Japan Eases Access to Financial Services Market : Trade: Regulations that will allow foreigners to manage public pension funds come on eve of U.S.-Japan summit.
The United States and Japan have reached agreement on measures to open Japan’s financial services market to greater participation by foreign firms, the Finance Ministry announced Tuesday.
In a key change, Japan will allow foreign investment advisers to participate in management of Japan’s $250 billion in public pension funds. New regulations will also expand foreign and domestic investment advisers’ access to $350 billion in private employee pension funds.
Japanese life insurance companies and trust banks currently dominate the management of pension funds in Japan.
Under the agreement, Japan will also relax controls on the issuance and sale of certain types of bonds and on participation by Japanese investors in overseas derivatives markets.
The agreement, reached as part of wide-ranging “framework” trade talks, came on the eve of today’s summit in Washington between President Clinton and Japanese Prime Minister Tomiichi Murayama.
Washington had pushed hard for foreign investment advisory firms to receive full access to Japan’s pension fund management and for liberalization of asset allocation guidelines to allow more flexibility.
A source at the American Chamber of Commerce in Japan said the agreement represents real progress in widening access to Japanese pension funds and in deregulating Japan’s investment trust management market.
Finance Minister Masayoshi Takemura, who was in Beijing, said in a statement released in Tokyo that he had spoken by telephone with U.S. Treasury officials to conclude a final agreement.
The new pension fund regulations will begin to take effect April 1, the start of Japan’s fiscal year, when rules governing the Pension Welfare Service Public Corp., which manages some public pension funds, will be relaxed.
The agreement calls for “objective standards” to measure the effectiveness of liberalization efforts, but Japanese officials said these would not be “numerical targets.”
