Japan times: FSA urges disclosure rules for brokers

08 February 2008

The Financial Services Agency (Japan) has called on the securities industry to work out rules to promote voluntary disclosure of information on financial products in the wake of the U.S. subprime loan crisis.

 

The request was made in a draft of new guidelines, announced by the FSA on Wednesday, to supervise brokerages and other entities in the industry, which attribute the recent market unrest to the lack of accurate information on securities backed by risky mortgages.

 

The financial industry watchdog expects the disclosure rules to stipulate that brokerages and other concerns explain details of loan claims incorporated in securitized products to help investors make informed decisions.

 

The rules are expected to include a ban on sales of financial products without detailed explanations to investors.

 

The Japan Securities Dealers Association will take the initiative in working out the rules.

 

The draft guidelines stress the need to introduce an "early warning system" to protect investors by closely monitoring the financial conditions of securities houses, investment trust companies and brokers of foreign-exchange margin trading.

 

The FSA will gather opinions from the public to finalize the guidelines by the end of March.

 

 

© Graham Bishop