On June 5, 2020, the Diet adopted amendments to the Act on Sales, Etc. of Financial Instruments that introduce, among other things, a system for the registration of one-stop intermediary service providers of financial services. As a result of these amendments, which will come into effect upon a date to be determined by a Cabinet Order (but in any event within 18 months from their publication), the Act on Sales, Etc. of Financial Instruments will be renamed as the “Act Concerning Provision of Financial Services” (the “Act”). The Act delegates authority to propose detailed regulatory requirements to the Financial Services Agency (the “FSA”), which typically publishes draft regulations for public comment a few months prior to their taking effect.
Under existing laws, licenses and/or other requirements for operating agency or intermediary services concerning financial products are set forth in separate statutes and regulations governing respective industries. Under the Act, an intermediary service provider may provide intermediary services concerning financial products in various business sectors covered by the Act by obtaining a registration as a Financial Services Intermediary Business Operator and designating the categories of the Financial Services Intermediary Businesses in which it will engage.
Below is a summary of the regulations introduced by the Act.
The Financial Services Intermediary Businesses that will be covered by the Act consist of the following categories:
Each of these categories is defined as follows.
Intermediation of insurance contracts between insurance companies, foreign insurance companies, or low value, short-term insurance business operators licensed in Japan as insurers and their respective customers.
Importantly, transactions designated by the FSA as requiring highly professional explanations to customers under regulations to be promulgated by the FSA (the “FSA Regulations”) will be excluded from the scope of transactions that can be intermediated by the Financial Services Intermediary Business Operators in each of the categories referenced above. As a result, the financial products that a Financial Services Intermediary Business Operator may intermediate under the Act will be limited to relatively simple, straightforward ones, although it is necessary to wait until the draft FSA Regulations are published to confirm what financial products can be intermediated by the Financial Services Intermediary Business Operators. 
In order to engage in the Financial Services Intermediary Businesses, it is necessary to register with the FSA pursuant to the Act.
Any person or entity (including non-corporate entities) may apply for a registration under the Act, but any foreign corporation that applies is required to have a registered business office in Japan and a Japan resident representative.
The application must also identify the categories of intermediary services in which the applicant contemplates engaging and a description of the methods it will use to conduct the identified categories of intermediary services. In addition, if the intermediary services are to be provided through computers or telecommunication systems (the scope of which will be clarified by the FSA Regulations (the “Electronic Financial Service Intermediary Business”)), the application must clarify this intent.
Details concerning other items to be described in applications and necessary attachments are delegated to the FSA Regulations and will be forthcoming.
The FSA will reject applications where the applicant or any of its officers (or a corporation for which such officer acted as an officer) has been subject to criminal, administrative, or other sanctions relating to certain financial services in Japan or any foreign jurisdiction, or if the applicant falls under any of other grounds listed in the Act or the FSA Regulations as delegated by the Act.
With respect to applicants that will be engaged in Electronic Financial Service Intermediary Businesses, the integrity and security of systems used for such business and the internal organization administering the system will be of a particular interest for the regulators.
Other lines of business engaged in by the applicant may also be scrutinized, particularly if the contemplated intermediary services include the banking-related services.
If there is any change in the content of an applicant’s application, the applicant will be required to notify the regulator, in advance or post-facto, depending upon the applicable matter.
Registration obtained by a Financial Business Services Intermediary Business Operator under the Act may excuse its need to obtain similar licenses under other similar Japanese statutes. For example, a Financial Services Intermediary Business Operator whose registration under the Act covers “Intermediation of Deposit Transactions, Etc.” will not be required to obtain a bank agency service license under the Banking Act for the Intermediation of Deposit Transactions, Etc., to the extent performed in compliance with the Act. In addition, the Intermediation of Insurance Transactions performed under the Act will be deemed as not constituting the sales of insurance that otherwise require a license under the Insurance Business Act. By the same token, Intermediation of Securities Transactions, Etc. performed by a Financial Services Intermediary Business Operator registered for such category will be deemed as not constituting Financial Instrument Business under the FIEA.
Further, a Financial Services Intermediary Business Operator that is registered to conduct Electronic Financial Service Intermediary Business may, if it satisfies certain criteria, provide Electronic Settlement Agency Services that would otherwise require a separate registration(s) under the Banking Act or other statutes regulating deposit-taking financial institutions. Before commencing the Electronic Settlement Agency Service, the Financial Services Intermediary Business Operator must file with the regulator a specific description of the Electronic Settlement Agency Service to be conducted. If accepted, such a Financial Services Intermediary Business Operator will be deemed an Electronic Settlement Agency Service Provider for purposes of relevant provisions in the Banking Act and/or other relevant statutes.
Also, certain portions of the conduct rules applicable to the Bank Agency Services (in the case of Intermediation of Deposit Transactions, Etc.) set forth in the Banking Act and the regulations thereunder, the Insurance Agency or Insurance Broker services (in the case of Intermediation of Insurance Transactions) set forth in the Insurance Business Act and the regulations thereunder, and others under the statutes and regulations concerning the relevant categories of intermediary services, are each made applicable to Financial Services Intermediary Business Operators.
 Act No. 101 of May 31, 2000.
 By the same bill, the Payment Services Act was also substantially amended, so that, among other changes, new categories of the fund transfer service providers were introduced. These amendments to the Payment Services Act will be covered in a separate client alert.
 These amendments were published on the Official Gazette on June 12, 2020.
 Article 11, Paragraph 1 of the Act.
 Article 11, Paragraph 2, Item 1 of the Act. The types of the deposit-taking institutions covered by this category are also enumerated in the same Item.
 The money lending business operators are registered as such under the Money Lending Business Act of Japan (Act No. 32 of 1973).
 Article 11, Paragraph 2, Item 2 of the Act.
 Article 11, Paragraph 2, Item 3 of the Act.
 Article 11, Paragraph 3 of the Act.
 Article 11, Paragraph 4, Item 1 of the Act. Intermediations that may be operated by proprietary trading systems are excluded.
 Article 11, Paragraph 4, Item 2 of the Act.
 Article 11, Paragraph 4, Item 3 of the Act.
 Article 11, Paragraph 4, Item 4 of the Act.
 Act No. 32 of May 13, 1983.
 Article 11, Paragraph 5 of the Act.
 See relevant Paragraphs and Items in Article 11 of the Act. According to materials published by the FSA, when the bill was submitted to the Diet, the following were referenced as examples of financial products that will be excluded: structured deposits; shares that are not listed on the exchange; derivatives; insurance, the payment under which depends upon fluctuations in the market index; and foreign currency-denominated insurances. The following financial products are listed as examples of those that will not be excluded: ordinary deposits; housing loans; JGBs; listed shares; investment funds; casualty insurances; travel insurances; and golfers’ insurances. Page 4 of the FSA material found at https://www.fsa.go.jp/common/diet/201/01/setsumei.pdf.
 See Article 13, Paragraph 1, Item 2 of the Act. Under this provision, a foreign corporation is required to identify its “representative in Japan” in the application. Similar provisions in other regulatory statutes have been interpreted by the FSA to mean that a foreign corporation must have a registered business office in Japan and a Japan resident registered representative of such business office.
 Article 15 of the Act.
 Article 16 of the Act.
 Article 17 of the Act.
 Registration as an Electronic Settlement Agency Service Provider is required for providing account aggregation and other services provided through an application programming interface (“API”) under the Banking Act and/or other statutes regulating deposit taking financial institutions. See Article 2, Paragraph 18 and Articles 52-61-2 of the Banking Act.
 Article 18 of the Act.
 Articles 22 and 23 of the Act.
 The materials published by the FSA indicate that the Financial Services Intermediary Business Operator is restricted from accepting funds for the payment of the purchase price of/fees payable for the financial products intermediated under the Act and owed to the providers of the financial products (i.e., banks, insurance companies, securities brokers/dealers, etc.) by its customers. See page 4 of the FSA material referred to in footnote 16.
 Some exceptions may be set forth in the FSA Regulations. Substantially different amounts of deposit may be required depending upon the category, taking into consideration the deposit requirements imposed on agency/intermediary service providers licensed under existing statutory provisions. See page 4 of the FSA material referred to in footnote 16.
 Articles 24 through 32 of the Act. For example, restrictions on preferential treatment of related persons in extending loans under the banking regulations, restrictions on use of material nonpublic information in soliciting securities transactions, etc. See page 5 of the FSA material referred to in footnote 16.
 Article 33 of the Act.
 Article 34 of the Act.