Japan FSA extends English support to newly entering securities firms
Delivering on its 2021/2022 Strategic Priorities, the Japan FSA has expanded the scope of foreign firms for which English communication is made available to include foreign securities firms newly entering the Japanese market that mainly deal with customers in English. Naturally, one would expect this to be a fairly small niche of the market. The annual plan also included similar accommodation for banks, which still has to be announced.
To recap, in January 2021 the FSA and Local Finance Bureaus jointly established the "Financial Market Entry Office," where all procedures for newly entering foreign financial institutions, from prior consultations, registration procedures and supervision after commencing business, are undertaken in English. In June 2021, for better convenience, JFSA relocated the Financial Market Entry Office to Kabutocho, Nihonbashi, where the Tokyo Stock Exchange is located and other related businesses, including start-up asset management companies, have business offices.
During the first year of its opening, despite the ongoing pandemic, five overseas asset managers have completed the English registration process (four had previously been reported as of August 2021), with a maximum elapsed time of three months, which is deemed comparable to other international financial centers. This support is now being extended to broker/dealer entities (Type I businesses under the Financial Instruments and Exchange Act [FIEA]).
Feedback received by the FSA during the comment period earlier this year ranged from “it is important to improve the English environment […] also for existing foreign securities and banks, and not only for businesses that ‘mainly deal with customers in English.’ “ to “All official procedures should be acceptable only in Japanese.”, reflecting the different interests of existing market participants.
However, the FSA remained steadfast in pointing out that the “amendment is intended to promote new entry into Japanese market” and therefore “is targeted at foreign securities companies, etc. that are newly entering the market.”
In our view, this position is largely driven by the scarcity of multi-lingual personnel inside the FSA. As the agency has also started to develop AI-based translation methods since 2021, it is quite conceivable that the service will be expanded in the future as the automated translation becomes more accurate.
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