Consultation Responses

The JFMC monitors and comments on a broad range of industry reform initiatives from the Japan financial market participant perspective.

JFMC and International Bankers Association of Japan send letter to the Commodity Futures Trading Commission - (05 March 2020)

JFMC and IBAJ sent a letter to the Commodity Futures Trading Commission in response to their request for comments to the notice of proposed rulemaking on the Cross-Boarder Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants.

JFMC and International Bankers Association of Japan send letter to the Commodity Futures Trading Commission - (12 November 2019)

JFMC and IBAJ sent a letter to the Commodity Futures Trading Commission in response to their request for comments to the supplemental notice of proposed rulemaking on the Exemption from Derivatives Clearing Organization Registration.

PDF icon JFMC and IBA response to DCO exemption.pdf1.29 MB

GFMA, ISDA, IACPM and JFMC respond to the Basel Consultation on Internal Risk Models - (01 July 2016)

London – 22 June 2016: The Global Financial Markets Association (GFMA), along with the International Swaps and Derivatives Association, Inc. (ISDA), the International Association of Credit Portfolio Managers (IACPM) and the Japan Financial Markets Council (JFMC), today responded to the Basel Committee’s consultation on Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches. The full response is available here

The response highlights that the proposals amount to “the most significant conceptual change to the capital framework since the advent of Basel 2, and, rather than improve the measurement and understanding of risk, would more likely do the opposite”. The Basel Committee’s previously stated objective of maintaining risk sensitivity is missing from the present consultation.

The response notes that the removal of risk sensitivity would distort capital allocation decisions and pricing to the detriment of banks’ customers and the global economy. Corporate lending, capital markets activity, project finance deals, aircraft, shipping finance and commodities finance, all necessary to support investment and economic activity, would be particularly affected by the proposals. Moreover, economies where market financing is still developing would also be likely to feel these effects more acutely. Consequently, these proposals are inconsistent with the pursuit of the growth agenda at the global level.

The response raises concerns that the cumulative effects of the current suite of Basel Committee proposals are all leading to increased risk-weighted-asset levels, with decreasing marginal benefits for society. A comprehensive analysis is required to avoid disproportionate and unnecessary increases in capital requirements.

The objectives set out in the consultation can be achieved without restricting internal modelling in the way and to the extent proposed. This is particularly true as major investments on the part of both industry and the regulatory community are underway to reduce unwarranted differences in modelled outcomes. These efforts should be allowed to take effect before fundamental changes are introduced.

The Associations put forward a number of alternatives for the Basel Committee to consider – for example, a constrained-IRB approach for exposures to banks and other financial institutions, where probability-of-default and loss-given-default risk parameters are set at regulatory prescribed levels.

For exposures to corporates, where there is sufficient data, including pooled data, internal modelling approaches should be retained across the board. The response also recommends that firms be allowed to continue modelling their specialised lending exposures when they can prove that they have the expertise and specialism required to structure and monitor these deals appropriately.

As the proposals currently stand, they are more likely to increase the complexity of the capital framework and reduce comparability between firms. It is in the economy’s best interests to maintain real internal models. The Associations’ key concerns and alternative suggestions are set out in more detail in their full response.

Letter to IOSCO and BCBS setting out how current margin settlement requirements will negatively disadvantage Japan and Asian markets because of time zone differences - (08 December 2015)

A letter from the Japan Financial Markets Council (JFMC) and the International Swaps and Derivatives Association (ISDA) regarding margin requirements for uncleared derivatives.

JFMC and GFMA send letter to IOSCO Cross-Border Task Force - (02 June 2014)

The JFMC along with the GFMA co-sign a letter to the IOSCO Cross-Border Task Force in support of increased dialogue and coordination between authorities from differing jurisdictions
PDF icon GFMA and JFMC Letter to IOSCO Cross Border Task Force.PDF255.01 KB

JFMC sends letter to the Commodity Futures Trading Commission - (05 March 2014)

JFMC sends letter to the Commodity Futures Trading Commission in response to their request for views on the application of CFTC regulations to swaps between non-U.S. Swap Dealers and non-U.S. counterparties involving personnel or agents of non-U.S. Swap Dealers located in the United States
PDF icon JFMC response to CFTC on non-US persons_79 FR 1347.pdf133.86 KB

JFMC response to Second consultation document on Shadow Banking - (28 November 2013)

JFMC responds to Financial Stability Board’s Consultative Document on Strengthening Oversight and Regulation of Shadow Banking: policy framework for addressing shadow banking risks in securities lending and repos