TOKYO, June 6 Japan will relax barriers between
banks and brokerages and allow firms to offer a broader range of
financial products, as the world's second-largest economy
continues its push to make Tokyo more competitve as a global
Foreign investors and other critics have long warned that
Japan risks becoming a financial backwater, as companies
increasingly shift their Asian focus to smaller but more
flexible centres such as Hong Kong and Singapore.
Japan has been fighting to change its image as a closed
shop. Financial Services Minister Yoshimi Watanabe has said his
top priority is to make the country more attractive to foreign
Under a bill passed by Japan's parliament on Friday,
restrictions between banks, brokerages and insurance firms will
be relaxed, allowing employees of large firms to simultaneously
hold positions in different divisions.
It will also become easier for financial firms to share
information across divisions, making it possible for the
securities arm of a company, for example, to market products to
clients of another division.
Under previous regulation financial firms in Japan were
prevented from offering the "one-stop" financial solutions
available in other countries.
"It's a good step forward towards maintaining Tokyo's
position as the financial centre for the region," said David
Hatt, president and chief executive officer of Deutsche
Securities in Toyko.
"The big picture is that it will enable greater efficiency
for us in the carrying out of the operations of our banking
businesses," Hatt said.
But Japan is not without its hurdles. Tax law, for instance,
is less accommodating than other Asian locations, and the
world's No.2 economy continues to see sluggish growth.
Foreign managers are also quick to point out that
English-speaking employees are scarce, as are those with
backgrounds in financial law and financial engineering
In order to increase market transparency, the law will also
stiffen penalties for insider trading and false disclosure, the
regulatory Financial Services Agency said.
Banks and insurance firms will be able to engage in the
investment advisory business, which was previously banned, and
The law will also allow for the creation of a market for
professional investors, which will require less disclosure, and
allow for exchange-traded funds based on commodities.
The passage of the bill sends a message that strengthening
the financial markets is one of Japan's most important issues,
Watanabe, the financial services minister, said in a statement.
"This country is open to the world," he said.
(Reporting by David Dolan and Nathan Layne; Editing by David