JBA, together with the Regional Banks Association of Japan, Trust Companies Association of Japan, Second Association of Regional Banks, The National Association of Shinkin Banks, National Central Society of Credit Cooperatives and The Norinchukin Bank, submitted an opinion paper to the First Subcommittee of the Financial System Council held on December 19. The paper requested prompt lifting of the ban on engaging in securities intermediation by depository institutions.The First Subcommittee drafted a report on this issue on December 24, 2003 and proposed to lift the ban on the condition that measures to prevent abuses be taken.JBA's opinion is as follows.The First Subcommittee of the Financial System Council has been deliberating lifting the ban on depository institutions engaging in securities intermediation.Non-financial institutions and individuals will be allowed to conduct securities intermediation from April 2004. The lifting of the ban has not been realized for depository institutions since more deliberation is needed to secure their soundness. Securities intermediation being discussed in this case does not refer to financial institutions trading or underwriting securities in their own accounts. The institutions would only intermediate for securities companies, that is, solicit customers for securities trades and intermediate resulting trades for securities companies. Therefore, depository institutions would not possess more securities due to this business, and consequently they will not be exposed to market risk. Rather, this business will promote diversification of revenue sources and spread risks. Thus it will help stabilize business performance. In addition, corporations and individuals expect the intermediating of securities by depository institutions to heighten convenience by making the institutions "one stop shop."Data concerning the sales of stock investment trusts at depository institution counters after the ban on such sales was lifted show that utilizing such channels is an effective means for attracting inexperienced investors to securities markets. In the less than five years after lifting the ban in December 1998, the share of depository institutions in the sale of stock investment trusts has exceeded 40%. Securities intermediation by depository institutions will surely enhance familiarity of securities products among retail customers and foster individual investors.Securities markets are recovering from the recession. Nevertheless, cooperation between depository institutions and securities companies as envisaged in alliances related to securities intermediation should help boost securities markets, especially by improving access to markets for customers who reside in regions with few outlets of securities firms.Therefore, we request that the Financial System Council speedily deliberate this issue to enhance customer convenience, foster individual investors and revitalize markets and conclude to lift the ban on financial institutions handling securities intermediation as early as possible.
News
Dec.19.2003
Japanese Bankers Association