[02PacRimLPolyJ191] Introduction to the Financial System and Securities & Exchange System Reform Act of Japan

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[02PacRimLPolyJ191] Introduction to the Financial System and Securities & Exchange System Reform Act of Japan

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Title: [02PacRimLPolyJ191] Introduction to the Financial System and Securities & Exchange System Reform Act of Japan
Author: Naka, Hiroshi (author); Nakamura, Akio (author); Yamashita, Atsushi (translator); Siegler, Scott (translator)
Abstract: Mr. Hiroshi Naka was a Deputy Manager of Okurash5 Ginkikyoku Ch~saka (the Ministry of Finance ("MOF"), Banking Bureau, Research Division) and Mr. Akio Nakamura was a Deputy Manager of Okurash5 Sh5kenkyoku Samuka Chjsashitsu (the MOF, Securities Bureau, Coordination Division, Research Office) as of July 25, 1992, when the original article was published. Both officials were involved in preparing drafts of bills involved in the Act. Atsushi Yamashita is a licensed attorney in Japan; LL.M. Candidate 1993, University of Washington Asian Comparative Law Program. Scott Siegler is a licensed attorney in New Jersey and awaiting admission to the New York Bar, A.B. 1988. University of Michigan, Japanese Language and Asian Studies, J.D. 1992 Fordham Univ. School of Law; LL.M. Candidate 1993, University of Washington Asian Comparative Law Program. Abstract: This translation of an original Japanese language work, by Hiroshi Naka and Akio Nakamura, both of the Japanese Ministry of Finance, details the reforms of Japan's financial and securities & exchange system made under the recently enacted System Reform Act. The major reforms under the Act include: (1) altering the "Glass Steagall" rule (the separation of securities business and banking business) in Japan so that banks and securities companies can engage in each other's business through their subsidiaries; (2) extending securities regulations to some new types of structured finance; (3) amending public offering provisions and providing new articles for private placement; and (4) amending and adding provisions to secure the soundness of banking operations, including capital requirements, and safeguards against harmful side effects (firewalls) which may arise from a bank's moving into securities business. This English language translation, along with the translators' detailed notes, provide an insightful look into these reforms. Translators' Introductory Note: The original article provides Japanese readers with an introduction to the new financial and securities & exchange system in Japan created under The System Reform Act (defined infra). The System Reform Act is said to have drastically changed the Japanese post-war financial system. The major points of the System Reform Act include: (1) reforming the "Glass Steagall" rule (separation of securities business and tanking business) in Japan so that banks and securities companies can engage in each other's business through their subsidiaries; (2) extending of securities regulations to some new types of structured finance; (3) amending public offering provisions and providing new articles for private placement; and (4) amending or adding provisions to secure the soundness of banking operations, including capital requirements, and safeguards against harmful side effects (firewalls) which may arise from a bank's moving into securities business. The System Reform Act is the fruit of more than seven years of earnest discussions by Kinyii Seido Ch5sakai (the "Financial System Research Committee") ("FSRC") and Shaken Torihiki Shingikai (the "Securities And Exchange Council") ("SAEC"), both of which are councils under the Ministry of Finance ("MOF"). FSRC prepared the report titled Atarashii kinyfiseido ni tsuite (report "Concerning The New Finance System") as of June 4, 1991 ("FSRC Report"). SAEC prepared the report titled Shakentorihiki ni kakaru kihontekiseido no arikatani tsuite (report "Concerning The Basic System in respect of Securities & Exchange Transactions") as of May 24, 1991 ("SAEC Report"). The perceptions and recommendations contained in both reports became foundation of the System Reform Act. They will be occasionally-referred to below. The translators provide relevant background information and appropriate comments (historical and legislative explanations, explanations of technical terms and, to increase the clarity of the text, references omitted in the original article) in brackets in the original text and in the footnotes. Where necessary, they summarize, rather than translate directly the content of the original article (indicated in brackets as "summary"), so that American readers can easily understand the new financial system in Japan. We believe, therefore, an English translation of this article will be helpful for readers who are interested in Japan and international finance. In addition, some readers may be interested in this article because of the insights it provides into the legislative process in Japan.
Description: Originally published as Kinyuseido, syokentorihikiseido kaikakuho no gaiyo (No. 1293, Syojihomu, pp.2-11)
URI: http://hdl.handle.net/1773.1/649
Date: 1993-01

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