Japan Law Targets Nation's Savers
Japan is preparing to launch the biggest change in the country's financial regulations in 20 years, a move designed to encourage the nation's thrifty savers to put more of their $13 trillion in personal assets into stocks and bonds.
The Financial Instruments and Exchange Law, which goes into effect Sunday, governs everything from corporate reporting procedures to acceptable securities trading practices. Commonly known as FIEL, the law also lays out new registration requirements for hedge funds and private-equity funds. Most important, it details what marketing practices are allowed in selling stocks, bonds and mutual funds to individual investors -- a vaguely defined regulatory area until now.
Separately, Japan Post, the government-owned postal service that doubles as a bank and insurance company, will take a major step Monday in what is expected to be a 10-year privatization process, becoming a holding company with four operating companies under it. Japan Post's privatization is likely to accelerate the shift of its $1.6 trillion in deposits -- more than the combined $1.5 trillion at the country's two biggest banks -- from simple savings accounts into more sophisticated financial products, like mutual funds and variable annuities.
Many of the rule changes in FIEL will bring Japan's regulations -- often considered loose compared with those of other countries -- closer to international standards and enhance transparency in the world's second-largest economy, securities lawyers say. Like their counterparts in the U.S. under the Sarbanes-Oxley Act, Japanese executives will now have to certify that financial statements are true. The law also mandates quarterly reporting of earnings, something U.S. and European companies have done for years. Currently, Japanese companies are obligated to report only half- and full-year earnings.
FIEL also raises the maximum penalty for illegal securities transactions to 10 years. In two recent high-profile insider-trading cases, the maximum prison sentence that could be imposed was three years.
'It is a whole modernization of the law,' said Christopher Wells, a securities lawyer at White & Case LLP, who helped supervise an English-language translation of the legislation.
Enactment of FIEL comes as Japan wrestles with how to encourage ordinary Japanese to invest in assets that can produce higher returns than bank deposits, such as stocks and corporate bonds. Many Japanese, turned off by a series of corporate scandals and hard-sell tactics used by brokerages in the past, have snubbed these types of investments. As a result, much of Japan's personal wealth is currently in bank deposits that yield less than 1%.
Getting individuals to buy more stocks could have a profound effect on Japan's market, which still trades at less than half the peak it reached in 1989. The percentage of the market held by individuals dipped to 18% at the end of last year from 21% at the 1989 peak, according to the Tokyo Stock Exchange.
Lawyers say FIEL aims to shore up investor confidence by providing greater protection than individuals historically have had. For example, the law requires brokerages and banks to classify all investors as professionals or amateurs. For amateur investors, brokerages and banks will have to explain the risks involved in investment products, like mutual funds and foreign-currency deposits, before selling them. The law also requires marketing material to carry a risk-disclosure statement.
Tighter disclosure rules are being implemented as Japan Post's 25,000 post offices begin to expand the range of products and services they handle. Over the next few years, post offices are expected to begin offering mortgages, credit cards, annuities and foreign-currency deposits. Japan Post started selling mutual funds at some post offices two years ago, and by the end of August had gathered some $8.5 billion in fund assets by persuading nearly a half-million depositors to shift some of their money into funds.
In the short term, the new law may slow some bank business in Japan because it requires financial institutions to evaluate a customer's experience and explain all the risks involved in buying certain products. For example, Mitsubishi UFJ Financial Group Inc. is ending a service that allows customers to open mutual-fund accounts online because the bank needs to vet investors first.
The bank, Japan's biggest by market capitalization, is also requiring customers who want to make deposits in foreign-currency-denominated accounts to speak with a representative. Previously, they could use an automated telephone service.
Mizuho Financial Group Inc., another of Japan's big banking groups, says the amount of time its representatives spend with each customer is nearly doubling to more than two hours. 'There are a lot of legally required items to cover,' said Masako Shiono, a bank spokeswoman. 'We have to go through them one by one.'
這 部《金融工具與交易法》(The Financial Instruments and Exchange Law, FIEL)將於本週日生效﹐它涵蓋的範圍從公司披露機制到可接受的證券交易行為無所不包。這部法律還規定了對沖基金及私人資本運營基金新的註冊要求。最重 要的是﹐它還就向個人投資者賣出股票、債券及共同基金時所允許的市場操作進行了詳細的規定﹐一直以來這一領域都屬於監管的灰色地帶。
兼 有銀行和保險業務的日本國有郵政服務機構日本郵政(Japan Post)將於下週一進行重組﹐成為擁有四家運營公司的控股公司。此舉被認為是日本郵政歷時10年的私有化進程中的重要一步。日本郵政的私有化進程很可能 會加速使其1.6萬億美元儲蓄存款從單一的儲蓄帳戶流向共同基金和浮動年金等更多樣的金融產品。日本郵政的儲蓄存款比日本最大兩家銀行的存款之和(1.5 萬億美元)還要多。
證券律師表示﹐《金融工具與交易法》中的許多法規調整將使日本的法規與國際進一步接軌﹐並提高日本這一世界第二大經濟 體的透明度。與其他國家的法規相比﹐日本的法規常被認為不夠嚴格。與受薩班斯－奧克斯利法(Sarbanes-Oxley Act)約束的美國同行一樣﹐現在日本的企業管理人士也必須保證財務報表的真實性。該法律還規定企業必須公佈季度收益報告(這在美國和歐洲公司中已經實行 多年了)。目前﹐日本公司仍只需公佈半年收益和全年收益。
美國偉凱律師事務所(White & Case LLP)的證券律師克里斯託夫•威爾斯(Christopher Wells)曾指導了這部法律的英文版翻譯工作。他說﹐該法進行了一次徹頭徹尾的“現代化”。
律 師們表示﹐該法律旨在向個人投資者提供前所未有的保護﹐以便增加投資者信心。比如﹐該法律要求經紀人和銀行把投資者分為職業投資者和業餘投資者兩類﹐並在 向業餘投資者賣出共同基金和外匯儲蓄等投資產品前﹐向其解釋涉及的風險。該法律還要求營銷宣傳品上必須登有風險披露聲明。
隨著日本郵政下 屬的2.5萬家郵局開始擴大產品和服務範圍﹐日本將實施更加嚴格的信息披露規定。在接下來的幾年中﹐郵局將陸續開辦抵押、信用卡、年金和外幣儲蓄業務。兩 年前﹐日本郵政的部分郵局開始銷售共同基金﹔截至8月末﹐它們已經說服近50萬名儲戶將部分存款投入基金﹐從而獲得85億多美元的基金資產。
短 期來看﹐該法律可能會放慢日本一些銀行業務的辦理速度﹐因為它要求金融機構對客戶的經驗進行評估﹐並向客戶解釋購買某種投資產品可能涉及的全部風險。例如 ﹐三菱UFJ金融集團(Mitsubishi UFJ Financial Group Inc.)就因為需要對投資者進行評估﹐而計劃終止其共同基金網上開戶服務。
日本另一家大銀行集團瑞穗金融集團(Mizuho Financial Group Inc.)表示﹐它的客戶代表花在每位客戶身上的時間超過了兩小時﹐幾乎是以前的兩倍。該行發言人Masako Shiono說﹐“有太多法律要求的事情要做﹐我們不得不一一完成。”
Andrew Morse / Yuka Hayashi