A group of lawmakers from Japan’s ruling Democratic Party will propose a revision of regulations to ban domestic pension funds from allocating public money to asset management companies involved in insider trading.
The party has set up a working group to look into measures to stamp out insider trading after a spate of scandals involving Japanese heavyweight brokers such as Nomura Securities and Daiwa Securities rocked investor confidence in the stock market and threatened to hamper corporate fund-raising.
Three asset managers – Chuo Mitsui Asset Trust and Banking, Asuka Asset Management and Japan Advisory – were found by regulators to have been involved in insider trading cases.
The working group plans to craft its first report by the end of the month, Shinsuke Amiya, a Democratic Party lawmaker and a member of the group, told reporters on Friday.
Amiya, a former Merrill Lynch banker, said the group will propose imposing penalties on those who leak insider information.
Currently, only those who trade on insider information are punished, while those who pass on insider trading tips go unpunished unless they benefit financially from the information.
The group also plans to propose shortening the subscription period for IPOs to reduce the chance of market speculation.
The subscription period – which starts on the day the IPO is announced and ends on the day the terms are set – is currently 15 days.
The Tokyo Stock Exchange said on Friday it will set up a new section to screen public offerings.
Last month, Nomura admitted it was the source of leaks on planned share offerings in 2010 by energy firm Index, Mizuho Financial Group and Tokyo Electric Power.
A probe by the Securities Exchange and Surveillance Commission has also implicated Japan’s second-largest broker, Daiwa, for leaking information on one public share offering in 2010. Third-ranked broker SMBC Nikko Securities was punished for priming its retail clients with non-public information about a share offering by its parent bank.