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103D CONGRESS
1ST SESSION
H. R. 420
To require the Secretary of the Treasury to perform a study of the structures,
operations, practices and regulation of Japan’s capital and securities
markets, and their implications for the United States.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. TORRICELLI introduced the following bill; which was referred jointly to
the Committees on Energy and Commerce and Banking, Finance and
Urban Affairs
A BILL
To require the Secretary of the Treasury to perform a study
of the structures, operations, practices and regulation
of Japan’s capital and securities markets, and their im-
plications for the United States.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Foreign Capital and
Securities Markets Study Act of 1993’’.
SEC. 2. FINDINGS.
The Congress finds that—
(1) Japan’s capital and securities markets have
assumed a global significance;
(2) growing interaction between the capital and
securities markets of the United States and Japan
can affect national policies on exchange rates, in-
vestment, fiscal policy, and public debt;
(3) Japan’s capital and securities markets have
different structures, operations, practices, and regu-
latory regimes than United States markets;
(4) the different structures, operations, prac-
tices, and regulatory regimes of Japan’s capital and
securities markets could cause significant economic
effects in the United States; and
(5) a study by the Secretary of the Treasury
therefore is required to gain a fuller understanding
of the structures, operations, practices, and regula-
tion of Japan’s capital and securities markets and
their implications for the United States.
SEC. 3. STUDY OF CAPITAL AND SECURITIES MARKETS.
(a) IN GENERAL.—The Secretary of the Treasury
(hereafter referred to as the ‘‘Secretary’’) shall conduct
a study of the capital and securities markets of Japan in
accordance with subsection (b). Not later than 1 year after
the date of enactment of this Act, the Secretary shall sub-
mit a report to the Congress on the structures, operations,
practices, and regulation of Japan’s capital and securities
markets, and their implications for the United States.
(b) STUDY TOPICS.—In conducting the study re-
quired by subsection (a), the Secretary shall consider—
(1) with regard to Japan’s capital and securi-
ties markets—
(A) methods used by Japanese companies
to raise capital, and the cost of such capital, at
present and historically;
(B) Japanese methods of corporate govern-
ance, particularly with regard to the effective-
ness of shareholder meetings, proxy solicita-
tions, and other methods of shareholder partici-
pation, the strength of the consumer movement
in Japan and its implications for shareholder
rights, techniques used by corporate manage-
ment regarding shareholder participation in cor-
porate governance, and the general effectiveness
of shareholder rights in the supervision of cor-
porate managers;
(C) practices and techniques used by Japa-
nese securities brokers and dealers;
(D) the prevalence of loss guarantees and
similar practices in securities dealing;
United States, and capital repatriation from the
United States;
(J) the adequacy of disclosure require-
ments imposed on industrial corporations,
banks, securities houses, and other financial in-
stitutions and the extent of compliance by such
organizations, including disclosure of primary
bank and reciprocal or similar shareholding re-
lationships;
(K) the use of securities and real estate
holdings as collateral, and the implications of
any decline in value of such collateral; and
(L) the adequacy of judicial relief available
to foreign investors claiming injury under Japa-
nese law, including, but not limited to, the
availability of administrative remedies, the suf-
ficiency and effectiveness of discovery proce-
dures and the timeliness of relief; and
(2) with regard to the economic effects of such
markets on the United States—
(A) the magnitude of United States invest-
ment in Japanese securities, particularly by
United States pension funds, and the implica-
tions for United States investors of the struc-
tures, operations, practices, and regulation of
Japan’s capital and securities markets, includ-
ing the safety of securities investments, the va-
lidity of price and volume signals on Japanese
exchanges, the ability to participate in cor-
porate governance, and other protections of
shareholders’ rights;
(B) the implications for United States se-
curities markets, particularly the risk that de-
velopments in Japan could have consequences
for the United States;
(C) the implications for United States cap-
ital markets, including international liquidity,
United States interest rates, Japanese invest-
ment in the United States, capital repatriation
to Japan, and domestic capital supply;
(D) the effect on United States macro-
economic policies, including interest rate policy,
exchange rate policy, fiscal policy, monetary
policy, and public debt policy;
(E) the implications for the competitive-
ness of United States enterprises, including the
comparative cost of capital, duties to sharehold-
ers, research and development expenditures,
and investments in plant and equipment; and
(F) the effectiveness of remedies available
to United States investors in Japanese securi-
ties, and the amount of dealing in Japanese se-
curities in the United States, whether directly
or indirectly.
(c) CONSULTATIONS.—The Secretary shall consult
with the Chairman of the Securities and Exchange Com-
mission, the United States Trade Representative, and
such other agencies or persons as the Secretary may deem
necessary to complete the study and report required under
this Act. The Secretary may consult with agencies of the
Government of Japan, Japanese exchanges, and such
other Japanese persons or organizations as the Secretary
may deem appropriate.
SEC. 4. DEFINITIONS.
For purposes of this Act the term ‘‘security’’ has the
same meaning as in section 3(a)(10) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(10)).
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