Outline of Self-Regulatory Operations
Self-regulatory operations in Japan are defined under the Financial Instruments and Exchange Act (FIEA). Article 84, Paragraph 1 of FIEA prescribes an exchange "shall properly conduct the Self-Regulation Related Services… in order to ensure fair sales and purchase of Securities and Market Transactions of Derivatives… as well as to protect investors." and provides a summary of self-regulatory operations in Paragraph 2 of the same article and Cabinet Office Ordinances as follows.
(Article 84, Paragraph 2 of FIEA)
- Business related to the listing and delisting of financial instruments, financial indexes or options
- Investigation of member/trading participant compliance with laws, exchange rules or just and equitable principles of trade
- Other business specified by a Cabinet Office Ordinance as necessary for ensuring fairness of transactions in a financial instruments market
(Article 7 of Cabinet Office Ordinance on Financial Instrument Exchanges, etc.)
- Examination of securities or derivatives trading by members/trading participants in the financial instruments market
- Examination for member/trading participant qualification and operations related to disciplinary action against members/trading participants
- Examination of information disclosures by listed companies and operations related to disciplinary actions against listed companies
- Creation, alteration, or abolition of rules related to specified self-regulatory operations and creation of agenda items for the general meeting or general shareholders meeting related to changing the Articles of Incorporation
Specific Self-Regulatory Operations
Self-regulatory operations at Japan Exchange Regulations (JPX-R) are mainly divided into 2 categories, issuer compliance and member compliance.
Issuer compliance involves operations to investigate and examine the suitability of current and potential listed issuers and products. It consists of initial listing examinations to examine whether prospective issuers meet the listing criteria and listed company compliance work to examine whether issuers fall under the delisting criteria or check for important matters that should be made known to investors.
Meanwhile, member compliance involves supervising trading and ensuring proper conduct in the market. It consists of maintaining participant quality through examining whether trading participants (broker-dealers qualified to access directly the trading platforms of Tokyo Stock Exchange or Osaka Exchange) are qualified for or conduct operations in accordance with the qualifications, and ensuring fairness by identifying and investigating unfair transactions.
For more information on each area of JPX-R's self-regulatory operations, please refer to the corresponding page.