Japan wants major banks’ bond sales under scrutiny as move towards crackdown gains momentum

Japan’s financial regulator plans to probe how global investment banks are selling controversial structured notes in the country, a sign a crackdown on the products is gaining momentum, according to people familiar with the matter.

The Financial Services Agency (FSA) will examine whether the main issuers of such products are giving enough information to local financial firms, which will buy them and then distribute them to retail investors across the country, said the people, who declined to be named as the talks are private .

Japan’s FSA will also look into the fees collected, the people said.

There is a possibility that the Securities and Exchange Surveillance Commission will also carry out inspections of foreign investment firms if deemed necessary, an official with the FSA’s Enforcement Division said in response to inquiries from Bloomberg.

Regulators in Japan have intensified scrutiny of structured bond marketing after receiving numerous complaints from buyers who have suffered unexpected losses.

Tightened supervision has already prompted several of the country’s largest lenders, including the banking arm of Sumitomo Mitsui Financial Group and Mizuho Financial Group, to limit or suspend sales of structured products. Regulators have said the products are too complicated for most people to fully understand.

According to Hideyasu Ban, a Jefferies analyst in Tokyo, the main players issuing and selling structured notes to Japanese financial firms are big US and European banks. Barclays Plc, Credit Suisse Group, UBS, BNP Paribas, Citigroup and Morgan Stanley are among the global banks offering such products.

“As always, we stand ready to fully cooperate with the Japanese authorities,” said UBS spokesman Tsukasa Noda.

https://www.independent.ie/business/world/japan-wants-bond-sales-by-big-banks-reviewed-as-move-toward-crackdown-gathers-pace-41993022.html Japan wants major banks’ bond sales under scrutiny as move towards crackdown gains momentum

Fry Electronics Team

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