Market Abuse / Surveillance in Japan

Key dates

2026-08-27

JFSA published the revision and added Question 7 to the Q&A on Financial Instruments Business.

Suggested considerations

• Firms should identify all overseas-listed ETFs distributed or made available to Japanese customers and isolate products with a single Japanese-company equity exposure and leveraged or inverse performance objectives.
• Compliance teams may wish to suspend onboarding, marketing, solicitation, and new sales of affected products pending a documented legal and compliance assessment of the revised Question 7 and any follow-up JFSA communications.
• Firms should review whether existing distribution arrangements, product lists, customer disclosures, suitability controls, and overseas-product filing processes remain defensible in light of the JFSA’s public-interest position.
• Broker-dealers should assess whether affected products can remain accessible on an execution-only basis, including the risk that continued availability could be viewed as distribution or otherwise inconsistent with the JFSA’s stated view.
• Firms should obtain product-level information on the reference asset, leverage or inverse multiple, daily reset methodology, derivatives and rebalancing arrangements, listing venue, and Japanese investor access channels.
• Market surveillance and product-governance teams may wish to evaluate whether distribution of affected products could contribute to volatility, disorderly trading, or concerns about price formation in the Japanese underlying shares.
• Senior management should document escalation, inventory decisions, customer communications, and any decision to close or restrict positions, while monitoring for amendments to the Financial Instruments and Exchange Act framework, supervisory guidelines, or additional JFSA expectations.

What changed

The JFSA added Question 7 to its Q&A on Financial Instruments Business. The revised guidance expresses the JFSA’s view that distributing overseas single-stock leveraged ETFs whose underlying assets are shares of Japanese companies is not in the public interest because the products may amplify fluctuations in the prices of the underlying shares listed on Japanese exchanges and may significantly affect price formation in Japan’s financial markets.