On March 15, 2019, the Japanese Financial Services Agency (the “JFSA”) published the final version of its amendment to the regulatory capital requirements relating to investments by certain types of Japanese financial institutions, including Japanese banks and bank holding companies, in securitizations. The amendment, which takes effect on March 31, 2019, adds to such regulatory capital requirements (i) a set of due diligence and information collection requirements for investments by covered Japanese financial institutions in securitizations and (ii) a risk retention rule for such investments. To provide guidance regarding these new regulatory requirements, the JFSA published, together with the final version of the amendment, a series of responses to selected comments that it received with respect to its initial proposal of these regulatory changes as well as a series of answers to frequently asked questions concerning the application of these regulatory changes. This Legal Update focuses on the risk retention rule portion of the amendment.
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As anticipated, Japan’s Financial Supervisory Authority (FSA) has released its final risk retention rule (in Japanese) in substantially the same form (including as to grandfathering) as FSA had previously published last December. Our chart comparing the Japanese proposal with existing EU and US risk retention requirements is here. FSA has also released related FAQs