Publication of the draft „Cabinet Office Order to Amend the Cabinet Office Order on Restrictions on Securities Transactions, etc.“ for public consultation

The FSA has released the draft „Cabinet Office Order to Amend the Cabinet Office Order on Restrictions on Securities Transactions“. The proposed revision aims to address the growing global expansion of ETFs that do not follow a specific index, known as actively managed ETFs, and anticipates their emergence in Japan.
Presently, ETFs are required to adhere to the volatility of a designated index, typically a stock index. However, the draft acknowledges the increasing popularity of actively managed ETFs worldwide and proposes that similar trading conditions be provided for them. In line with the current situation, where certain types of short-selling associated with market-making for providing liquidity are exempted for conventional ETFs, the revision suggests extending the same exemption to the applicable ETFs under the new category.
To achieve this, consequential amendments to the Cabinet Office Order will be introduced, aiming to exempt transactions related to actively managed ETFs without a specific index from short-selling regulations.
Public feedback is invited concerning this proposal. Interested parties are encouraged to submit their comments either via mail or the Internet, including their name (or the name of their corporation/organization), contact details (address, telephone number, or email address), and the rationale behind their request. The deadline for submission is 17:00 on Thursday, 10 August 2023 (JST).