Canada    FinTech Guide    Chapter 3    Japan


3. Consulting and Broking Services / Robo-Advisory / Auto-Trading
Japan  Japan

Companies which intend to start offering the above services sometimes find it difficult to comply with the current laws and regulations. To handle such cases, the government has been trying to establish a system to attain the purpose of the regulation in a different way.



Legal Affairs


Depending on the contents of services being offered, necessary registration and requirements for such registration differ.

For each of (i) investment advisory services, (ii) investment management services and (iii) services related to investment including sale and purchase of securities in the market, different registration is required under the Financial Instruments and Exchange Act.

The requirements vary depending on the kind of registration, and the requirements for (i) above are the laxest and those for (iii) are the strictest. To complete the registration of (iii), an operator is required to be a stock company (kabushiki kaisha) and to meet the requirements concerning its financial status, its major shareholders and restriction on subsidiary business, among other requirements.

Costs and legally required running costs for registration also vary depending on the kind of registration. For example, the registration of (iii) requires 5 million yen as a deposit and 150 thousand yen as a registration and license tax, among other costs.



Economic Conditions


With respect to robo advisory/ auto-trading, the market is rapidly expanding with existing major financial institutions as well as venture companies arestarting to provide the services. It is estimated that the market will continue to expand in the future. According to a projection, the balance of the assets managed in this business area will reach approximately 5 trillion yen in 2020.

Among the companies that offer broking services, Nomura Holdings, Inc. is the No.1 company in Japan as of 2016.

As for robo advisory/auto-trading that are based on discretionary investment contracts, MONEY DESIGN Co., LTD. is in first place in Japan in terms of the amount of assets in custody as of 2016.



Miscellaneous


Which registration, of (i) through (iii) above, becomes necessary affects such matters as the amount of the burden of expenses, the period of preparation necessary for registration and required personnel, etc.



Contributing Authors

Ushijima & Partners

Hiroyasu Kageshima
Tokyo, Japan

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018