The Japanese Financial Services Authority has proposed wide-ranging reforms of the markets with a package of securities, banking and taxation changes. The reforms are designed to increase the global competitiveness of Japanese financial markets and increase the diversity of financial products while ensuring market fairness and transparency.
There will be measure to enable the diversification of exchange-traded funds. In addition, legislation will be introduced to make it possible to invest in a wide range of products, including financial and commodity derivatives. This will be part of an alliance between financial and commodities exchanges to enable exchanges groups to offer a full line of products from equities, bonds, financial derivatives to commodity derivatives. A taxation scheme will also be implemented stocks and investment trusts that will facilitate a shift from savings to investment. In addition, civil money penalties will be made more effective against market misconduct; and market surveillance will be enhanced.
As part of a better regulation initiative, the FSA will improve the regulatory environment by engaging in an intensive dialogue and sharing of principles with the financial services industry. There will also be enhanced transparency and predictability of regulation. At the same time, the FSA will strengthen its co-operation with foreign authorities.
Proposed legislation would also revamp the firewalls among banking and securities. For example, the ban on interlocking officers and employees would be lifted. Similarly, the restrictions on the sharing of undisclosed corporate customer information between banking and securities businesses would be relaxed. At the same time, foreign fund managers would be encouraged to participate in Japanese markets by removing taxation risk in carrying out business through independent agents in Japan.