[Introduction] The Financial Services Agency has published explanatory materials on internal audits of financial instruments business operators and others!

Financial Services Agency press releases, etc.

Financial instruments business operators are required to establish systems that take into account regulations such as relevant laws and regulations (such as the Financial Instruments and Exchange Act), supervisory guidelines, and other guidelines.
Each regulation is continually reviewed by the Financial Services Agency, and the financial instruments trading industry is one of the sectors in Japan where reforms are occurring most actively.
In addition to the fact that amendments are made frequently, the period between promulgation and enforcement is often short, and often promulgation and enforcement occur simultaneously.

For these reasons, we are constantly receiving inquiries from our clients, who are financial instruments traders, about how to respond to the amendments.

One of the sources of information we use to keep up with amendments is press releases from the Financial Services Agency.
Before the amendments are published, public comments will be solicited, and committees and councils will be held and their minutes made public.

Introduction of the contents of the "Roundtable Discussion on Enhancing Internal Audits at Financial Institutions"

In this topic, we will introduce the contents of the press releases and other materials from the Financial Services Agency, based on the explanatory materials from the second meeting of the "Roundtable on Improving Internal Audits at Financial Institutions."

Reference: Financial Services Agency website: Agenda for the 2nd Meeting of the "Roundtable on Enhancement of Internal Audits at Financial Institutions"
https://www.fsa.go.jp/singi/naibukansa/siryou/20250219.html

This is the agenda of a roundtable discussion by various industry groups related to financial institutions (such as the Japan Securities Dealers Association). Each association exchanges opinions on practical issues and ideal situations.

This is merely an exchange of opinions and is not yet a valid regulation.
On the other hand, it will also serve as a reference for financial instruments businesses (securities companies, etc.) when preparing their own systems, and it will also serve as a "seed for regulation" for the future.

If you keep track of what kinds of regulations will be introduced in the future through press releases, you will be able to easily grasp the intent of the amendments when they are published, and will be able to respond smoothly.

Graded evaluation (four levels)

One of the major directions of the discussion group is to "evaluate the level of internal audits at different stages and take measures appropriate to each stage."
Specifically, opinions were expressed based on the following four-level evaluation.

The document lists the following "major opinions" regarding the development of the following items:
(Currently, the following items are not well organized.)

Current level of internal audits and future goals

At the roundtable discussion, the current level of internal audits was also summarized based on a survey of each financial institution.

Outline

In addition, several opinions were presented regarding the challenges and initiatives faced by financial instruments business operators and other entities at each stage.

Comments from Support Administrative Scriveners Corporation

In the future, if specific examples of the level of internal audits, as well as examples of initiatives and audit methods tailored to industry, company size, and business scale are provided based on the opinions expressed at the roundtable discussions, it will be easier for financial instruments business operators and others to use as reference and to implement the measures.
On the other hand, it is possible that more specific regulations will be implemented with a certain degree of coercive power.

In addition, opinions are also being expressed regarding the very nature of the "staged evaluation" itself.
Through upcoming discussion meetings and other forums, it is possible that the policy will change significantly beyond what the specific examples given suggest.

For inquiries regarding financial instruments business registration, please contact Support Administrative Scrivener Corporation

Support Administrative Scrivener Corporation specializes in financial instruments business registration.
In addition to various applications and notifications, we also provide "financial internal audit support" and "comprehensive management of financial licenses and permits." We are not simply a "procedure agent," but are also requested to act as "experts and advisors in the financial field."

Please contact Support Administrative Scrivener Corporation for any inquiries regarding financial instruments business registration.

(Author: Shuhei Azuma)