Foreign Capital and Securities Markets Study Act of 1993

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, investment, fiscal policy, and 
        public debt;
            (3) Japan's capital and securities markets have different 
        structures, operations, practices, and regulatory regimes than 
        United States markets;
            (4) the different structures, operations, practices, 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 structure, 
        operation, practice, and regulation 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 the enactment of this Act, the 
Secretary shall submit a report to the Congress on the structure, 
operation, practice, and regulation of Japan's capital and securities 
markets, and their implications for the United States.
    (b) Study Topics.--In conducting the study required by subsection 
(a), the Secretary shall consider--
            (1) with regard to Japan's capital and securities 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 governance, 
                particularly with regard to the effectiveness of 
                shareholder meetings, proxy solicitations, and other 
                methods of shareholder participation, the strength of 
                the consumer movement in Japan and its implications for 
                shareholder rights, techniques used by corporate 
                management regarding shareholder participation in 
                corporate governance, and the general effectiveness of 
                shareholder rights in the supervision of corporate 
                managers;
                    (C) practices and techniques used by Japanese 
                securities brokers and dealers;
                    (D) the prevalence of loss guarantees and similar 
                practices in securities dealing;
                    (E) the prevalence of companies having common 
                directors, especially directors common to financial 
                institutions and client industrial companies;
                    (F) the practice known as ``stable shareholding'' 
                and other reciprocal shareholding relationships, 
                especially between vendors and customers;
                    (G) the role played by banks and other financial 
                institutions in capital and securities markets, 
                particularly with regard to equity participation, 
                participation in corporate governance, investment 
                practices, and adequacy of collateral;
                    (H) the financial strength of Japanese banks, 
                including the adequacy of capital and loan loss 
                reserves, the impact of current trends in securities 
                values on bank capital, and the impact of current 
                trends in real estate values on bank profitability, 
                loan defaults, and the adequacy of collateral;
                    (I) trends in Japanese real estate and securities 
                values, particularly in relation to savings rates, the 
                adequacy of collateral, loan defalcations, 
                bankruptcies, investment in the United States, and 
                capital repatriation from the United States;
                    (J) the adequacy of disclosure requirements imposed 
                on industrial corporations, banks, securities houses, 
                and other financial institutions and the extent of 
                compliance by such organizations, including disclosure 
                of primary bank and reciprocal or similar shareholding 
                relationships;
                    (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 Japanese law, 
                including the availability of administrative remedies, 
                the sufficiency and effectiveness of discovery 
                procedures 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 investment in 
                Japanese securities, particularly by United States 
                pension funds, and the implications for United States 
                investors of the structures, operations, practices, and 
                regulations of Japan's capital and securities markets, 
                including the safety of securities investments, the 
                validity of price and volume signals on Japanese 
                exchanges, the ability to participate in corporate 
                governance, and other protections of shareholders' 
                rights;
                    (B) the implications for United States securities 
                markets, particularly the risk that developments in 
                Japan could have consequences for the United States;
                    (C) the implications for United States capital 
                markets, including international liquidity, United 
                States interest rates, Japanese investment in the 
                United States, capital repatriation to Japan, and 
                domestic capital supply;
                    (D) the effect on United States macroeconomic 
                policies, including interest rate policy, exchange rate 
                policy, fiscal policy, monetary policy, and public debt 
                policy;
                    (E) the implications for the competitiveness of 
                United States enterprises, including the comparative 
                cost of capital, duties to shareholders, research and 
                development expenditures, and investments in plant and 
                equipment; and
                    (F) the effectiveness of remedies available to 
                United States investors in Japanese securities, and the 
                amount of dealing in Japanese securities in the United 
                States, whether directly or indirectly.
    (c) Consultations.--The Secretary shall consult with the Chairman 
of the Securities and Exchange Commission, 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 Exchange Act of 1934 (15 
U.S.C. 78c(a)(10)).

Summary: Foreign Capital and Securities Markets Study Act of 1993 - Directs the Secretary of the Treasury to study and report to the Congress on the capital and securities markets of Japan and their implications for the United States.