Tentative Translation

Report of the Council for Tokyo Global Financial
Center Promotional Activities

September 9, 2015
Council for Tokyo Global Financial Center
Promotional Activities* This translation is prepared solely for information purposes. The Japaneseversion should be referred to for the accurate content of this report.

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Table of contents

1. Introduction..................................................................................................... 1
2. Tokyo’s Significance as a Global Financial Center and the Type ofInternational Financial Center It Should Aspire to Be ..................................... 1
2-1 Tokyo’s significance as a global financial center ...................................... 1
2-2 The type of international financial center Tokyo should aspire to be ........ 2
3. The Tokyo Market—Current Situation and Issues .......................................... 3
3-1 The status of Tokyo’s financial and capital markets.................................. 3
3-1-1 Stock, ETF and ETN markets ............................................................ 3
3-1-2 Bond markets ..................................................................................... 6
3-1-3 Derivatives market ............................................................................. 8
3-1-4 Other ................................................................................................ 10
3-2 Asset management industry situation ..................................................... 12
3-2-1 Current situation............................................................................... 12
3-2-2 Issues .............................................................................................. 14
3-3 Business, systems, and living environment situation .............................. 18
3-3-1 Current situation............................................................................... 18
3-3-2 Issues .............................................................................................. 19
4. Efforts Targeted at Specific Issues ............................................................... 21
4-1 Industry efforts ........................................................................................ 21
4-2 Relay requests to the national and metropolitan governments ............... 28
5. Conclusion.................................................................................................... 29
Attachment 1: Comparisons of Global Financial Centers ..................................31
Attachment 2: Outline of the Council.................................................................4 1
Attachment 3: Member List................................................................................43
Attachment 4: Past meetings of the Council.......................................................442

1. Introduction

Establishing the Tokyo market’s position as an international financial center will
naturally enhance the development of Japan’s financial and capital markets, andcould be a crucial strategy to maintain and promote sustained growth in Japan’s
economy over the medium to long term.
Based on this understanding, the Japan Securities Dealers Association (JSDA),
Japan Exchange Group, Inc. (JPX), The Investment Trusts Association, Japan (JITA),
and Japan Investment Advisers Association (JIAA) formed the Council for Tokyo
Global Financial Center Promotional Activities (hereinafter, “the council”) in
September 2014. Our mission is to review and define Japan’s strengths and its roles
as a global financial center—as well as related issues in our capacity as the securities
and asset management industries—and promote and support efforts to achieve thegoal stated above.
The council met a total of five times between October 2014 and August 2015 todiscuss tasks and initiatives related to confirming the Tokyo market’s status as aninternational financial center.
The following summarizes the results of the council’s discussions.

2. Tokyo’s Significance as a Global Financial Center and the Type of International
Financial Center It Should Aspire to Be

2-1 Tokyo’s significance as a global financial center
Japan’s economy is showing continuing signs of recovery and that it is shaking freeof the long-running deflation that followed the collapse of the “bubble” economy.
While faced with structural issues that include the falling birth rate and aging
population, striving for growth integrated with that of other countries is
indispensable if Japan’s economy is to achieve sustained growth. We need to
attract human resources, goods, funds and information from overseas, especially11

from booming Asia, to the Japanese markets. Based on wide-ranging discussions
and suggestions to date, there is also a shared recognition of how significant it is toestablish Tokyo’s position as a global financial center.
Moreover, the securities and asset management industries themselves possess
great potential as growth industries. In fact, their presence provides a foundation
for the economic growth of the whole country. With expectations that these two
industries will be leaders in propelling Japan’s economic growth alongside the
manufacturing industries that have sustained Japan’s economic growth so far,there is a powerful need for Tokyo to function as an international financial center.

2-2 The type of international financial center Tokyo should aspire to be
The goal of making Tokyo’s market into Asia’s leader—number one in the financial
and capital markets—has been outlined by various parties up to now. Considering
the deep relationship Japan’s economy has with those of the other nations in Asia,
aspiring first of all to the position of Asia’s top international financial center is logical.
To achieve that, we must establish Tokyo as the preferred market in Asia foroverseas investors as for fund management, for overseas issuers as the location
for procuring funds, and for overseas financial institutions and asset managementcompanies as the place to do business.
Tokyo’s market differs from Hong Kong, Singapore and other Asian global financecenters that focus on trading among nonresidents. It boasts a corps of domestic
companies whose scale is unique in Asia, and an underpinning of over 1,700
trillion yen in individual financial assets, endowing it with strength in the depth of its
domestic trading. Making optimal use of this advantage to boost the Tokyo
market’s attractiveness would be an effective method for turning it into a global
financial center. Specifically, offering diverse, appealing products in the respective
stock, bond and derivatives markets will expedite market participation by domestic
investors who possess abundant financial assets and increase the markets’ depth.
That will conceivably help form markets that attract overseas investors.
Additionally, the role the asset management industry must fulfill is significant with2
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regard to promoting investments by individual investors who possess abundantfinancial assets and participation in Tokyo’s markets by nonresident investors,
financial institutions and asset management firms. Some believe that Japan’s
asset management industry lags those of other countries relative to the economy’ssize. Positioning the asset management industry as a Japanese growth industry
and developing it can be considered key to establishing Tokyo’s position as a
global financial center.
To achieve that requires both a business environment that enables overseas
financial institutions and asset management firms to participate in Tokyo’s markets
and for top domestic and overseas players to compete with each other.
Based on the preceding basic perceptions, the council reviewed Japan’s strengths
and its roles as a global finance center as well as related issues, and studied
methods and processes to achieve various measures, by employing its financeand securities expertise of the securities and asset management industries.

3. The Tokyo Market—Current Situation and Issues

3-1 The status of Tokyo’s financial and capital markets
To improve Tokyo’s position as an international financial center, markets here must
be appealing enough that domestic and overseas investors and asset managers
select them as places for investing and managing assets. To that end, it is effective
to analyze the markets from the perspective of product diversity and liquidity, which
are especially important elements of market attractiveness.

3-1-1 Stock, ETF and ETN markets[Stock market]
Viewed by size, Tokyo’s stock market boasted appropriate magnitude — ranked
third worldwide and first in Asia in total market capitalization at listed firms—as ofthe end of 2014, and fifth globally and third in Asia in trading value. Seen in33

terms of average daily trading volume, turnover and floating stock ratios, as wellas other data, its stock market liquidity greatly exceeds that of Hong Kong or
Singapore, and that high liquidity can be perceived as a market advantage.
Additionally, shares held by nonresident investors amount to just under 60
percent of trading value, and foreign investors’ extremely high presence is adistinctive feature.
On the other hand, concerns that the Tokyo market’s relative position and weightin the world will decline as China and the various ASEAN countries grow theireconomies cannot be denied.
In view of the current situation as described above, the council debatedmeasures to promote market participation by investors, including overseas
investors.

(1) Publicize Japan’s efforts related to corporate governance reforms
overseas
Japan’s Stewardship Code was drawn up in February 2014. By the end of
May 2015, 191 institutional investors had declared they would adopt it.
Corporate governance reforms are also under way at Japanese companies,
and moves to achieve sustained growth and boost enterprise value over the
medium to long term are accelerating. Corporate Governance Code (final
proposal) was drawn up in March 2015, and on June 1 amended rules cameinto force at the Tokyo Stock Exchange, Inc. The amendments included therequest that companies comply with the code or explain why they would not.
This has ensured the code’s effectiveness, with expectations that the ratingsof Japanese companies will rise.
Some members of the council also believe that these actions should be
actively publicized in English to advertise the attractiveness of Tokyo’s
markets overseas and promote nonresident investors’ market participation.

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(2) Promote disposal of cross-shareholdings
Under Corporate Governance Code mentioned above, much attention was
focused on corporate governance at listed companies and the appropriate
handling of cross-shareholdings to improve enterprise value. For example,
the code calls for decisions and disclosures regarding cross-shareholding
policies, as well as standards for appropriate and sound execution of theirvoting rights. Some were of the opinion that financial institutions’ recent
moves to dispose of their cross-shareholdings would suppress procyclicality(effects augmented during economic cycles) when share prices fell, which
would help stabilize Japan’s financial system. Others saw great significanceand a powerful message in financial institutions moving to dispose of thosecross-shareholdings.
Additionally, some thought the new code might boost investor market
participation if corporations tried to give back to shareholders by undertaking
buybacks of their own shares, considering the potential disposal of crossshareholdings.

[ETF and ETN markets]
The number of listings in the markets for exchange traded funds and notes had
climbed to 190 at the end of 2014, and asset classes and liquidity also rose.
Trading value during 2014 was third worldwide, and number one in Asia.
However, at around five percent ETFs and ETNs account for a relatively low
share of total trading value of cash equity markets compared to other countries,
and conditions are such that only a limited number of listings are actively traded.
With that situation in mind, some believe that in addition to increasing thenumber of products there was a parallel need to boost liquidity to definitively turnJapan’s ETF/ETN market into a core market in Asia.
On this point, some see the need for product diversification, such as enhancing
ETF product lineups with commodity ETFs. From the standpoint of the depth of5
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investor segments, some also felt the need to promote acceptance of ETFs andETNs among individual investors.

3-1-2 Bond markets
Looking at the government bond market, Japan was second in size to the U.S. It
had an outstanding balance of government bond issues as of the end of 2014,
recording a high level of around 177 percent of nominal GDP. In a breakdown ofgovernment bondholders, domestic investors account for around 95 percent.
This percentage differs greatly from the composition in other countries. For
example, overseas investors in the U.S. account for around 46 percent.
In corporate bonds, Japan had an outstanding balance of around 60 trillion yen
in corporate bond issues, or around 12 percent of nominal GDP. Companies
were procuring few funds from corporate bonds. By rated corporate issuers’
shares, around 88 percent were grade A or above, and corporate bonds fromcompanies with relatively high credibility accounted for the majority. Regarding
corporate bondholders, domestic banks held around 47 percent of bonds.
Compared to the developed American corporate bond market, there was a low
share of ownership by nonresident investors and investment trusts. Furthermore,both turnover and the turnover ratio in secondary markets have been on a
downward slide in recent years, and conditions are such that liquidity is low
compared to the U.S.
In view of the current situation as described above, the council discussed stableissuance and consumption of government bonds, diversification of corporate
fund procurement, and measures designed to provide a variety of products forinvestors.

(1) Review trading practices related to Japanese government bonds
In terms of the government bond market, it is essential to review traditional
trading customs and buttress the market so that it is open and accessible to66

all investors. Some believe that implementing the following actions, meant toglobalize Japanese government bonds, might motivate overseas investors topurchase these bonds:(A) Promote super-long-term government bond futures trading(B) Shift from simple to compound yields on Japanese government bond bid
and asked prices(C) Abolish the lunch break for government bond futures trading(2) Vitalize the corporate bond market
Some stated that implementing the following measures—as part of efforts tospark the corporate bond market—would promote diverse issuers to issue
bonds and encourage more nonresident investors to participate in thecorporate bond market:(A) Improve the convenience of funds procurement with corporate bonds(thereby resolving the problem that they lag bank loans as a means ofprocuring funds)(B) Incorporate yen-denominated bonds in indexes that are benchmarks forforeign bond dealing(C) Promote issuers’ acquisition of foreign bond ratings(D) Review measures to improve liquidity by using short selling(3) Make policies on investment management more flexible
It has been noted that the uniform policies on investment management that
asset owners observe—and which copy those for the Government Pension
Investment Fund (GPIF)—restrict the investment activities of asset managers.
Particularly in terms of corporate bonds, investments by asset managers arelimited to highly rated bonds. Some say that implementing the following might
encourage more flexible investment management policies and promote
investments in corporate bonds from diverse issuers:77

(A) Discussions with asset owners to promote more flexible policies oninvestment management(B) More flexibility in GPIF policies

3-1-3 Derivatives market
JPX’s 2014 trading volume was fifteenth worldwide in the listed derivatives
market—admittedly a relatively small market compared to the stock market’s
total size. Additionally, around 70 percent of the investors are nonresidents;
participation by domestic investors is extremely low. Moreover, almost all the
products traded are equity indexes, and there is a heavy bias compared to thehigher ranked exchanges where derivatives are traded.
In view of that, the council discussed how to add variety to the products that areoveremphasized in derivatives market trading and at the same time takemeasures to promote market participation by domestic investor segments.

(1) Provide a variety of derivatives productsSome believe that dividing jurisdiction for exchanges between the Ministry of
Economy, Trade and Industry (METI) for commodities and the Financial
Services Agency (FSA) for financial products hinders the derivatives market’s
development. On this point, we strongly hope to see an integrated exchange
where diverse financial products are provided in one location in the near
future.
Meanwhile, under the current circumstances in which the creation of such an
integrated exchange is still to come, it is best to move forward with what canrealistically be achieved. For example, we envision an integrated exchange assomething along the lines of Japan’s current stock exchange mergers, butsome say that adding new products at the current stock exchange could standas an integrated exchange.
There are also concerns that even if new derivatives products are listed,

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trading will lag in a fashion similar to transactions involving super-long-term
Japanese government bond (JGB) futures. Related to this is a Japanesecultural issue involving an inability to accept new things, and some believethat the industry as a whole is not working hard enough to develop new
products.

(2) Increase flexibility in policies on investment management
Japanese institutional investors tend to have a “long-term view” management
style. It would be preferable to disperse assets and improve their
management performance through the diversification of asset management
techniques, including alternative investments. Some say, for example, that
employing derivatives with regard to portfolio risk hedging might add liquidity
to the derivatives market.
Some were of the opinion that the uniform management policies asset owners
observe—which copy those for the GPIF—restrict the investment activities ofasset managers. On this point, some said that holding discussions with asset
owners might encourage flexibility in their investment management policies
institutional investors follow (refer to 3-1-2 (3)), which could stimulate markets,
including the derivatives market.

(3) Encourage individual investors to participate in the exchange-tradedderivatives market
Some products among exchange-traded derivatives have standardized
structures and trading, and can be invested in for comparatively small sums. If
products are used with an appropriate understanding of their characteristics
and risks, they can be considered valid asset management product choices
for individual and other end investors.
Some noted that carrying out the following efforts, for example, might
encourage more individual investors to participate in the exchange-tradedderivatives market:

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(A) Carrying out finance-related training pertaining to derivatives products(B) Expanding the scope of profit-and-loss aggregation for financial
products to derivatives trading
Some also believe that the investment activities of business executives —pa
rticularly at institutional investors and financial institutions — were overly
restricted by in-house corporate rules.

3-1-4 Other(1) Diversify primary markets
Fewer varieties of both debt and equities are issued in Tokyo markets
compared to Europe and the U.S., and some on the council say they might
not be fully manifesting their function of supplying companies, including
venture firms, with funds for growth, which is the role of capital markets.
Additionally, some taking a long-term perspective feel that the public andprivate sectors should collectively consider policies for diversifying andstimulating primary markets to help turn the Tokyo market into a global
financial center.

(2) Develop markets for professionals
Tokyo AIM was founded in 2009 as a stock trading venue for professionals.
Since then, mainly small and medium-sized enterprises have listed ten issues
as of the end of 2014. The Tokyo PRO-BOND market was set up in 2011 as amarket for professionals. Since then, eleven companies’ programs have been
listed. These markets have remained small in size.
Some say that underwriters need to actively scout out overseas companies,
market participation by domestic and nonresident investors must be
encouraged, and institutional investors need to gain more market awareness.
In addition, an environment conducive to investing must be promoted as partof efforts to develop and utilize professional markets with abundantlyinternational market characteristics.

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(3) Competition among markets
Regarding proprietary trading system (PTS) trading, the obligation to tradethrough exchanges was abolished in 1998, and alternative trade executors
have steadily been developed for share trading as well. PTS trading volume
accounted for a share of around seven percent of the whole at one point, but
is currently falling.
Some say that stimulating PTSs was important when considering that diverse
forms of competition would yield innovations in domestic markets. Additionally,some also feel that exchanges were exposed to international competition andwere making far-reaching efforts driven by a sense of crisis, and that how tokeep up with overseas markets was providing a key perspective.

(4) Strengthen settlement infrastructure
It was suggested that Japan’s systems and infrastructure were set up fornational markets, and that specifications for settlement infrastructure inparticular were not international in scope. Some say that under current
conditions domestic institutions that could provide settlement functions forbonds from other countries did not exist, and that there might be a need toconsider mechanisms to enable this.
Some felt, moreover, that there was a need to strengthen settlement
infrastructure capabilities as part of moves to improve market liquidity andturn Tokyo into a market both domestic and overseas investors would choose.

(5) Promote funds procurement by foreign companies
Many foreign companies listed on the Tokyo market have delisted. Listed
overseas firms are now extremely few in number compared to leading
markets in other countries. From the perspective of winning over Asiancompanies that are growing conspicuously, attracting foreign companies to
the Tokyo market and encouraging them to procure funds will be crucial.
There is a strong need to determine how to boost the appeal of Tokyo’s
market.

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On this point, Hong Kong and Singapore, for example, have had successattracting overseas companies in sectors that are their particular forte. It wassuggested that the Tokyo market use a similar focus on sectors in which it
excels—including pharmaceuticals, car parts, and games—to attract foreign
corporations.

3-2 Asset management industry situation
Efforts to leverage Japan’s strengths through its abundant financial assets andstimulate capital markets include a need to develop and offer more appealingfinancial products and services. The asset management industry is expected tohave an especially large role in this. Some say that Japan’s asset management
industry lags its counterparts in other countries in this respect when the size ofJapan’s economy is considered, and needs to be strengthened. If an environment
can be created for Tokyo’s asset management industry that draws domestic andforeign-affiliated asset management firms and personnel, it will strengthen theindustry and attract human resources, goods, funds and information to the Tokyo
market. It will also contribute greatly to making Tokyo an international financial
center that is integrated with the rest of the world in striving for growth.
The council held discussions about the status of the asset management industry,
outlining and reviewing essential tasks.

3-2-1 Current situation
Since the financial crisis, asset management firms have tended to relocate their
Japanese share-trading desks from Tokyo to Hong Kong or Singapore. We havealso seen some firms relocate their Japanese stock and other asset
management units to the same locations. For example, Japan trailed Hong Kong
(36 percent), Singapore (22 percent) and Australia (18 percent) at 9 percent as alocation for hedge fund managers in the Asia-Pacific region as of September
2013. Clearly talented personnel who manage Japanese and Asian shares are

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exiting Japan for other countries. Asian shares are managed as an integrated
entity in Hong Kong and Singapore. In foreign-affiliated financial institutions as
well, operations involving Japan are handled from an international standpoint,
not from a local market perspective, with trading operations, for example,
looking at the overall Asia-Pacific area.
There were thirty-nine foreign-affiliated investment trust management firms
based in Japan as of May 2015, accounting for around 40 percent of all
investment trust management firms in Japan. Most of these companies carry out
their Japanese share management operations in Japan, while Asian share
management is handled in Hong Kong or Singapore. Some among these evenhandle Japanese share management operations in Hong Kong or Singapore
rather than in Japan, however. For those types of companies the Japan office ispositioned as a sales office rather than for asset management. Moreover, evensome Japanese investment trust management firms handle decisions about
Asian share investments and management in Hong Kong or Singapore insteadof Japan. They have already devised mechanisms for handling decisions about
Asian share investments and management, as well as trading, in Hong Kong or
Singapore. Attracting them to Tokyo would therefore require considerable effort.
Additionally, among Japanese investment trusts a comparatively highpercentage of the types of products is invested in foreign assets. In many cases
their management is consigned to foreign-affiliated asset management firms, soJapanese customers are ultimately purchasing products managed by overseas
subadvisors.
Language barriers, tax and regulatory system issues, and the inflexibility ofsystems for rating human resources engaged in asset management in Japan
can be cited as underlying causes for the exodus of management offices andfund managers to other countries.

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3-2-2 Issues
Singapore has clearly designated the asset management industry a strategic
industry and is successfully attracting foreign-affiliated asset management firms
and managers. Luxembourg has become a fund power in Europe by making useof a European passport in connection with the “undertakings for collective
investment in transferable securities” (UCITS) and adopting practical regulations
in line with the collective national will, establishing and maintaining its position asa world center for asset management and related administrative affairs centers.
With the current situation of Japan’s asset management industry in mind, thecouncil used these examples for reference while discussing policies to makeTokyo a base for managing all kinds of Asian shares—including Japaneseshares—as part of efforts to bolster the global competitiveness of Japan’s asset
management industry. The proposal also contains new policies to curb the
exodus of fund managers from Tokyo and attract them, as well as policies toenhance the management skills of Japan’s asset management firms, as follows:(1) Become a fund center by employing “fund passport” schemes
Using the EU’s UCITS precedent as a reference point, some believe thatencouraging the formation of funds that could be sold overseas would
promote Tokyo as a global fund center, taking into consideration recent
development related to Asian region fund passports.

(2) Use national strategic special zones
There is a need to improve the flow of human resources, provide urban
infrastructure, form interpersonal networks and promote operations in English
as part of efforts to develop the asset management industry as a growthindustry. Some of the council believe that national strategic special zones
could help to achieve these goals.

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(3) Set up advanced financial training programs
Some felt that universities and graduate schools should provide fundmanager-oriented education and training to develop human resources tohandle future asset management at an early stage.
In China and Singapore, universities have entered into agreements with
American and European business schools, offering joint programs. Some feltthat Japan should employ similar agreements with overseas institutions toprovide advanced global financial training programs.

(4) Examine performance at Japanese asset management firms
Some believe that carrying out empirical research into past performance
should be part of efforts to enhance skills at Japanese asset management
firms.

(5) Establish Japanese versions of “Emerging Managers Programs”
Some feel that American “Emerging Managers Programs”* should serve as
reference in developing new asset management companies just as they arestarting up and discovering new asset management firm ventures. For
example, public pension funds may take the lead and give priority toconsigning some public funds management to asset management firms andemerging management firms that have management teams in Japan.

* Emerging Managers Programs: These are programs implemented byAmerican public pension funds and foundations to support startup asset
management firms having few total assets by giving them priority in funds
consignments. (The requisites for the relevant asset management startups
differ according to the respective asset owners.)

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(6) Put funds management into practice
Actually having management personnel manage funds is the best method of
training them, some believe, and that creating an environment in Japan for
personnel who have produced results at asset management firms would
encourage them to start their own asset management companies. Some feel
it would be a good idea to hold written asset management contests, providing
excellent performers with funding to create funds.

(7) Diversify financial products for asset management
Some believe we should encourage the issuance of various ETFs, real estate
investment trusts (REITs), and high-yield bonds to increase what asset
management firms could manage.

(8) Reform the systems for rating and remunerating asset management
Some suggest working to change the perceptions of asset owners so thatthey would evaluate the performance of asset management firms over the
medium to long term rather than the short term.
Furthermore, some believe that schemes should be devised to provide
merit-based remuneration as a way to develop the asset management
capabilities of specialists who handle alternative, credit and emerging market
asset management, and bring about asset management remuneration
systems that correspond to the type of management and performance. One
example would be that public pension funds provide appropriate remuneration
for high-value-added, active asset management.

(9) Popularize and gain acceptance for Japan’s Stewardship Code, andimprove corporate governance at asset management firms
As of the end of May 2015, 191 institutional investors had declared that theywould adopt Japan’s Stewardship Code drawn up in February 2014. Some16
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suggest there is a need to further familiarize people with the code, gain
greater acceptance for it, and devise a monitoring system.
Furthermore, the FSA indicated in its Financial Monitoring Policy (itsinspection and supervisory policy) that putting fiduciary duties into practicewould be a priority policy in response to increasingly sophisticated asset
management. Some feel there is also a need to reinforce in-house corporate
governance at asset management firms by implementing Corporate
Governance Code.

(10) Expand retail product offerings
Some see a need for asset management firms to grow by expanding theirretail product offerings, putting fiduciary duties into practice for asset
formation by individual investors over the medium to long term, and offering
appropriate products suited for each stage of life.
Some suggest that while striving to improve the financial literacy of individual
investors through securities trading, there was a need for systems to promote
medium- to long-term asset formation, and that working on the aspects below
would be effective:(A) Make Nippon Individual Savings Accounts (NISAs) and Junior NISAs
permanent, and expand and simplify them(B) Abolish the special corporate tax on defined contributions (DCs)(C) Raise the maximum level of DC amounts(D) Promote individual DCs (expand the range of financial institutions that
handle them)(E) Expand default product options for DCs, and consider automati cenrollment programs for corporate DC plans(F) Diversify the products offered in the DC market

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(G) Provide an environment that encourages intergenerational transfers offinancial assets (review the appraised value system of listed shares forinheritance tax purposes, etc.)

3-3 Business, systems, and living environment situation
Tokyo’s ratings have continually lagged Hong Kong and Singapore since Z/Yen
Group Limited first published its Global Financial Centers Index in 2007. The
group’s reports have ranked Hong Kong and Singapore with New York and London
as the world’s four great financial centers. Tokyo follows thes in fifth placeworldwide in the March 2015 index, but Seoul has nearly caught up to the samelevel in Asia.
Furthermore, although Japan was ranked higher than Hong Kong in the World
Economic Forum’s overall global competitiveness indices due to “Abenomics,”
Japan trailed Hong Kong and Singapore significantly in financial market
development (access to financing and so on), market efficiency, and systems.
Additionally, although Japan is currently ranked higher than Shanghai, sufficientattention must be paid to trends in Shanghai in view of the dynamic program to link
the Shanghai and Hong Kong exchanges and the establishment of Shanghai’s pilot
free trade zone.
In view of the above, the council discussed the current business, systems andliving environment situation as described below, outlining and reviewing tasks
ahead.

3-3-1 Current situation
The council notes that Japan has fallen behind Hong Kong and Singapore inbusiness, systems and living environment.
In terms of business, Hong Kong and Singapore provide a businessenvironmentinwhich English is the common business language, and it is easy to obtain
information in English there. Additionally, the environment eases the flow of18
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information about Asia via China and Southeast Asian networks.
In terms of systems, Hong Kong and Singapore have low corporate and income
taxes compared to the rest of the world. Singapore offers multifaceted
tax incentives to attract targeted industries needed for the country’s advancement ,including financial services.
In terms of the living environment, Hong Kong and Singapore haveinfrastructures that make them comfortable places for foreigners to live, including
expatriates posted from headquarters in other countries. Specifics include
international schools, the admission of maids and nannies, and a medical careenvironment in which English is used.

3-3-2 Issues
In view of the above, eliminating language barriers is a key element in making
Japan’s business, systems and the living environment attractive to expatriates.
The council discussed specific efforts to be made, bearing in mind the potential
needs to make requests to the national and metropolitan governments regarding
tax and regulatory systems.

(1) Reduce language barriers(A) A suggestion was made to convert the language for the software andhardware used in the financial system infrastructure to English as is donein other countries.
(B) Some believe that to internationalize oversight agencies, exchanges
and self-regulatory organizations—for example, by employing foreigners
who possess specialized finance-related expertise and can offer advice
to respective institutions, as well as by disseminating information in English— would involve specific efforts to eliminate the language barriers thatwould arise in various legal and clerical procedures.

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(2) Provide an environment that accommodates sophisticated expatriate
personnel
Training personnel to endow them with cutting-edge financial expertise andspecialized knowledge is an urgent task for Japan’s asset management
industry. Acquiring talented human resources from other countries will tie inwith the development of Japanese asset managers and strengthen Japan’s
asset management capabilities. Some suggest that the initiatives noted below
might bring in talented asset managers from overseas. Moreover, they believethat care should be taken to ensure a fair competitive environment in these
initiatives, and that they do not just present preferential treatment for overseas
asset management institutions and personnel.
(A) Preparing in-house corporate environments for admitting sophisticatedcorporate expatriate employees (such as the reappraisal of humanresource policies, including pay systems, expediting decision making,and so on)(B) Tax system measures for sophisticated expatriate personnel(3) Regulations to attract overseas financial institutions to Tokyo
Council members suggest that the following types of regulatory efforts would
promote overseas financial institutions’ participation in Tokyo’s market andexpansion of operations:(A) Implement more flexible financial supervisory administration related to
how overseas financial institutions develop financial businesses inTokyo’s market(B) Establish offshore markets equivalent to Europe’s Euromarket(4) Living environment
Some council members note that establishing or expanding international
schools and medical institutions where English could be used, strengthening
and improving systems for admitting maids and nannies, and improving

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access to airports—among other measures—would create a

more

comfortable living environment for expatriates.

4. Efforts Targeted at Specific Issues

4-1 Industry efforts(1) Strengthen the asset management industry
The council decided to pursue the following initiatives to establish Tokyo’s
position as an international financial center, based on the recognition thateveryone in the securities and asset management industries needs to makestrengthening the asset management industry a priority issue.
(A) Establish the working group on asset management
Based on the issues related to asset management industry the council
has outlined (see 3-2-2) and proposals by the government and others
meant to promote popularization and use of investment trusts, the council
set up the working group on asset management under its auspices. The
working group is to carry out industry-wide discussions in the securities
and asset management industries as a way to strengthen Japan’s asset
management industry while also discussing measures to provide
products that would tie in with investors’ medium- to long-range asset
formation.
(B) Carry out research on asset management business in overseas market
Coordinating with the working group on asset management in (A) above,
JITA promoted efforts to accurately understand world asset management
industry

trends,improve

Japan’sassetmanagement

industry’s

performance and competitiveness, and boost the international appeal ofJapanese investment trusts as part of a review of various issues related
to promoting the formation of global funds and improving the operational
efficiency of investment trusts.

21
21

(C) Support foreign government and public agency road shows
JITA will provide support and coordination for national and public
institutions from countries other than Japan when they hold road shows
and other promotions related to asset management.
(D) Hold a symposium on international investment trust issues and trends
JITA plans to host the International Investment Funds Association
conference in Japan in October 2016. JITA will use this opportunity toinvite the heads of investment trust industries from various countries
coming to Japan for the conference to attend a s ymposium. Thissymposium will help Japan acquire expertise about the asse t
management industry and investment trusts—whose importance is
growing worldwide—and be hosted in Tokyo with the JSDA and otherrelevant organizations.
(E) Popularize and gain acceptance for Japan’s Stewardship CodeJIAA sent out a questionnaire regarding responses to Japan’s
Stewardship Code in October 2014 to assess members’ declared
acceptance of the code and their system preparations, and announced
the survey results in December that year. JIAA will pursue similar
initiatives to further promote the code and gain acceptance for it.
(F) Hold a continuing series of expanded corporate governance workshops
JIAA has been holding wide-ranging discussions during expanded
corporate governance workshops on the form the asset management
industry should take. Workshop discussions during 2015 have covered
the topic of strategies for becoming a highly competitive asset
management firm, and these discussions will continue. The content of the
discussions will also be disseminated externally.
(G) Provide an environment to persuade domestic institutional investors toinvest in diverse products
Bearing in mind that the number of investors is limited for certain
corporate bond and derivatives products, the organizations acting as

22
22

council secretariat will strive to foster an environment to promote
investments in these products by domestic institutional investors. They
will also encourage greater flexibility in the asset management policies ofdomestic institutional investors.
(H) Further deliberate popularizing and promoting DCs
The JSDA has been working together with JITA in the working grouprelated to the efforts of individual investors to build assets, and continues
to deliberate on tasks related to popularizing and promoting DCs.

(2) Stimulate the respective markets
In view of the issues detailed in 3-1 above, the council decided to implement
the following initiatives on the part of the securities and asset management
industries:(A) Stock, ETF and ETN markets
a. Popularize Corporate Governance Code and gain acceptance for it
Bearing in mind that the revised TSE rules pertaining to Corporate
Governance Code just came into force on June 1 this year, JPX will
carry out publicity efforts designed to help listed companies smoothly
get a handle on Corporate Governance Code and disseminate
information about the status of responses to the code.
b. Diversify product listings, including ETFs, J-REITs, and infrastructurefunds
JPX will work to create and list a variety of appealing ETFs and
J-REITs that investors will want to trade in to help establish Japan’s
ETF and J-REIT market as a global financial center and Asia’s coremarket. Specifically, listings of various asset class ETFs, healthcare
REITs, and infrastructure funds will be promoted. Additionally, PR
activities will be used to expand individual investor segments as away to expand the depth of the ETF and J-REIT market segments.

2323

(B) Bond markets
a. Continue discussions in the Study Group to Vitalize the Corporate
Bond Market
The JSDA has been pursuing new schemes for expanding priceinformation and bondholder safeguards through the Study Group to
Vitalize the Corporate Bond Market, endeavoring to steadily
implement these as well as continue familiarization efforts andprovide information about them so these systems are used.
b. Host a forum on bond market vitalization
In view of the Study Group to Vitalize the Corporate Bond Market’s
efforts to date, the JSDA considers holding a forum on bond market
vitalization, giving personnel throughout the industry a place where
they can exchange information and views and discuss the bondmarket’s current state, issues and measures to stimulate credit
markets, as well as those of international markets.
(C) Derivatives market
a. Conduct financial training for individual investors
Diversified asset management methods and risk management
techniques are viewed as important for individual investors from theperspective of undertaking medium- to long-range asset management.
Havingcorrect

information

about

derivatives

trading

andunderstanding it are also crucial to the effective use of diverse asset
management methods and risk management techniques. JPX andthe rest of the industry have engaged in educational efforts directed at
individual investors through seminars and other means.
b. Make changes in the overall industry’s perceptions pertaining to newmarket and product development
The derivatives market needs to provide both liquidity and a variety of
products to increase the financial and capital markets’ international

24
24status and achieve diversity in the asset management techniques thatinvestors use. For example, JPX will work on measures to offer
diverse products and improve liquidity in the exchange tradedderivatives market. At the same time—bearing in mind thedevelopment of derivatives market by the overall industry, startingwith securities and asset management firms—JPX will work to
expand its use by institutional investors.
(D) Develop markets for professionals and settlement infrastructurea. Promote the use of and investment in the PRO-BOND market
JPX will continue to encourage issuing entities to use its PRO-BOND
market as a way to give the professional market a more international
character.
b. Study how to implement T+1 for government bonds
The JSDA will work with relevant institutions to shorten the settlement
period for government bonds and continue to review the advance
regulatory preparations and reappraisals of market customs required
to implement T+1 by the first half of FY2018.
c. Continue deliberations on changing to T+2 for stocks
The JSDA, TSE and Japan Securities Clearing Corporation (JSCC)
have been acting as joint secretariat for the Working Group on the
Shortening of the Stock Trading Settlement Cycle (T+2). The working
group will carry out the deliberations on this in coordination withindustry representatives.

(3) Other
Along with the preceding efforts, the council decided to implement thefollowing initiatives to strengthen the Tokyo market’s ability to publicize itself
overseas and improve the business environment:25
25

(A) Achieve more robust dissemination of information in English
The organization acting as council secretariat will strive to disseminate
information in English at a similar level and timing to the information
disseminated in Japanese to robustly promote the appeal of Japan’s
financial and capital markets overseas, as well as provide information
thought to strongly relate to nonresident investors and about activities
related to efforts to become a global financial center.
(B) Achieve more robust dissemination of information overseas
To enhance Tokyo’s status as a global financial center, the JSDA willcontinue

to

carry

out

activities

targetedatoverseas

marketrepresentatives. These activities are designed to publicize the Tokyo
market’s attractiveness by holding promotional events such as the Japan
Securities Summit overseas, and improve the information provided in
English.
(C) Expand support for the markets of emerging nations and strengthen
public and private sector coordination
The JSDA will coordinate with other relevant organizations to promoteand bolster technical support activities that employ Japan’s expertise andexperience to develop and sustain the growth of capital markets inemerging nations whose economies are booming. Moreover, coordination
will be strengthened with what is currently known as the Asian Financial
Partnership Center (located in the FSA), set to be reorganized tostrengthen its capabilities and now tentatively renamed the Global
Financial Partnership Center.
(D) Host international financial conferences and attract financial bases ofoperation
The council secretariat organizations will actively seek to invite and hostall kinds of international financial conferences and meetings. For example,
the ITAJ is scheduled to host a symposium on international investment

26
26

trust issues and trends and the International Investment Funds
Association conference in Japan in October 2016. This will strengthen
relations with the investment trust industries of various nations andincrease understanding overseas of the activities of Japan’s asset
management industry.
Moreover, we will support the FSA and Certified Public Accountants andAuditing Oversight Board in their bid to have the permanent secretariat ofthe International Forum of Independent Audit Regulators (IFIAR) in
Tokyo.
(E) Coordinate with the Council for Town Planning to Create Investment and
GrowthThe office of the Council for Town Planning to Create Investment and
Growth, chaired by Toyota Motor Corporation senior advisor Hiroshi
Okuda, was set up within Heiwa Real Estate Co., Ltd. in December 2014.
Its mission is to carry out neutral, effective redevelopment to attract
people and produce investments and growth to help revitalize the
Kabutocho and Kayabacho districts in Nihombashi, maintaining theircharacter through development that recognizes Kabutocho’s special
character as a pioneering district for finance.
In the interim proposals the above council assembled in April 2015,
finance personnel, mainly in asset management, are positioned as
Kabutocho’s new leading actors. The proposal includes redevelopmentthat fosters and attracts financial human resources, financial venturefirms with a focus on asset management, and specialized financial
services contractors while enhancing the interaction with listedcompanies.
Furthermore, the Nihombashi Kabutocho and Kayabacho 1-chome
district was named a new national strategic special zone in the National
Strategic Special Zone Meeting for the Greater Tokyo Area on June 15
this year. The hope is that it will provide support for starting up and2727

developing asset management companies and promote dialogue andinteraction among investors and corporations.
In response to these developments, the council will coordinate with theabove council to support emerging asset management firms and provide
platform functions designed for asset management companies (attracting
organizations to take charge of back-office and other similar operations).
Additional initiatives will be to provide venues for dialogue among
investors and companies (set up various kinds of investor relations
facilities) and provide a business environment designed to build astronger asset management industry.

4-2 Relay requests to the national and metropolitan governments
The following are the items among the issues listed in 3. above that mainly require
national or metropolitan government responses. The council secretariat will
deliberate further on these matters to prepare for appeals to the national andmetropolitan governments.
(1) More robust implementation in English with regard to administration(2) Human resource training at universities and graduate schools(3) Tax system revisions(A) Make NISAs and Junior NISAs permanent, expanding and simplifyingthem(B) Abolish the special corporate tax on DCs(C) Raise the maximum level of DC amounts(D) Provide an environment conducive to promoting intergenerationaltransfers of financial assets (such as reevaluating the appraised
inheritance tax value of listed shares)(E) Expand the scope of profit and loss offsets on financial products toinclude derivatives trading(F) Add other tax system provisions that would contribute to making Tokyo aglobal financial center28
28

(4) Promote flexible administrative oversight regarding financial businesses
operated by overseas financial institutions on Tokyo markets(5) Provide a comfortable living environment for expatriates(6) Use national strategic special zones in efforts to develop the asset
management industry(7) Establish Japanese versions of Emerging Managers Program(8) Change compensation systems of public pensions for fund management

5. Conclusion

This report summarizes the results of the council’s deliberations, which involved
using specialized financial and securities expertise of the securities and asset
management industries to review and outline Japan’s strengths and Tokyo’s role as a
global financial center and related issues. It also addresses initiatives that our
industry should undertake and matters that require action by the national andmetropolitan governments needed to make Tokyo an international financial center.
Efforts have been made to turn Tokyo into a global financial center, but it was difficult
to produce sufficient results during the extended recession and in a deflationary
environment.
The current Japanese economy, however, shows signs of a market and economic
environment sufficient to kindle corporate and individual investments thanks tofinancial liberalization, etc. under Abenomics, which has resulted in lower real interest
rates, rising stock prices, and an improving macroeconomic environment.
Pressed to shift their thinking about corporate management, moreover, the Japanesecompanies that will be targeted for investment are steadily changing. Specifically,
they are steadily implementing corporate governance reforms, which include
government’s growth strategies. Overseas investors have praised these reforms.
Furthermore, it has been noted that Japanese companies’ capital efficiency is low
compared to American and European firms, but many companies are working to

29
29

improving their return on equity, and average ROE levels are improving.
These kinds of changes have brought increasing attention and praise for the Tokyo
market and Japanese companies from both domestic and overseas investors. The
government, public and private sectors need to seize this opportunity and link it toimproving and establishing Tokyo’s position as a global financial center.
Especially regarding the asset management industry, which the council put a priority
on addressing, the industry itself obviously needs to work on issues in view of theimportance of fiduciary duties. Because strengthening the asset management
industry will help provide risk money to growing companies and citizens’ stable asset
formation through that, it is strongly hoped that the national government will actively
foster them as part of national policy.
These efforts to turn Tokyo into a global financial center will not immediately bear fruit.
Instead, prolonged, continuous efforts will be needed.
The council will follow up on the status of this report’s proposals as well as undertakenew policy orientations as needed based on the situation with national andmetropolitan government and industry efforts.

30
30

Attachment 1

Comparisons of Global Financial Centers

31

I. Global Financial Center Rankings
㻌 1. Comparison of major rankings

Rank

March 2015 Global
Financial Centres
Index

2014 Xinhua-Dow
Jones International
Financial Centers
Development Index

New York

1

1

London2

2Hong Kong

3

5

Singapore

4

4

Tokyo

5

3

Sources: Z/Yen Group Limited, Global Financial Centres Index; Xinhua-Dow Jones
International Financial Centers Development Index

2. Global financial center index
March 2011
Rank
London㻝㻌
New York㻞㻌Hong Kong㻟㻌
Singapore㻠㻌㻡㻌 Shanghai (tied for 5th)
Tokyo (tied for 5th)㻢㻌
Chicago㻣㻌
Zurich㻤㻌
Geneva㻥㻌

March 2012

March 2013

March 2014

March 2015

LondonLondon

New York

New York

New York

New York

LondonLondonHong Kong

Hong Kong

Hong Kong

Hong Kong

Singapore

Singapore

Singapore

SingaporeTokyo

ZurichZurichTokyo

Zurich

Tokyo

Tokyo

ZurichChicagoGeneva

Seoul

Seoul

Shanghai

BostonBostonSan Francisco

Seoul

Seoul

GenevaChicagoTorontoFrankfurt

San Francisco

Bostonth㻝㻜㻌Sydney (tied for 10 )Toronto㻌

Assetmanagement

Banking

Government& regulations

Insurance

Industryoriented
services

Human capitalBusiness
environment

New York

1
2
3
4
5

1
2
3
4
5

2
1
4
3
9

1
2
5
4
8

2
1
3
4
5

1
2
3
4
5

1
2
4
3
5

LondonHong Kong
SingaporeTokyo

Financial
Reputation &sectorInfrastructure
generalfactors
development

2
1
3
4
5

2
1
3
5
4

1
2
3
4
6

Source: Z/Yen Group Limited, Global Financial Centres Index
32

3. Xinhua-Dow Jones International Financial Centers
Development Index
2010
Rank
1
New York
2
London3
Tokyo
4
Hong Kong
5
Paris
6
Singapore
7Frankfurt
8
Shanghai
9 Washington, DC
10
Sydney2011
New York
LondonTokyo
Hong Kong
Singapore
ShanghaiParisFrankfurt
SydneyAmsterdam

Financialmarkets
1
2
4
3
5

City
New York
LondonHong Kong
Tokyo
Singapore2012
New York
LondonTokyo
Hong Kong
Singapore
ShanghaiFrankfurt
Paris
ZurichChicago2013
New York
LondonHong Kong
Tokyo
Singapore
ShanghaiParisFrankfurt
ChicagoSydneyIndustrial
support1
2
4
3
6

Growth &development
4
5
6
2
3

2014
New York
LondonTokyo
Singapore
Hong Kong
ShanghaiParisFrankfurt
Beijing
ChicagoService level
1
2
3
4
5

Generalenvironment
2
1
11
3
4

Source: Xinhua-Dow Jones International Financial Centers Development Index

ϩ. Comparisons of Financial Markets
㻌 1. Stock, ETF and ETN markets㻌 㻌 (1) Market capitalization rankings
Rank

Market capitalization
Nation or jurisdiction
at end of 2014
(USD trillion)

Exchange
World

Asia

1

̺

New York Stock Exchange

U.S.

19.4

2

̺

Nasdaq OMX Group

U.S.

7.0

3

1

Japan Exchange Group, Inc.

Japan

4.4

4

̺

London Stock Exchange Group PLC

U.K.

4.0

5

2

Shanghai Stock Exchange

China

3.9

6

̺

Euronext NV

Europe3.3

7

3

Hong Kong Exchanges andClearing Limited

Hong Kong

3.2

8

̺

TMX Group Inc.

Canada2.1

94

Shenzhen Stock Exchange

China

2.1

10

̺

Deutsche Börse AG

Germany

1.7

Source: World Federation of Exchanges (WFE) 
Note: Domestic shares33㻌㻌 㻌 (2) Trading value rankings
Rank
Exchange

Nation or jurisdiction

2014 trading value(USD trillion)

World

Asia

1

̺

New York Stock Exchange

U.S.

14.8

2

̺

Nasdaq OMX Group

U.S.

11.0

3

1

Shanghai Stock Exchange

China

6.1

4

2

Shenzhen Stock Exchange

China

5.9

5

3

Japan Exchange Group, Inc.

Japan

4.8

6

̺

London Stock Exchange Group PLC

U.K.

2.3

7

̺

Euronext NV

Europe1.8

8

4Hong Kong Exchanges and Clearing
LimitedHong Kong

1.5

9

̺

TMX Group Inc.

Canada1.3

10

5

Korea Exchange

Korea

1.3
Source: WFE(3) Number of foreign companies listed on major exchanges(Companies)

Exchange

Number of listedcompanies
at end of 2014

Foreigncompanies

New York Stock Exchange

2,466

527

Japan Exchange Group, Inc.

3,470

12

London Stock Exchange Group
PLC

2,752

572

Hong Kong Exchanges andClearing Limited

1,735

90

Singapore Exchange Limited

775

291
Source: WFE

34

(4) Comparisons of global ETF and ETN markets
Total 2104
trading value(USD billion)

Number of% of totalcompanies
cash equity
listed at thetradingend of 2014

Rank

Exchange

Nation or
jurisdiction

1

New York Stock Exchange

U.S.

39,429

27

1,470

2

Nasdaq OMX Group

U.S.

25,462

23

150

3

Japan Exchange Group, Inc.

Japan

2,527㻌

5

190

4

London Stock ExchangeGroup PLC

U.K.

1,712

7

1,989

5

Deutsche Börse AG

Germany

1,681

13

1,036

6

Shanghai Stock Exchange

China

1,624

3

61

7

Hong Kong Exchanges andClearing Limited

Hong Kong

1,495

10

122

8

Korea Exchange

Korea

1,404

11

172

9

Euronext NV

Europe

837

5

631

10

SIX Swiss Exchange Ltd.

Switzerland

519

7

839

Source: WFE
Note: Only market session and electronic transactions trading value 2. Bond markets
 (䠍) Outstanding government bond balances
Singapore

Hong Kong

End of 2014
End of 2007

U.K.

End of 2004
Japan

U.S.
0

5,000

10,00015,00020,000 (Unit: USD billion)

Sources: Bank for International Settlements, BIS Quarterly Review, September 2007; BIS Quarterly Review, June 201535

(2) Outstanding corporate bond balance (Japan vs. U.S.)(¥ trillion)

1000

936.1

900
800
672.73635.51
632.26583.25559.58700
600
504.35 493.31

500
400

498.31721.01604.32561.88612.29479.9385.88

300

200
100

49.99

0

52.37

53.12

53.22

52.58

52.02

51.62

54.36

54.78

59.4

61.81

61.73

60.72

60.39 59.32

2000㻌 2001㻌 2002㻌 2003㻌 2004㻌 2005㻌 2006㻌 2007㻌 2008㻌 2009㻌 2010㻌 2011㻌 2012㻌 2013㻌 2014㻌
Japan
U.S.
Sources: Japan Securities Dealers Association (JSDA); Securities Industry and Financial Markets Association(SIFMA)
Notes: Foreign bonds included for U.S. data. Respective yearend exchange rates used to convert dollars to yen. (䠏) Comparison of outstanding corporate bond balance to nominal GDP(¥ trillion)

600
500
400
300
200
100
0
Outstanding corporate bond balanceGDP
Comparison of outstanding corporatebond balance to nominal GDP

End of 2012
59.32
474.6

End of 2013
60.39
483.1

End of 2014
60.72
490.6

12.49%

12.50%

12.37%

Sources: JSDA; Cabinet Office36 (4) Number of corporate bond issues by rating(Number of issues) 

500
450
400
350
300
250

200
150
100
50
0

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014

AA or higher

91

140

174

134

146

98

127

121

83

A

164

228

124

221

240

238

247

286

299

BBB

80

57

15

33

73

58

42

51

51

BB or lower

0

0

0

0

0

0

0

0

0

Source: JSDA (5) Corporate bond holdings by investor type (Japan vs. U.S.)
Japan

U.S.
Nonresidents
1%

Other
3.9%

Other
4%

Banks
6.3%

Households
7%
Generalgovernment
12%
Other financial
firms
4%

Nonresidents
24.5%

Insurance firms
and pension
funds
32.4%

Banks
47%
Household(individual
investors)
8.2%

Insurance firms
and pension
funds
25%

Government
1.5%

Source: Bank of Japan
Note: End of 2014 

37Investment
trusts23.1%
Source: Federal Reserve Board
Notes: Includes foreign bonds.
End of 2014.  (6) Corporate bond trading value (Japan vs. U.S.)(¥ trillion)

900

799.98

800
700
600

599.23533.56483.48500

450.41489.89 504.20

466.03459.73451.89419.78 401.04

400

324.09

300
200
100

21.41

22.09

20.88

19.27

19.87

19.8

19.44

18.95

19.78

20.05

19.18

15.67

15.13

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

Japan

U.S.

Sources: JSDA; SIFMA
Notes: Foreign bonds included for U.S. data. Respective yearend
exchange rates used to convert dollars to yen. Shows sum of “outright”
transactions only.

 (䠓) Corporate bond turnover ratio (Japan vs. U.S.)(%)

120.00108.16100.75100.00

90.39
83.99

80.00

80.43

79.34
72.71

69.28

85.46

66.36

57.92

60.00

40.00

68.56

83.11

40.30

41.51

39.71
37.04

38.49 36.42

35.49

31.90

32.48
32.00

31.59

20.00

25.95

25.51

0.00
2002

2003

2004

2005

2006

2007

2008

Japan

2009

2010

2011

2012

2013

2014

U.S.
Sources: JSDA; SIFMA
Notes: Foreign bonds included for U.S. data. Showssum of “outright” transactions only.

38㻌 3. Derivatives markets㻌 㻌 (1) Major exchange groups’ annual derivatives market trading volume 㻌 㻌(Unit: Million)

Rank

Exchange

Nation or
jurisdiction

2014 trading
volume

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

CME Group Inc.
Intercontinental Exchange Inc.
Eurex Exchange
National Stock Exchange of India Ltd.
BM&F Bovespa S.A.
Moscow Exchange Group
Chicago Board Options Exchange
Nasdaq OMX Group
Shanghai Futures Exchange
Dalian Commodity Exchange
Bombay Stock Exchange
Korea Exchange
Zhengzhou Commodity Exchange
Hong Kong Exchanges and Clearing Limited
Japan Exchange Group, Inc.
㻌
Singapore Exchange Limited
London Stock Exchange Group PLC

U.S.
U.S.
Germany
India
BrazilRussia
U.S.
U.S.
China
China
India
Korea
China
Hong KongJapan
㻌
Singapore
U.K.

3,442
2,276
2,097
1,880
1,417
1,413
1,325
1,127
842
769
725
677
676
319
309

26
31

120
50

Source: Futures Industry Association, 2014 FIA Annual Volume Survey(2) Trading volume shares by investor type (Nikkei 225 Futures)
Investment
trusts 1㸣

Other 3㸣Trust banks
3㸣

Individual
investors 10㸣
Securities
companies forown accounts
13㸣
Nonresident
investors 70㸣

Source: Japan Exchange Group, Inc.
Note: During 201439

Ϫ. Asset Management Industry
㻌 Hedge fund managers’ locations in the Asia-Pacific region

New Zealand 2%
Korea 2%Thailand 1%
Other 1%

India 2%China 5%

Japan 9%Hong Kong 36%
Australia 18%

Singapore 22%

40

Source: Preqin
Note: September 2013

Attachment 2

Outline of the Council for Tokyo Global Financial Center Promotional
Activities
September 16, 2014
Japan Securities Dealers Association
Japan Exchange Group, Inc.
The Investment Trusts Association, Japan
Japan Investment Advisers Association
1. Purpose and Objective
To enhance the functions of the financial and capital markets in Japan, a variety of
discussions are being conducted and recommendations made by many sectors tostrengthen Tokyo’s status as a global financial center going forward.
With these movements in mind, securities industry and asset management industry
cooperatively set up the Council for Tokyo Global Financial Center Promotional
Activities to discuss such topics as advantages and disadvantages of Japan and its
role and challenges as a global financial center and to support those activities.
2. Composition and Administration
1) The council comprises market professionals, high profile executives in marketrelated institutions and intellectuals.
2) The council has a Chairperson.
3) Non-member representatives may participate as observers.
4) The Chairperson may, if necessary, invite persons related to discussions
participated in the council.
3. Working groups
1) The Chairperson may, if necessary, set up a working group.
2) The Chairperson shall designate members of the working group.
4. Secretariat
The Planning Division of the Japan Securities Dealers Association shall serve as thesecretariat of the council.

41

Attachment 3
Council for Tokyo Global Financial Center Promotional Activities—Member List
September 2015
Council
Chair

Motoshige Itoh

Professor, Graduate School of Economics, Faculty of
E c o n o m i c s , Th e U n i ve r s i t y o f To k yo

MemberYugo IshidaR e p r e s e n t a t i ve D i r e c t o r a n d C E O , L a za r d J a p a n
A s s e t Ma n a g e m e n t K . K .

MemberKazutoshi Inano

Chairman and CEO, Japan Securities Dealers Association

MemberYoichiro Iwama

C h a i r m a n , J a p a n I n ve s t m e n t A d vi s e r s A s s o c i a t i o nMemberNobuyuki Iwamoto

D e p u t y P r e s i d e n t , D a i wa S e c u r i t i e s C o . L t d .

MemberSadakazu Osaki

H e a d o f R e s e a r c h , C e n t e r f o r S t r a t e g i c Ma n a g e m e n t
and Innovation, Nomura Research Institute, Ltd.

MemberAkiyoshi Oba

P r e s i d e n t a n d C E O , To k i o Ma r i n e A s s e t Ma n a g e m e n tCo., Ltd.

MemberSusumu Okano

S e n i o r E xe c u t i ve Ma n a g i n g D i r e c t o r , H e a d o f
R e s e a r c h D i vi s i o n , D a i w a I n s t i t u t e o f R e s e a r c h L t d .

MemberYuri Okina

V i c e C h a i r m a n o f t h e I n s t i t u t e , Th e J a p a n R e s e a r c hInstitute, Limited

MemberAtsushi Saito

G r o u p C E O , J a p a n E xc h a n g e G r o u p , I n c .

From the first
to fourthcouncilMemberAkira Kiyota

G r o u p C E O , J a p a n E xc h a n g e G r o u p , I n c .

From the fifthcouncil andthereafter

MemberNobuyuki Koga

Chairman of the Board of Directors, Nomura
Securities Co., Ltd.

MemberTakumi Shibata

R e p r e s e n t a t i ve D i r e c t o r , P r e s i d e n t a n d C E O , N i k k o
A s s e t Ma n a g e m e n t C o . , L t d .

MemberMakoto Shirakawa

C h a i r m a n , Th e I n ve s t m e n t Tr u s t s A s s o c i a t i o n , J a p a n

MemberShigemitsu Sugisaki

Vice Chairman, Goldman Sachs Japan Co., Ltd.

MemberTakuhide Hagino

P r e s i d e n t & C E O , P i c t e t A s s e t Ma n a g e m e n t ( J a p a n )Ltd.

MemberPhilippe Avril

C E O a n d R e p r e s e n t a t i ve D i r e c t o r , B N P P a r i b a s
Securities (Japan) Limited

ObserverFinancial Services Agency

ObserverInternational Bankers Association of Japan

Observer

Ministry of FinanceObserverJapanese Bankers Association

ObserverTokyo Metropolitan Government

ObserverBank of Japan(Honorifics omitted; Japanese alphabetical order)
42

Attachment 4

Past meetings of Council for Tokyo Global Financial Center Promotional Activities
Meeting DateFirst
meeting

October
10, 2014

Topics and Speakers
1. Administration policy and future plan of the council
2. Current state of the Tokyo market as a global financial
centerGuest speaker: Tomoyuki Teraguchi, Senior Managing
Director, Nomura Securities
Current state and evaluation of the Tokyo market

Secondmeeting

January
15, 2015

Third
meeting

March 20

Guest speaker: Hidehiro Imatsu, Co-head, Japan Securities
Division and Asia Pacific Macro Trading Securities Division,
Goldman Sachs Japan
Challenges facing exchange market in promoting the Tokyo
market as a global financial center
Speakers:
Atsushi Saito, Director＆Representative Executive Officer,
Group CEO, Japan Exchange Group
Yasuyuki Konuma, Executive Officer, Tokyo Stock Exchange
1. Proposal for the Japanese asset management industry
Speaker: Takuhide Hagino, President & CEO, Pictet AssetManagement (Japan) Ltd.

FourthmeetingFifthmeeting

May 29August 7

2. Challenges and proposal for development and growth of
the Japanese asset management industry
Speaker: Yugo Ishida, Representative Director and CEO,Lazard Japan Asset Management K.K.
1. Draft report of the Council for Tokyo Global Financial
Center Promotional Activities
2. Establishing the Working Group on Asset Management(provisional name)43