EXCLUSIVE: Japan to Mull Relaxing Bank-Securities Firewall

Tokyo, May 12 (Jiji Press)–The Japanese government plans to start talks this fiscal year on easing so-called firewall regulations that prohibit the sharing of customer information between banks and securities companies within the same financial group, Jiji Press learned Tuesday. The government hopes to promote cooperation between banks and securities firms in order to enhance financial services and improve financing for corporate customers. Japan has gradually eased the firewall in the past. The Financial Services Agency plans to discuss further deregulations with outside experts. The government is also considering urging banks and securities firms to ensure proper management of customer information and introducing strict penalties for violations, in light of a recent series of firewall violations. The firewall was introduced in Japan in 1993, when banks and securities firms were allowed to enter into each other’s business areas, to prevent banks from abusing their dominant positions. Amid strong calls for relaxing the regulations, the government in 2022 allowed banks and securities companies to share undisclosed information on publicly traded clients if they did not object. A call for reviewing the firewall was included in a proposal drawn up last month by a group of ruling party lawmakers aiming to make Japan a leading asset management nation. In 2024, the FSA issued business improvement orders to MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities Co. and Morgan Stanley MUFG Securities Co. for sharing information about client firms without consent. The FSA took administrative action against SMBC Nikko Securities Inc. and Sumitomo Mitsui Banking Corp. for firewall breaches in 2022. END [Copyright The Jiji Press, Ltd.]