The Journal The Authority on Global Business in Japan

For the Securities and Exchange Surveillance Commission (SESC) four-year strategy and policy plan, which runs through 2019, Secretary General Kiyotaka Sasaki insisted that his staff take a completely different approach.

“The SESC was created in 1992, at a time of many problems in the market, such as insider dealing,” Sasaki said at an American Chamber of Commerce in Japan (ACCJ) luncheon at the ANA InterContinental Hotel on February 22.

“But there have been a lot of changes—in the economy, the government, politics—in those 25 years, so, based on that quarter-century of history, I decided we needed to look forward to a new stage and not just to repeat what happened in the past,” he said.

The SESC’s mission remains to ensure the integrity of the markets here and the protection of investors, but there is an explicit commitment in the latest policy plan to contribute to the sound development of markets as well as sustainable, broader economic growth.

SIX VALUES
A key change that Sasaki is instituting in the organization is values in his staff.

“It is common practice in the private sector to have a corporate culture and a way of conduct, but we have not had such clear values spelled out,” he said. “So, in addition to our neutrality, we have introduced a further five new values that we expect of our staff.”

Building on accountability, those five new values are:

  • public outreach
  • forward-looking perspective that enables the early detection of signs of misconduct in the market
  • effectiveness and efficiency
  • strong collaborative mindset
  • commitment to excellence

Sasaki admitted, however, that instilling the new attitudes in the organization’s staff is a “huge challenge.” Many ways of getting the message across have been introduced, such as having the six values pop up on an employee’s computer screen every time they log on.

Another innovation is that Sasaki asks his staff about their performance in relation to the six values.

THREE OBJECTIVES
Market oversight has been finessed into the three strategic objectives of a holistic, “bigger-picture” approach to the task combined with early detection and preemptive actions, and both root-cause analysis and horizontal analysis to consider similar activities in other companies or sectors.

And an upswing in market misconduct, due in large part to Japan’s negative interest rates—meaning there are no returns available in the market here—underlines the importance of the SESC’s work, Sasaki said.

“That has led to wrongdoers marketing some very questionable products, with many of these suspicious schemes based outside Japan,” he said. “We have also noticed that they are getting very aggressive, so we have heightened our surveillance of this sort of marketing.”

Sasaki also commented on the opening, in April, of the permanent secretariat of the International Forum of Independent Audit Regulators, expressing his gratitude to both the ACCJ and the European Business Council for their support of the Japanese government’s campaign to have the organization based in Tokyo.

Julian Ryall is Tokyo correspondent for The Daily Telegraph