Japan: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Investment Funds
IMF Staff Country Reports, May 13, 2024
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Bibliographic details
- Published: May 13, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400276347.002
Overview
- This technical note reviews the functioning and effectiveness of the regulation, supervision, and systemic risk monitoring of investment funds in Japan.
- Focus areas: valuation, segregation and safekeeping of fund assets, liquidity risk management, and redemption of fund units.
- Publication date: May 13, 2024.
- Pages: 37
- Volume: 2024
- Issue: 114
- Series: Country Report No. 2024/114
- DOI: https://doi.org/10.5089/9798400276347.002
- Stock No: 1JPNEA2024006
- ISBN: 9798400276347
- ISSN: 1934-7685
Key findings
- Investment Management Business Operators that are part of major financial groups dominate the industry.
- The majority of assets under management are invested in equities via securities investment trusts.
- The regulatory framework has been recently enhanced with relation to liquidity risk management.
- The Financial Services Agency (FSA) has increased its data collection efforts and launched a number of targeted initiatives to gain better insight into the industry.
- The FSA identifies certain practices that require more attention, such as liquidity risk management.
Regulatory and supervisory developments
- Authorities have recently implemented a new supervisory approach that relies on an enhanced offsite monitoring of firms.
- The regulatory framework enhancements specifically relate to liquidity risk management.
Industry structure and exposures
- Dominance by Investment Management Business Operators that are part of major financial groups.
- Concentration of assets under management in equities through securities investment trusts.
Data, monitoring, and supervisory practice
- The FSA has increased data collection efforts.
- The FSA has launched targeted initiatives to obtain better industry insights, particularly on practices the FSA determines require more attention.
- The new supervisory approach emphasizes enhanced offsite monitoring of firms.
Policy recommendations and supervisory priorities
- Authorities should ensure a broader coverage of their onsite inspection program while maintaining their offsite enhancement focus.
- Continued attention to liquidity risk management practices is warranted given recent regulatory enhancements and supervisory focus.
Source: Japan: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Investment Funds, May 13, 2024 — International Monetary Fund (DOI: https://doi.org/10.5089/9798400276347.002).
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- 1jpnea2024006