Regulation
Regulation: Japan
Japanese regulation, including the Financial Instruments and Exchange Act, mandatory clearing, margin rules, trade reporting and suitability.
Introductory1 pagePractitioner9 pages
1Legal Framework
- IntroductoryJapan's Derivatives Regulation at a GlanceThe Financial Instruments and Exchange Act divides derivatives transactions into three types (market, over-the-counter, and foreign market), and the Commodity Derivatives Transaction Act governs transactions in commodities.
- PractitionerThe Financial Instruments and Exchange Act and DerivativesThe FIEA defines derivatives transactions in three categories by where they are conducted, and sets the types of transactions and the range of underlying assets in its articles.
- PractitionerThe Financial Services Provision ActThe Act aims to protect customers and improve the usage environment, and it sets rules for selling financial instruments across sector-specific laws.
- PractitionerThe Commodity Derivatives Transaction ActCommodity derivatives transactions are of three kinds, transactions on commodity markets, foreign commodity market transactions, and over-the-counter commodity derivatives transactions, and commodities include agricultural products, minerals, and electricity.
- PractitionerSupervisory Guidelines of the Financial Services AgencyStatutes such as the Banking Act set the obligations, and the supervisory guidelines show the points the authorities focus on when they check controls.
2OTC Derivatives Regulation
- PractitionerMandatory ClearingThe obligation arises when a designated transaction is entered into, unless it falls under an exception set by Cabinet Office Order.
- PractitionerMargin Requirements for Uncleared DerivativesThe margin requirements call for variation margin and initial margin to be exchanged on OTC derivative transactions that are not cleared.
- PractitionerTrade ReportingThe legal basis is Articles 156-63 to 156-66 of the Financial Instruments and Exchange Act and a Cabinet Office Order.
- PractitionerElectronic Trading Platform MandateThe notice as amended covers transactions that meet all its requirements. These include yen swaps with a compounded-in-arrears TONA floating rate.