In response to the Great Financial Crisis (2009) The Dodd-Frank emerged as a leading set of financial regulations. The primary aim was to rebuild trust among the public and prevent any potential recurrence of a financial crisis.
Gradually, worldwide regulators have implemented their own versions of financial regulations, particularly in the over the counter (OTC) arena. Notably, since November 2012, the Japanese Financial Services Agency (JFSA) has mandated weekly reporting of OTC derivatives. The JFSA, is a regulatory body established to ensure financial stability in Japan.
Where do products need to be reported under JFSA?
All swaps across Interest Rates, Credit, Equity and FX derivatives.
Background
In 2015, CPMI-ISOCO issued a consultation paper and offered guidance on standardising the reporting of OTC derivatives. Subsequently, several G20 regulators have tailored their own versions of the consultation papers to suit their local markets.
During, this time JFSA established a dedicated support desk for FinTech inquiries. As of April 1, 2024, the revised JFSA reporting regulation has come into force, introducing significant changes in derivatives reporting. This update is expected to broaden the range of reporting entities, requiring them to report to an approved trade repository for the first time. Furthermore, the implementation of ISO 20022 messaging and the expansion of reporting fields to 139 are essential aspects of this regulatory overhaul.
The new version aims to align JFSA reporting with global standards and presents challenges to the industry due to changes occurring on multiple fronts. These changes may involve reporting frequency, required data points, reporting to a trade repository instead of directly to the JFSA, among others.
Derivatives trade reporting was initially introduced in Japan back in 2012. Since then, various financial institutions such as type-one FIBO, registered banks, insurance companies, and specific institutions outlined in the OTC derivatives ordinance 2021 have been mandated to comply with reporting requirements for OTC derivatives.
JFSA Products and Services:
- Formulating plans and policies for Japan’s financial systems.
- Conducting inspections and oversight of private sector financial entities, including banks, brokerages, insurance firms, and market participants such as securities exchanges.
- Regulating securities market trading activities.
- Establishing standards for business accounting and other aspects of corporate finance.
- Oversight of Certified Public Accountants (CPAs) and auditing firms.
- Ensuring adherence to securities market regulations and rules.
In conclusion
The JFSA, a Japanese governmental body, oversees banking, insurance, securities, and exchanges, with a primary mission of safeguarding Japan’s financial stability and protecting the interests of depositors, insurance policyholders, and securities investors.
Furthermore, through its Securities and Exchange Surveillance Commission, the JFSA is tasked with inspecting, supervising, and promoting transparency within the financial system. Additionally, as part of its mandate, it provides oversight for Certified Public Accountants and the auditing oversight board.
