JAPAN Law and Practice Contributed by: Daisuke Tanimoto, Etsuko Yamazaki and Miki Okuda, Anderson Mōri & Tomotsune
3.1.6 Business Conduct Specific Requirements for Business Operators
General Requirements Applicable to FIBOs Regulation of advertisement Under the FIEA, any advertisement published by an FIBO etc must include the following information: • (i) its company name; • (ii) the fact that it is an FIBO etc and its registration number; • (iii) the fee to be paid to the FIBO etc; • (iv) the amount or calculation method of the required deposit; • (v) the potential risk of the loss suffered by custom - ers exceeding the deposits placed for derivatives transactions and the ratio of the deposit to the transaction amount; • (vi) the potential risk of loss by customers and direct cause of such loss (eg, due to changes in the interest rate, value of currency or other relevant index); • (vii) the potential risk of the loss suffered by cus - tomers in (vi) above exceeding the principal (if any) and direct cause of such loss; • (viii) the spread between ordering price and execut - ed price, if any; • (ix) facts that might have significant adverse effect on customers; and • (x) the self-regulatory organisation which the FIBO etc has joined (eg, JSDA) Suitability principle FIBOs etc have to follow the principle of suitability when marketing financial instruments to non-profes - sional investors. The principle of suitability requires FIBOs etc to adjust their manner of solicitation as appropriate in light of the customer’s sophistication (as determined from the customer’s knowledge, expe - rience, assets and purpose for purchasing the prod - uct, among other factors). Requirement of written statutory disclosure to customers Under the FIEA, when conducting transactions with customers, FIBOs etc had been required to deliver certain paper-based statutory disclosure documents containing the information relating to the transactions to the customers. As a result of the amendments to the FIEA which came into force on 1 April 2025, this requirement was modified to shift the focus from
Handling Derivatives Leverage restrictions
FIBOs and Commodity Derivatives Business Opera - tors are required to impose certain leverage restric - tions when entering into certain derivatives with customers who are individuals. For example, for the leverage restriction imposed on certain FX transac - tions with individuals under the FIEA, the maximum notional amount is 25 times the amount of the margin posted by each customer. For the leverage restric - tion imposed on retail crypto-asset derivatives with individuals under the FIEA, the maximum notional amount is double the amount of the margin posted by each customer. For the leverage restriction on retail commodity derivatives with individuals, the maximum notional amount is 20 times the amount of the margin posted by each customer. Loss cut rule The FIEA provides that a Type I FIBO is required to establish a loss cut rule with respect to certain FX transactions offered to individual customers and with respect to OTC crypto-asset derivatives transac - tions (ie, if the loss incurred by a customer exceeds a certain level, the position of the customer must be compulsorily closed). The CFEA also provides that a Commodity Derivatives Business Operator is required to establish a loss cut rule. Prohibition of solicitation without consent The FIEA and CFEA prohibit visiting or making a phone call to a customer who has not consented to solicitation. Further, if a Type I FIBO engages in OTC crypto-asset derivatives, the following acts are also prohibited: • entering into a crypto-asset-related agreement with or soliciting such, or advertising financial instru - ments transactions related to crypto-assets to customers without showing reasonable supporting evidence of certain prescribed facts; and • soliciting the entering into of a crypto-asset-related agreement without representing certain matters to customers clearly and correctly.
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