MFA Files Letter with the Japan Financial Services Agency

November 22, 2017

From: Managed Funds Association

To:

Director of the Markets Division Mr. Takuo Komori
Head of the Market Function Enhancement Office Mr. Shigeki Mitomo

Today, MFA filed comments with the Japan Financial Services Agency (“FSA”) on its consultation regarding regulations implementing high-speed trading registration requirements.  FSA requires market participants trading securities or derivatives, using an automated trading strategy and time shortening telecommunication technologies (e.g., servers that are co-located, adjacent to, or in proximity to the trading system) to register as high-speed traders.  In the letter to the FSA, MFA submitted comments, suggestions and questions for clarification with respect to the registration application, the notification and annual report requirements, and ongoing compliance requirements.

Specifically, with respect to the registration application, MFA urged the FSA to maintain confidential information concerning an applicant’s capital level, personnel information, and other materials concerning business operations.  MFA requested for clarification on the financial information that FSA requires, recommending that the FSA seek a high-level balance sheet.  MFA also sought confirmation that registrants can provide a high-level summary of business operations and methods as part of the registration application, rather than detailed policies and procedures.

With respect to notifications and annual report requirements, MFA recommended that the FSA only require notifications of material business and operation changes.  MFA made recommendations for simplifying the annual report and recommended that the FSA provide registrants with 8 months from year-end to submit reports rather than 3 months.

Finally, with respect to ongoing compliance requirements, MFA sought clarification with respect to the requirement to conduct an internal audit, recommended a recordkeeping period of 7 years for all materials (as opposed to 7 years and 10 years), and requested for clarification with respect to trade-surveillance.

MFA submitted the letter to the FSA in both Japanese and English, as well as uploaded questions from our letter to FSA through its online portal.

MFA Ltr on FSA HST consultation.final.11.20.17

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