Latest Update on JFSA Go-Live Date

The JFSA will be implementing the revision of Article 156 of the Financial Instruments and Exchange Act as of April 2024.

Key elements that have already been confirmed include:

• A change from reporting directly to the JFSA to reporting to the DDRJ
• Additional data fields included such as market price, collateral, identifier etc.
• Daily reporting vs previous weekly reporting
• Reporting format shifted from CSV to ISO20022XML

However, some areas remain less clear and we expect that there may be further rewrites after April 2024. For example, UPI has not been adopted at this time, but the JFSA has warned the market that it plans to do so in the future and that systems should be prepared accordingly.

In addition, when we consider international regulatory reporting trends, there are other aspects that are likely to be incorporated by JFSA in due course such as UTIs, pairing and matching, reconciliation, and real time reporting.

Currently, the industry is waiting for answers to public questions from the JFSA as well as “technical specifications.” Most likely, these will only be available in September or October, which limits the time available for implementation.

We recommend that industry players affected by these new rules take some key issues into account as they consider the best way to implement:

1. Long term view: Any new processes and systems developed, whether in-house or via a vendor, need to take a long-term approach. Additional rewrites after the 2024 implementation are highly likely – as we’ve seen in other jurisdictions and implied by the JFSA – and as such, today’s build needs to be both scalable and adaptable to accommodate future changes.
2. Changes to reporting requirements for the JFSA sit alongside reporting requirements in other jurisdictions. Resources and effort can be more effectively managed by taking a global approach and implementation is likely to be easier if lessons are taken from other jurisdictions.
3. The JFSA’s full requirements are still not fully defined. Experience in other markets has shown that even after full details are published, market participants may interpret these differently to each other. A collaborative approach – working with peers, vendors and regulators – will support a consistent approach to reporting that is also more likely to be accepted by regulators.
4. When considering an external vendor to streamline the process, seek out vendors with experience in building regulatory reporting processes for new and changing regulations as well as those with specific local expertise and support.

As of 2020, 79 financial institutions currently reporting directly to the JFSA, with an obligation to continue reporting via a TR in 2024. Each one is still in the process of deciding on how to respond and prepare for the JFSA rewrite. However, for these firms and any others who may have reporting obligations from 2024, it is crucial they begin this process now, engaging with consultants and vendors to establish the best way to implement new processes.

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About the author: Ogawa Masaki

Mr Masaki is Sales Director of S&P Global Market Intelligence Cappitech Business in Japan. He is responsible for major OTC derivatives trading institutions such as banks, securities, and insurance companies. He has extensive experience in selling derivative products to companies such as UBS Securities, ABN Amro, and Bank of America. Previously, he oversaw sales at IHS-Markit's Enterprise Data Management solutions.