Financial institutions are under constant pressure to reduce costs, improve operational efficiency, adapt to regulatory changes and grow their business. NRI believes that a combination financial knowledge and information technology are crucial to the industry’s growth and development. Through our lakyara reports, NRI identifies the various capital markets and IT issues impacting our clients and the future of their business.
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The revelation that AIJ Investment Advisors is unable to account for 90% of the pension fund assets it manages has shocked the Japanese public. With the facts not yet fully known, it may be premature to comment on this scandal without inviting criticism.
However, the ruling Democratic Party and Financial Services Agency (FSA) have apparently already started discussing regulatory reforms in response to accusations that deficiencies in Japan's corporate pension system and regulation of investment managers are partly to blame for the AIJ scandal. Following are my personal views on regulation of investment managers and related issues based on media reports of the facts of the scandal and regulatory reforms reportedly under discussion (or likely to be discussed).
Chinese Capital Markets
In 2011, Chinese securities investment funds performed poorly amid a decline in equity prices, revealing the fund industry's shortcomings in bold relief. In response, initiatives are afoot to diversify sales channels and improve fund companies' corporate governance.
In response to the revelation that Olympus had concealed losses for many years, the TSE designated its stock a "security on alert," allowing Olympus to retain its listing. Although the TSE's decision itself is not unjustified, its disciplinary system should be improved in certain respects.