The Financial Services Agency of Japan (FSA) plans to
establish a new law to regulate financial products and
services. Although the details of the law are not yet decided,
it is expected to regulate investment services in similar
fashion to the UK's Financial Services and Markets Act
Financial products are currently regulated by different laws
depending on the type of product. One of the most important
laws is the Securities and Exchange Law (SEL) that regulates
securities, which include government bonds, corporate bonds,
stock certificates and certain legal interests specified as
deemed securities. The types of financial products included in
the term securities have increased over the years (the
most recent example is the addition of interests in
partnerships, which came into effect on December 1 2004), but
it does not cover all investment products and services.
Apart from the SEL, investment trusts are regulated by the
Law Concerning Investment Trusts and Investment Corporations.
The Law for Financial Futures (despite its name) generally
regulates financial derivatives such as options, but was
amended only recently to include foreign exchange margin
transactions as of July 1 2005. Before the amendment, investors
were not protected from margin transaction dealers because the
scope of the derivatives law was limited to transactions on
Reportedly, the new law is intended to replace the existing
regulatory laws mentioned above. It will also regulate various
investment services in a comprehensive and harmonized manner.
The FSA aims to establish the new law in 2006.