Silviase/jgov_v1.4_full_ann huggingface dataset:
instruments debt assumption service solely on commodity-related market derivative transactions.

C. The FSA made required revisions with regard to the provisions relating to administrative monetary penalties due to the addition of commodity related market derivatives transactions.

D. Provisions regarding matters consulted with each minister having jurisdiction over the commodity markets

E. Designation of the scope of customer assets related to commodity-related market derivatives transactions

F. Provisions regarding classification management of securities and money related to commodity-related market derivatives transactions

G. Provisions regarding books and documents related to commodity-related market derivatives transactions

H. The FSA included holdings of government bonds in the separate management method of clearing margin by financial instruments exchanges and clearing organizations
### d. Improvement and management of disclosure systems

### 20. Development of disclosure systems

Based on the practices of securities trading and demands of investors and issuers, the FSA has developed the disclosure systems in light of making them investor friendly and requiring issuers to disclose investment information that is truly necessary for investors. In addition, the FSA considers it important to reflect the practices of securities trading and demands of investors and issuers.

Specifically, the FSA developed the systems as described below.

21. Exemption granted to foreign companies from the obligation to submit annual securities reports

Reflecting deregulation requests, the FSA amended the “Order for Enforcement of the Financial Instruments and Exchange Act” and “Cabinet Office Ordinance on Disclosure of Corporate Affairs, etc.” The main amendments are as follows (promulgated and enforced on August 26, 2013).

(1) As is the case with domestic companies, when the number of shareholders of a foreign company in Japan has been less than 300 for five successive years, the foreign company may apply to be exempted from the obligation to submit annual securities reports.

(2) The FSA corrected the discrepancy between the scope of issuer and related parties subject to the secondary distribution of securities and the scope of issuer and related parties who are required to submit securities notification statements and prepare a prospectus.

(3) With regard to quarterly reports to be prepared by foreign companies, in the case where a foreign company requests approval to extend a deadline for submission of quarterly reports on the ground of foreign laws, regulations and practices, the FSA rationalized its approval for the extension of the deadline for the submission of all quarterly reports so that it will be applicable to the subsequent submissions by such foreign company until the laws, regulations and practices in issue are extinguished or changed.

### 22. Review of reasons for the submission of extraordinary report on regulated securities

In response to the Act for Partial Revision of the Financial Instruments and Exchange Act, etc. (law No. 45, 2013), the FSA introduced regulations on insider trading regarding the transactions of investment securities issued by an investment corporation. This amended Act brought about revisions to the “Cabinet Office Ordinance on Disclosure of Information, etc. of Regulated Securities.” Specifically, the FSA added the following grounds for the
submission of an extraordinary report on regulated securities (including investment securities) for the extraordinary report (promulgated on February 14, 2014 and enforced on April 1, 2014).

(1) Determination of change in major subsidiary or affiliate

(2) Material change in management structure of an investment fund regarding the investment trust securities

(3) Material disaster

(4) Filing or resolution of lawsuit

(5) Approval of the Board of Officers regarding merger of investment corporations

(6) Notification of consolidation of domestic or foreign investment trusts

(7) Petition for bankruptcy proceedings

(8) Likelihood of uncollectible or delayed accounts receivable due to dishonored checks

(9) Occurrence of events with a significant effect on financial condition

(10) Dispositions including rescission of registration or suspension of business

(11) Dissolution or decision of proposal to dissolve

23. Development of disclosure regulations in relation to the revisions of the regulations on investment trusts and investment corporations

Based on the final report issued by the “Working Group on Review of Investment Trust and Investment Corporation System” (the First Subcommittee of the Sectional Committee on Financial System of the Financial System Council) published on December 12, 2012, the FSA amended the “Order for Enforcement of the Financial Instruments and Exchange Act” and the “Cabinet Office Ordinance on Disclosure of Information, etc. of Regulated Securities.” The main amendments are as follows (promulgated on July 2, 2014 and enforced on December 1, 2014).

(1) In response to the amendment of the Financial Instruments and Exchange Act, the FSA introduced a system that deems a document describing only “securities information” (documents describing matters regarding subscription) as a securities registration statement in the case where such a document is submitted together with the annual securities report. Accordingly, the FSA designated “investment trust beneficiary securities” as securities subject to this new system.

(2) In relation to a substitution report system, the rules of the Financial Instruments Firms Association were designated as the rules similar to the “rules of financial instruments exchanges.”

(3) Requirement to include information regarding the services to be provided in consideration for sales commissions and trust fees as well as investment
risk involved using a chart for the comparison of the net asset value with other representative investment assets in securities registration statement and prospectus was introduced.

(4) In the case where a trustee issuing beneficiary certificates is an annual securities report submitting company, the trustee is no longer required to describe the financial statements in the column of “trustee information” of a securities registration statement, but instead, it is satisfactory to include in such column that the trustee submitted the ongoing disclosure documents.

24. Review of joint operating money trusts with compensation agreement on losses in principal

The issue date as securities of beneficiary interest regarding a joint operating money trust with compensation agreement on losses in principal (so-called “self-benefit trust”) was changed from “effective date of joint operating money trust” to “transfer date of beneficiary interest” as in the case of an ordinary self-benefit trust. In addition, the Trust Business Act is applicable to the agency and/or brokerage services related to the conclusion of the trust agreement (promulgated on March 24, 2014 and enforced on April 1, 2014).

### 25. Management of disclosure systems

With regard to disclosure documents submitted by companies, it is important to ensure that information necessary for investment judgment by investors is disclosed properly in an easy-to-understand and investor-friendly manner without giving a misleading description. For this reason, the FSA, together with each local finance bureau, has conducted a review of disclosure documents submitted and taken appropriate measures on violations.

### 26. Review of disclosure documents

## (1) Review of annual securities reports

In order to ensure the adequacy of the information contained in the annual securities reports, the FSA conducted the following reviews and published the results.

i) Review of the compliance by each company with the newly applied disclosure regulations and accounting standards.

ii) Focused review of selected companies in accordance with the priority issues.

iii) Focused review based on timely disclosure or information provided to the FSA.

In addition, based on the on-going focused review of annual securities
reports, the FSA announced the matters that need to be addressed in annual securities reports (FY 2014). Furthermore, the FSA published the plan to review annual securities reports for FY 2014.

(2) Review of other disclosure documents

Each local finance bureau has checked disclosure documents other than annual securities reports at the time of receipt to ensure proper disclosure. For example, each local finance bureau checked the appropriateness of the description on securities registration statements submitted by listed companies in the case of large-scale third party allotment of shares and on tender offer notifications submitted by tender offerors, and required the submitting companies to correct the description, if necessary.

27. Decision on commencement of trial procedures regarding administrative monetary penalty payment orders

The FSA made a decision to commence trial procedures regarding administrative monetary penalty payment orders imposed on issuers that submitted disclosure documents containing a false statement on important matters with the aim of preventing violations adequately and ensuring the effectiveness of the regulations.

28. Issuance of warnings to those engaging in soliciting the securities without giving notification

In recent years, mostly elderly people have been targeted for solicitation, in particular, for “unlisted stocks,” “private placement bonds” and “investment funds.” There were some cases where, despite the necessity to file securities registration statements to meet the requirement of offering for subscription of the securities, the violators engaged in soliciting the securities without complying with the procedures.

For this reason, the FSA issued warnings based on Guideline for the Disclosure of Corporate Affairs to those who were found to engage in such solicitation without notification. The FSA encouraged the issuers to correct their behaviors and also urged the investors to take precautions.

In the program year 2013, the FSA issued one warning.
e. Development of systems related to financial market

29. Necessary measures relating to the establishment of an infrastructure fund market (not yet promulgated)

Japan Exchange Group, Inc. planned to establish a market for listing infrastructure funds in the legal form of an investment corporation and investment trust. Accordingly, the FSA announced a legal revision regarding the addition of infrastructure assets (renewable energy power generation facilities and right to operate public facility etc.) to the specified assets (assets that may be mainly invested in by investment corporations and investment trusts) on June 6, 2014 (scheduled to be promulgated and enforced on September 3, 2014).

30. Review of a price disclosure system regarding transactions outside financial instruments exchange markets using proprietary trading systems (PTS) (not yet promulgated)

With regard to reporting related to trading outside financial instruments exchange markets, the FSA formulated an amendment of the Cabinet Office Ordinance in order not to require real-time reporting of individual stock prices by PTS operators (within five minutes), which was published on May 27, 2014 $ ^{3} $ (scheduled to be promulgated on July 14, 2014, and enforced on September 5, 2016).

This amendment is to be performed in order to reduce the workload of PTS operators and the Japan Securities Dealers Association (JSDA) that will receive and announce the prices.

31. Disclosure of Proposed Cabinet Order and Cabinet Office Ordinance Regarding the Review of Specially Permitted Businesses for Qualified Institutional Investor, etc.

The FSA formulated proposed revisions of Order for Enforcement of the Financial Instruments and Exchange Act and Cabinet Office Ordinance on Financial Instruments Business, etc., to the effect that the scope of investors to which those engaging in specially permitted businesses for qualified institutional investor, etc. may sell investment funds will be changed from the current “One or more qualified institutional investors + 49 or less non-qualified institutional investors” to “One or more qualified institutional investors + 49 or less persons acknowledged to have certain investment decision capabilities.”
The proposal was published on May 14, 2014 $ ^{4} $ .

### 32. Expansion of central clearing obligation

The “Act for Partial Revision of the Financial Instruments and Exchange Act, etc.” that was established in May 2010 (hereinafter, “Amended FIEA 2010”) introduced the central clearing obligation (enforced in November 2012). The “Summary of Discussions in ‘Study Group on OTC Derivative Market Regulation’” (published in December 2011) indicates that the FSA intends to expand the scope of persons and financial instruments subject to the central clearing obligation in two years after the enforcement.

In line with the approach, the FSA revised the Cabinet Office Ordinance to expand the scope of persons and financial instruments with respect to yen interest rate swap transactions and improve the regulations of over-the-counter derivative transactions (promulgated on June 20, 2014).

(1) The FSA specified that financial instruments business operators subject to the central clearing obligation are those whose average notional principal amount of the over-the-counter derivative transactions (each month-end in previous years) was JPY 300 billion or more (JPY 1 trillion or more for the period from December 1, 2014 to November 30, 2015) (to be enforced on December 1, 2014).

(2) The FSA added Euroyen TIBOR 3 months (within five years maturity) and Euroyen TIBOR 6 months (within 10 years maturity) to the scope of financial instruments subject to the central clearing obligation (scheduled to be enforced on July 1, 2015).

33. Review of restriction on underwriting business for parent/subsidiary corporation

The FSA reviewed the restriction on lead-management by a financial instruments business operator whose parent or subsidiary corporation issues securities. Specifically, the FSA revised the Cabinet Office Ordinance on Financial Instruments Business, etc. to include investment securities and investment corporation bond certificates in the scope of securities exempt from the application of the regulation, in addition to the share certificates and corporate bonds that were previously exempt (promulgated on May 28, 2014 and enforced on June 1, 2014).

### 34. Review of firewall regulations

In response to requests for relaxation of the firewall regulations, the FSA
revised the Cabinet Office Ordinance on Financial Instruments Business, etc. as follows (promulgated on March 28, 2014 and enforced on April 1, 2014).

(1) With regard to the regulations in the case where a bank and its securities affiliate communicate non-disclosure information of an issuer or customer, which is subject to one of the firewall regulations, the FSA took the following measures:

A. Relaxation of written consent requirements allowing for exclusion from the application.

B. Review of the scope of “business related to internal management” allowing for exclusion from the application.

C. Flexible provision of opt-out opportunities for issuers and customers.

(2) At the same time, with regard to the restriction on communication of non-disclosure information, the FSA published a Q&A that shows applicable examples in mergers and acquisitions cases.

### 35. Comprehensive review of short selling regulations

In respect of short-selling regulations, with reference to the regulatory trends in foreign countries, the FSA revised the Order for Enforcement of the Financial Instruments and Exchange Act (promulgated on August 26, 2013 and enforced on November 5, 2013).

## (1) Price regulation

The FSA revised the framework from continuous application of the regulations to the effective period applicable until the close of the relevant day and the following trading day for stocks whose values dropped by 10% or more as a general rule.

## (2) System for reporting and publication of short positions

The FSA abolished the time framework of the system for reporting and publication of short positions that was introduced as a temporary measure, and made the obligation of reporting and publication permanent. The FSA also revised the current reporting and publication levels (ratio of short positions to the total number of shares issued: 0.25% or more for both reporting and publication) to different levels of 0.2% or more for reporting and 0.5% or more for publication, respectively.

(3) Ban on short sales in which stocks are not owned or borrowed at the time of selling

The FSA abolished the time framework of the ban on selling stocks short without owning or borrowing the stocks at the time of selling that was introduced as a temporary measure, and made the measure permanent.

36. Reorganization and market integration of the Japan Exchange Group
(developments regarding financial instruments exchanges)

The Tokyo Stock Exchange (hereinafter, “TSE”) and the Osaka Securities Exchange (hereinafter, “OSE”) merged their management operations on January 1, 2013. The new organization includes stock exchanges (TSE and OSE), a clearing organization (Japan Securities Clearing Corporation) and a self-regulation corporation (TSE Regulation) under the holding company “Japan Exchange Group” (hereinafter, “JPX”).

JPX implemented an integration of cash markets through the merger of OSE’s cash market into TSE’s one on July 16, 2013 $ ^{5} $ , and then also implemented an integration of derivative markets through the merger of TSE’s derivative market into OSE’s one on March 24, 2014 $ ^{6} $ . As a result, JPX completed a series of reorganizations associated with management integration.

37. JPX-Nikkei Index 400 (developments regarding financial instruments exchanges)

JPX and TSE, in collaboration with the Nihon Keizai Shimbun, developed “JPX-Nikkei Index 400,” a new stock index consisting of “component companies attractive to investors” meeting global investment requirements, e.g., profitability and corporate governance, and commenced computation from January 6, 2014.

Accordingly, there are several financial instruments linked to JPX-Nikkei Index 400, such as ETFs listed on TSE and a large number of public investment trusts. In addition, Osaka Exchange is scheduled to start futures trading of the index from November 25, 2014.

38. Trends in development of securities and derivatives settlement system

In response to the recent global financial crisis, the FSA summarized the issues to be addressed immediately in Japan’s financial and capital markets, titled “Development of Institutional Frameworks Pertaining to Financial and Capital Markets,” $ ^{7} $ which was published in January 2010.

Accordingly, the FSA stipulates that Amended FIEA 2010 contains the
mandatory use of certain over-the-counter derivative transactions by clearing organizations and the archiving and reporting system of the trade data. The FSA promulgated the relevant Cabinet Order in May 2012 and Cabinet Office Ordinance in July 2012.

39. Actions regarding securities and derivatives settlement system

(1) Improvement of stability and transparency of the settlement of over-the-counter derivative transactions

As described in Paragraph 32, the FSA promulgated the relevant Cabinet Office Ordinance with the aim of expanding the scope of persons and financial instruments subject to a central clearing obligation.

In addition, in response to the establishment of the Act for Partial Revision of the Financial Instruments and Exchange Act, etc. (in September 2012) that stipulates the mandatory obligation to use an electronic trading platform for certain over-the-counter derivative transactions, the FSA exchanged opinions with market participants for the development and publication of the relevant Cabinet Order and the Cabinet Office Ordinance with the aim of facilitating smooth enforcement of the Act.

(2) Strengthening the securities settlement and clearing functions for government bond trading and stock lending transactions

Market participants published the “Roadmap regarding the settlement risk reduction of government bond trading” in June 2010 on the basis of the “Development of Institutional Frameworks Pertaining to Financial and Capital Markets” and compiled a preliminary version of the grand design of trading methodologies for further shortening the settlement period of government bond trading by market participants $ (T + 1) $ . In addition, the Japan Securities Clearing Corporation and Japan Government Bond Clearing Corporation merged their management operations in October 2013 to improve the strength of government bonds clearing organizations. Trust banks have started to participate in the Japan Securities Clearing Corporation since June 2014.

In addition, based on the “Roadmap on settlement risk reduction related to stock lending transactions” that was published in December 2010, the relevant institutions implemented a revision of the rules and system support. As a result, DVP Settlement of stock lending transaction was introduced in January 2014.

The FSA has actively participated in these initiatives, and also provided support for market participants, including publication and dissemination of the roadmap that has been updated on a semi-annual basis.
via the FSA’s website (December 2013 and June 2014).

40. Japan’s response to IFRS and international trends

(1) Japan’s response to the International Financial Reporting Standards (IFRS)

### A. Circumstances

In June 2013, the Business Accounting Council compiled “The Present Policy on the Application of International Financial Reporting Standards (IFRS)” (hereinafter, “Present Policy”) on how to address IFRS in Japan. The Present Policy suggests that it is important to achieve the accumulation of optional application of IFRS, and recommends addressing IFRS in respect of (i) relaxation of statutory requirements for voluntary application of IFRS; (ii) formulation of partly modified IFRS in light of “IFRS as they should be” (modified international standards); and (iii) simplification of the disclosure of non-consolidated (single-entity) financial statements (hereinafter, “these Measures”).

On the other hand, the Present Policy indicated then that it was too early to make a decision as to whether the IFRS should be mandatorily applied. In this regard, the Present Policy suggests that the relevant players should continue discussions through verification and confirmation of the attainment or progress of these Measures, including the trends of the number of companies that have applied IFRS, while also assessing the international situation, such as the trends of the United States and IFRS standards development.

In addition, there are 42 companies that have already adopted IFRS and plan to adopt IFRS through timely disclosure as of June 30, 2014 $ ^{8} $ .

B. Responses to the measures indicated in the “Present Policy”

(A) With regard to the relaxation of statutory requirements for voluntary application of IFRS, the FSA revised the rules on consolidated financial statements in October 2013. In this revision, out of optional application requirements, the FSA abolished two requirements, namely “listed companies” and “Conducting financial or business activities internationally” (however, no change for the requirements on efforts to ensure adequacy of consolidated financial statements).

(B) As for the “formulation of modified international standards,” the Accounting Standards Board of Japan (ASBJ) commenced studies from August 2013 (under examination as of June 30, 2014).