Amendments to the Financial Instruments and Exchange Law of Japan to inject vitality and stability into the Japanese financial and capital markets | Practical Law

Amendments to the Financial Instruments and Exchange Law of Japan to inject vitality and stability into the Japanese financial and capital markets | Practical Law

Amendments to the Financial Instruments and Exchange Law of Japan to inject vitality and stability into the Japanese financial and capital markets

Amendments to the Financial Instruments and Exchange Law of Japan to inject vitality and stability into the Japanese financial and capital markets

by Atsumi & Partners
Published on 08 May 2009 • Japan
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The Japanese government has submitted a bill to the Diet to amend the Financial Instruments and Exchange Law of Japan. The main provisions of the Amendment Bill are outlined here.
On 6 March 2009, the Japanese government submitted a bill to the Japanese Diet to amend the Financial Instruments and Exchange Law of Japan (Amendment Bill).
The amendments are aimed at injecting vitality and stability into the Japanese financial and capital markets.
The main contents of the Amendment Bill are set out below.

Regulation of rating agencies

Before the Amendment Bill, there were no laws aimed specifically at rating agencies.
The Amendment Bill:
  • Introduces a registration system for rating agencies.
  • Introduces a system of regulation and supervision for rating agencies.
  • Makes it unlawful to offer rated securities unless the securities are rated by a registered rating agency.

Designated dispute resolution agency (financial alternative dispute resolution)

Under the Amendment Bill, the competent minister may designate certain qualified dispute resolution agencies. Designated dispute resolution agencies will endeavour to resolve disputes between financial institutions and investors out of court.
Financial institutions are required to execute an agreement with a designated dispute resolution agency to use it, if there is a designated dispute resolution agency for the relevant type of entity (such as a bank or securities company).

Alignment of stock exchange and commodity exchange

The Amendment Bill makes it clear that a stock exchange and a commodity exchange may have mutual alignment in a form of a holding company or parent-subsidiary relationship which may lead to economies of scale.

Amendments to disclosure requirements for secondary offerings of securities

Depending on the type of investor or securities, the disclosure requirements for secondary offerings of securities will be amended to make the exemptions more readily available and certain types of secondary offerings of foreign securities may enjoy reduced disclosure requirements (for example, treasury bonds issued by certain foreign countries or securities listed on certain foreign exchanges).
If the Amendment Bill is approved by the Diet, it will be enacted in stages over the course of 18 months.