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Speaking at the EU Financial Counsellors Meeting in
“Only a few large Japanese financial firms have been engaged in the subprime-related securitisation business through their overseas subsidiaries”, he said. “They have reported some realised losses and valuation losses on these business operations, but the size of their losses has been limited in comparison with their fundamentals.”
Commenting on the current discussions among supervisors and other authorities to how such a future turmoil can be prevented, Mr Sato proposed to consider “rules or voluntary codes of conduct requesting the disclosure of information on the portion kept by originators and arrangers so that credit rating agencies can take such information into account in their ratings.”
“Similarly, it would be desirable that distributors explain their complex structured products to investors in sufficient detail, including information on underlying assets and particular risk profiles”, he added. “Some rules or voluntary codes of conduct for distributors could be established in this regard.”