsoriginal location within twoyears
24(iii) Authorization ofsubordinated borrowing
28(ii)(3) Recognition ofassetasanappropriate holding assetinthiscountry
29 Authorization toomitwhole orapartofdocuments relating tobusiness
Enforcement regulation offinancial futures trading law
5 Authorization fordesignation ofsecurities eligible formember deposit
Enforcement regulation oflawconcerning regulations ofpre-paid cards
17(i) Approval fordischarge ofconservation contract ofissuance depositS/FIN/W/1
Page43
Regulation ondeposit forissuance ofpre-paid cards
4 Approval forchange ofcollateral forissuance
Ministry ofFinance andMinistry ofInternational Trade andIndustry Notification No.8,1953
1(i)(6) Authorization forpossession ofsecurities
Ordinance oftheMinistry ofFinance onCapital Adequacy forSecurities Company
2(5) Authorization ofsubordinated borrowing
Ordinance oftheMinistry ofFinance onTerminology, Forms andMethod ofPreparation of
Financial Statements, etc.
3 Authorization ofapplication oflawsandordinances applicable toabusiness other than
principal business
Ordinance oftheMinistry ofJustice andtheMinistry ofFinance forEnforcement oftheLaw
onRecording ofBonds
17-2(i) Permission ofpreservation inmicrofilms ofaclosed bond recording register
50-2(i) Authorization ofform ofabond recording registerS/FIN/W/1
Page44
APPENDIX 2
Unfavourable Dispositions
Article Dispositions [provisionally translated]
1. Laws
Banking law
26 Order tosuspend banking business, etc.
27 Cancellation ofbanking licence, dismissal order todirectors, etc.
28 Cancellation ofbanking licence
29 Order toconserve assets inJapan
Lawconcerning concurrent operation oftrust business, etc.byfinancial institutions
4 Order tochange business methods andsuspension ofoperator, etc.
8 Suspension ofoperation, cancellation ofapproval forconcurrent operation
Long-term credit bank law
17 Order tosuspend long-term credit banking business, etc.
Cancellation oflicence forlong-term credit bank, dismissal order todirectors, etc.
Order toconserve assets inJapan
Trust business law
18 Order tochange ofbusiness method andsuspension ofoperation, etc.
19 Dismissal order todirectors, cancellation oflicence, etc.
Foreign exchange bank law
11 Order tosuspend foreign exchange banking business, etc.
Cancellation oflicence forforeign exchange bank, dismissal order todirectors, etc.
Order toconserve assetsinJapan
Foreign exchange andforeign trade control law
11-2 Imposition ofalimitation ofauthorized foreign exchange banks 'foreign exchange position
13 Revocation ofanauthorization asanauthorized foreign exchange bank
14(ii) Revocation ofanauthorization asamoney exchanger
23(vii) Direction toalterconditions of,ortosuspend execution ofcapital transaction
27(x) Direction toalterparticulars of,ortosuspend execution ofdirect domestic investment
30(vii) Direction toalterparticulars of,ortosuspend conclusion ofagreement forimportation
oftechnologyS/FIN/W/1
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Shinkin bank law
89(i) Order tosuspend business, etc.ofshinkin bankandfederation
Cancellation oflicence, dismissal order todirectors, etc.ofshinkin bankandfederation
Cancellation oflicence forshinking bankandfederation
Labour credit association law
94(i) Order tosuspend business oflabour credit association orfederation, etc.
95(i) Order tosuspend business, dismissal order todirectors, etc.oflabour credit association
offederation
95(ii) Cancellation ofbusiness licence forlabour credit association orfederation
Lawforsmall business co-operatives, etc.
9-7-5(ii) Cancellationofregistration,ordertosuspendbusiness,etc.(concerningfiremutualinsurance
co-operatives)
106(i) Necessary order toco-operatives, etc.
106(ii) Dissolution order toco-operatives, etc.
106(3) Order tochange thewayofbusiness execution, etc.(concerning firemutual insurance
co-operatives)
Order tochange basic documents (concerning firemutual insurance co-operatives)
Cancellation oflicence, dismissal order todirectors, etc.(concerning firemutual insurance
co-operatives)
Mutual loanbusiness law
24 Order tochange thewayofbusiness execution andsuspension ofoperation, etc.
25 Order tosuspend business, dismissal order ofdirectors, etc.,cancellation oflicence
26 Cancellation oflicence formutual loancompany insuspension ofbusiness
28(i) Order todeposit assetofmutual loancompany tochange business
Credit guarantee corporation law
36(i) Dismissal order todirectors, order tosuspend business, etc.
36(ii) Cancellation ofapproval forestablishment, dismissal order todirectors, etc.
Securities andexchange law
9(i) Order tofileanamended registration statement duetodefective form, etc.
10(i) Order tofileanamended registration statement duetofalsedescription, etc.
Order tosuspend theeffect ofregistration
11(i) Order tosuspend theeffect ofregistration orshelf-registration, andextension oftheperiod
necessary foraregistration statement tobeeffective
23-5(ii) Order tosuspend theeffect ofashelf-resignation
23-9(i) Order tofileanamended shelf-registration statement duetodefective form,etc.
23-10(i) Order tofileanamended shelf-registration statement duetofalsedescription, etc.
23-10(iii) Order tosuspend theeffect ofashelf-registration
23.10(v) Order tofileanamended shelf-registration statement, andorder tosuspend theeffect of
ashelf-registrationstatement,duetofalsedescriptioninamendedshelf-registrationstatementS/FIN/W/1
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23-11(i) Order tosuspend theeffect ofregistration andshelf-registration, orextension oftheperiod
necessary forthese statements tobeeffective, duetofalsedescription inshelf-registration
statement, supplementary documents, reference documents, etc.
24-2(i) Order tofileanamended securities report duetodefective form orfalsedescription
24-3 Order tosuspend theeffect ofregistration statement andshelf-registration statement, or
extension oftheperiod necessary forthesestatements tobeeffective duetofalsedescription
insecurities report
24-5(iv) Order tofileanamended semi-annual report orcurrent report duetodefective form or
falsedescription
27 Application oftheprovisions mutuatis mutandis toentities other thancorporations
27-7(ii) Order tomake apublic notice orpublic announcement ofcorrections regarding apubic
notice ofthecommencement oftender offer
27-8(ii) Order tofileanamended registration statement oftender offer duetodefective form
27-8(iv) Order tofileanamended registration statement oftender offer duetofalsedescription
27-10(ii) Order tofileanamended statement ofposition duetodefective formorfalsedescription
27-13(iii) Order tofileanamended tender offer report duetodefective form orfalsedescription
27-29(i) Order tofileanamended substantial share-holding report andamended report ofchange
35(i) Revocation oflicence ofsecurities company
Order tosuspend business ofasecurities company
35(ii) Order todischarge adirector oranauditor ofasecurities company
42-2(iii) Order todischarge adirector oranauditor ofasecurities company
Order totakenecessary measures
53(ii) Order topublish abusiness report ofasecurities company onanewspaper
54(i) Order tochange amethod ofbusiness ofasecurities company
Order tosuspend business ofasecurities company
Order toinsure theeffectiveness ofsupervision toasecurities company
60(i) Order toholdinthecountry apartofassetofasecurities company
64-3(i) Revocation ofaregistration ofaregistered representative
Order tosuspend adutyofaregistered representative
64-5(v) Order toasecurities dealers association torevoke registration ofaregistered representative
andtosuspend adutyofaregistered representative
65-2(iii) Revocation ofapproval ofanapproved financial institution
Order tosuspend business ofanapproved financial institution
65-2(v) Order tochange amethod ofbusiness ofanapproved financial institutions
Order tosuspend business ofanapproved financial institution
Order toinsure theeffectiveness ofsupervision toanapproved financial institution
Order tosuspend business ofanapproved financial institution against non-fulfillment of
amemorandum ofagreement
72 Revocation ofapproval tofound asecurities dealers association
79 Ordertoasecuritiesdealersassociationtorevokearegistrationofaover-the-countersecurity
79(ix) Order toasecurities dealers association todischarge itsofficer
79(xii) Order tomake changes inthearticles ofincorporation andother regulations ofasecurities
dealers association
79(xiii) Revocation ofapproval ofasecurities dealers association
Order toasecurities dealers association todischarge itsofficer
Order toasecurities dealers association tosuspend itsbusiness
85 Revocation oflicence tofound asecurities exchange
103 Order toasecurities exchange todischarge itsofficer
111 Order toasecurities exchange tolistashare forthepurpose oftradingS/FIN/W/1
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119 Order toasecurities exchange tosuspend thetrading ofsecurities
Order toasecurities exchange todelist asecurity
155(i) Revocation oflicence ofasecurities exchange forreasons ofviolation ofthelawsand
regulations, etc.
Order tosuspend business ofasecurities exchange forreasons ofviolation ofthelaws
andregulations, etc.
Order todischarge aofficer ofasecurities exchange forreasons ofviolation ofthelaws
andregulations, etc.
Order tosuspend purchase orsaleofsecurities onasecurities exchange forreasons violation
ofthelawsandregulations, etc.
156 Order tomake changes inthearticles ofincorporation andbusiness regulations, etc.of
asecurities exchange
156-5 Revocation oflicence tofound asecurities finance company
156-8 Order tochange methods orconditions ofloans ofasecurities finance company
156-10(iii) Order forsecurities finance company todismiss itsofficer
156-12 Revocation oflicence ofasecurities finance company forreasons ofviolation ofthelaws
andregulations, etc.
Order tosuspend business ofasecurities finance company forreasons ofviolation ofthe
lawsandregulations, etc.
178 Order tosuspend business andsecurities trading onthesecurities
Market against non-fulfillment ofamemorandum ofagreement
193-2(v) Decision nottoaccept audit report byacertified public accountant, etc.whohavemade
undue audit report
Securities investment trust law
22(i) Revocation oflicence foraninvestment trustmanagement company
23(i) Revocation oflicence foraninvestment trustmanagement company
Prohibition toenter intoanewcontract oftrust, etc.
23-2(i) Order toaninvestment trustmanagement company ortrustee company totransfer business
under acontract oftrusttoanother investment trustmanagement company ortrustee
company
24 Order topublish inanewspaper matters concerning trustamendments, etc.
24-7 Order totheAssociation torevise thearticles ofassociation oritsregulation
24-8 Order totheAssociation todischarge itsofficer
Lawonforeign securities firms
8(iii) Order todeposit whole orapartofanamount equivalent tothecontract amount
9(ii) Order topayaconsiderable sumofmoney inremuneration toanappointed deputy manager
12(i) Revocation oflicence
Order tosuspend business ofaforeign securities company
12(ii) Order todismiss arepresentative ortodischarge anofficer ofabranch offoreign securities
company
13(iii) Revocation ofpermission ofapartoftheunderwriting business
17(i) Order toforeign securities company todischarge itsrepresentative orofficer ortotake
necessary measures
19(ii) Order toaforeign securities company topublish itsbusiness report onanewspaper
20 Order tochange amethod ofbusiness ofaforeign securities company
Order tosuspend business ofaforeign securities company
Order toinsure theeffectiveness ofasupervision toaforeign securities companyS/FIN/W/1
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22 Revocation ofregistration ofaregistered representative
Order tosuspend adutyofaregistered representative
27 Order tosuspend business ofaforeign securities company andtosuspend securities trading
onthesecurities market against non-fulfillment ofamemorandum ofagreement
Lawforregulating securities investment advisory business
37(i) Order toimprove amethod ofbusiness ofaninvestment adviser
38(i) Revocation ofregistration ofaninvestment adviser
39(i) Revocation ofapproval toengage inthediscretionary investment management business
47(i) Order necessary forthesupervision ofactivities ofanassociation
48(iv) Order necessary forthesupervision ofactivities oftheNational Federation ofSecurities
Investment Advisers Association
Lawconcerning money lending business
36(i) Order tosuspend business formoney lenders
37(i) Cancellation ofregistration ofmoney lenders
Lawconcerning regulations ofmortgage companies
23(i) Corrective order tomortgage companies
24(i) Cancellation ofregistration ofmortgage companies, etc.
29(iii) Order tochange business ruleoftheMortgage Securities Deposit Corporation
32(ii) Dismissal order todirectors oftheMortgage Securities Deposit Corporation
35 Supervisory order totheMortgage Securities Deposit Corporation
36(i) Cancellation ofnomination oftheMortgage Securities Deposit Corporation
42 Order tocorporate withtheAssociation ofMortgage Companies
Financial futures trading law
45 Limitation onfinancial futures trading, etc.ofmembers
53(i) Cancellation oflicence forestablishment offinancial futures exchange, etc.
53(iii) Dismissal order todirectors offinancial future exchange
54(i) Dismissal order tomembers, order tosuspend trading
54(ii) Dismissal order todirectors ofmembers
55(i) Order tochange thearticles ofcorporation offinancial futures exchange, etc.
78(i) Corrective order tofinancial futures traders
79(i) Cancellation oflicence forfinancial futures traders, suspension ofbusiness
79(iii) Dismissal order todirectors offinancial futures traders
83(i) Order toconserve assets offinancial futures traders
Lawconcerning regulations ofpre-paid cards
13(iv) Order todeposit ofguarantee forissuance
19(i) Corrective order tothirdparty typepre-paid cardissuer
20(i) Cancellation ofregistration ofthird-party typepre-paid cardissuers, etc.S/FIN/W/1
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Lawconcerningcentraldepositoryandbook-entrydeliveryforsharecertificatesandothersecurities
5(iv) Order tochange abusiness regulation
8(ii) Order toasecurities depository centre todischarge itsofficer
10 Necessary order tosupervise asecurities depository centre
12(i) Revocation ofdesignation asasecurities depository centre
Lawonrecording ofbonds
9 Supervision ofarecording agency ofcorporate bond, etc.
2. Cabinet Orders
Cabinet order forenforcement ofthelawonrecording ofbonds
8 Order totakeadequate measures incasethere isafearthatabond recording register
vanishes
3. Ministerial Ordinances
Enforcement regulation oflawconcerning regulations ofmortgage companies
24 TheAssociation 'scorporation withMinister ofFinance.
Enforcement regulation oflawconcerning regulations ofpre-paid cards
18(iv) Order tofilearegular statement ofdeposit ofissuance guarantee.
Regulation ondeposit forissuance ofpre-paid cards
3(v) Order tofilearegular statement ofdeposit ofissuance guarantee.
Ordinance oftheMinistry ofJustice andtheMinistry ofFinance forenforcement oftheLaw
onrecording ofbonds
18 Order toarecording agency torecord.S/FIN/W/1
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APPENDIX 3
Exemptions from Anti-Monopoly Act(AMA) inFinancial Services intheMeasures
(1) Theactionsofthefollowingentitiesareinprincipleexemptfromtheapplicationoftheprovisions
ofAMA asco-operatives defined inArticle 24ofAMA:
(i) Shinkin banks (including federations ofthose) defined inArticle 7ofShinkin Bank
Law;
(ii) labour credit associations (including federations ofthose) defined inArticle 9ofLabour
Credit Association Law; and
(iii) small business co-operatives (including federations ofthose) defined inArticle 7of
LawforSmall Business Co-operatives, etc.
(2) Following associations defined bythefollowing lawsareexempt from theapplication ofthe
provisions ofArticle 8ofAMA based upontheprovision ofArticle 2oftheActConcerning Exemption,
etc.from theAntimonopoly Act:
(i) Law forSmall Business Co-operatives, etc.(Federation ofSmall Business Co-
operatives);
(ii) Shinkin Bank Law(Federation ofShinking Banks);
(iii) Credit Guarantee Corporation Law(Credit Guarantee Corporation);
(iv) FinancialFuturesExchangeLaw(FinancialFuturesExchanges,AssociationofFinancial
Futures Traders); and
(v) Securities andExchange Law(Stock Exchanges, Securities Dealers Association).S/FIN/W/1
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APPENDIX 4
TheAntimonopoly ActGuidelines Concerning Distribution Systems andBusiness Practices
(excerpt)
PartI TheAntimonopolyGuidelinesConcerningtheContinuityandExclusivenessofBusiness
Practices among Firms
Chapter 4 Restrictions onTrade Partners ofDealing withCompetitors
2. Restrictions onTrade Partners ofDealing withCompetitors
Incases where aninfluential firminamarket bymeans ofthefollowing manners, engages
intransactions withitstrading partners oncondition thatthetrading partners shall notdealwith
competitors ofthefirmoranother firmhaving closerelations withthefirmorcauses thetrading partners
torefuse todealwiththose above-mentioned competitors, andifsuchconduct mayresult inreducing
business opportunities ofthecompetitors andmaking itdifficult forthemtoeasily findalternative trading
partners, suchconduct isillegal asunfair tradepractices (Article 2(Other Refusal toDeal), 11(Dealing
onExclusive Terms), or13(Dealing onRestrictive Terms) oftheGeneral Designation):
(i) Aninfluential material supplier inamarket, bynotifying orsuggesting toitscustomers
(manufacturers) thatitintends todiscontinue thesupply ofmaterial tothecustomers
iftheycarry onbusiness withother material suppliers, requests thecustomers notto
carryonbusiness withothermaterial suppliers, (Article 11oftheGeneral Designation);
(ii) Afinished product manufacturer influential inamarket requests aninfluential parts
manufacturer nottosellparts ortorestrict thesales ofparts tocompeting finished
product manufacturers, andobtains consent fromsuchpartsmanufacturer tothateffect
(Article 11or13oftheGeneral Designation);
(iii) Aninfluential financial firminamarket provides finance foraninfluential distributor
oncondition thatthedistributor exclusively deals withamanufacturer having close
relations withthefinancial firm; or
(iv) Aninfluential manufacturer inamarket causes itscustomers (distributors) nottoaccept
anoffer oftransactions byaspecific manufacturer attempting toenter themarket
(Article 2oftheGeneral Designation).
Chapter 7 Acquisition orPossession ofStocks ofTrading Partners andAnticompetitive Effects
3. Exclusionary Conduct byMeans orbyreason ofHolding ofStocks ofTrading Partners
Incases where afirmholds stocks oforisinacross stockholding relationship withanyof
itstrading partners, eveniftheproportion ofstockholding isnotparticularly high, theformer canuse
itsposition asastockholder toinfluence decision-making processes bythelatter, andmaythereby engage
insuchconduct asimpairing thelatter'sindependent judgement inselecting trading partners, etc.
Furthermore, incases where afirmhasarelationship ofeither unilateral orcross stockholdings with
itstrading partners, thefirmmayrefuse todealwithother firms having nostockholding relationship
withit,withtheintent ofexcluding themfromamarket. Suchconduct mayimpair thechoice oftrading
partners through theirownindependent judgement based onprice, quality, service, andothertransactionS/FIN/W/1
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terms. Itmayalsoreduce business opportunities ofnewentrants orother firms having nostockholding
relationship, andmaypresent aproblem under theAntimonopoly Act.
(1) Restrictions ontrading partners 'dealings withcompetitors bymeans ofstockholding
Incases where aninfluential firminamarket, holding stocks ofanyofitstrading partners,
engages inthefollowing types ofconduct, forinstance, andifsuchconduct mayresult inreducing
business opportunities ofcompetitors andmaking itdifficult forthemtoeasily findalternative trading
partners, suchconduct isillegal asunfair trade practices;
(i) Aninfluential finished product manufacturer inamarket notifies itsparts supplier,
whose stocks itholds, ofitsintention todispose ofthestocks andsuspend business
withthesaidsupplier ifthelatter sellsparts totheformer 'scompetitors whoare
attempting toenter themarket, ormakes suggestions tothateffect, andthereby
discourages thelatter fromdealing withthesaidcompetitors (Article 2(Other Refusal
toDeal) oftheGeneral Designation); or
(ii) Aninfluential manufacturer inamarket, bymaking useofitsposition asastockholder,
induces itsdistributor, whose stocks itholds, togiveconsent totheeffect thatthelatter
willdealonlyintheformer 'sproducts (Article 11(Dealing onExclusive Terms) of
theGeneral Designation).
(2) Refusal todealbyreason ofpresence orabsence ofstockholding relationship
Itisbasically amatter offreedom ofchoice oftrading partners forafirmtodecide which firm
itdoesbusiness with. However, incases where aninfluential firminamarket, inanyofthefollowing
manners, forinstance, refuses todealwithother firms having nostockholding relationship withit,
withaviewtoexcluding themfromthemarket, andifsuchconduct maymake itdifficult fortherefused
firmtoengage innormal business activities, suchconduct isillegal asunfair tradepractices (Article 2
(Other Refusal toDeal) oftheGeneral Designation):
(i) Aninfluential finished product manufacturer inamarket stopspurchasing fromaparts
manufacturer which hasnostockholding relationship withit,withaviewtoexcluding
thecompetitors ofaparts manufacturer which doeshaveastockholding relationship
withit;or
(ii) Aninfluential parts manufacturer having astockholding relationship withafinished
product manufacturer, rejects aproposal forpurchase ofparts byafirmattempting
toenter thefinished product market, byreason oftheabsence ofstockholding
relationship withtheparts manufacturer.