Tokyo, May 25 (Jiji Press)–The Japanese government is stepping up discussions on whether to relax a firewall rule that prohibits the sharing of customer information between commercial banking and investment banking businesses. investment by banking groups.
While megabanks with brokerage subsidiaries are pushing for the rule to be deregulated or abolished, independent securities firms are demanding that the rule be maintained.
The firewall rule was introduced in 1993 when commercial and investment banks were allowed to enter each other’s trading territory through subsidiaries, in order to prevent banking groups from exerting a strong influence on the client companies to which they lend money.
Currently, such sharing of non-public information is permitted with the consent of the customer but is prohibited in principle – a rule that is not observed in the United States and Europe.
A Financial Services Agency board discusses scrapping the rule, which megabanks say would allow them to offer a wider variety of financing services to help make corporate clients more competitive, such as a combination loans and the issuance of corporate bonds.
[Copyright The Jiji Press, Ltd.]