The Financial Instruments and Exchange Law (FIEL) was passed by Japan's Diet in June 2006 and superseded the Japanese Securities and Exchange Law (SEL), the Securities Investment Advisory Law (SIAL) and several other securities laws on September 30 2007, marking Japan's most sweeping securities law reform in decades.
The stated goal of the FIEL is to impose integrated "cross-sectional" regulation on all investment vehicles used for investments in Japan. This has increased the regulatory burden on certain types of investment vehicles, particularly so-called silent partnerships (tokumei kumiai, or TKs), that had been lightly regulated under the SEL. Regulatory inconsistencies also remain, as the FIEL did not replace the Investment Trust and Investment Company Law (ITICL), which will continue to govern investment trusts and corporate vehicles. The FIEL also raises several unanswered questions, as noted below.
The FIEL regulates all forms of collective investment schemes (CIS) unless an exemption is available....