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1. key regulatory reforms such as regulatory (licensing) and immigration reforms, and tax reforms, all of which are intended to make it easier for foreign managers to open Japan offices and register with the Japanese regulator; and

2. direct support to these managers through (i) the English-language support and supervisory desk within the Japanese regulator called Financial Market Entry Office, and (ii) an office set-up support program called Financial Start-Up Support Program that includes monetary incentives up to JPY 20 million (approximately USD 173,000), which can be used to cover initial costs such as initial office rents, costs of hiring, registration, and visa application.

The latest reform under the IFC Initiative Policy was issued on 18 January 2022 by the Financial Services Agency of Japan (the FSA), which has proposed expanding the functions of the Financial Market Entry Office (Proposed Order). The Financial Market Entry Office currently accepts registration and supervision in English in relation to Investment Management Business Operators (Investment Manager), Investment Advisory and Agency Business Operators (Investment Adviser), and Type II Broker-Dealers (Type II BD). This allows eligible institutions to submit registration application documents in English with respect to one or more of these categories of businesses, and to be subject to post-registration supervision in English, including submission of annual reports in English with respect to such businesses. However, these measures currently apply only to new registrants for these three categories of licenses; and do not apply to existing registrants.

The Proposed Order would expand this allowance of English to eligible institutions applying for Type I Broker-Dealer (Type I BD). If the Proposed Order were adopted, Japan would allow all types of financial instrument-related businesses (Type I BD, Type II BD, Investment Manager, and Investment Adviser) to register and to be supervised in English. This would be an additional significant structural change welcomed by global financial institutions eyeing registration in Japan. Under the Proposed Order, English registration and supervision would not be available to existing registrants unless they intend to apply for additional categories of registration and satisfy eligibility requirements. FSA is accepting public comments regarding the Proposed Order until 17 February 2022, and comments can be submitted in English.

This alert provides a summary of the final exemptions and an overview of the Financial Start-Up Support Program. It also reviews the Proposed Order in more detail, including eligibilities for English registration.

For more information click here.

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