FIA President and CEO Walt Lukken delivered a keynote address at the FIA Japan Financial Market Conference in Tokyo on May 13. His remarks, as prepared for delivery, follow:
I want to thank you all for being here, and I’d like to extend a special thanks to Mitch Fulscher and the FIA Japan board for all the hard work that went into the development of this conference.
This is an exciting time to come together and discuss Japan’s financial markets and their global role.
Japan is a wonderful mix of old and new—of history and innovation and of tradition and growth.
A few weeks ago in Washington, D.C., we celebrated the annual cherry blossom festival. This is a tradition that dates back more than a century ago—in 1912, the Tokyo City Council, in a gesture of friendship between our nations, shipped more than 3,000 cherry blossom trees to President William Howard Taft.
And in return for this overture of freindship, in 1912 President Taft sent Mitch Fulscher to Tokyo to be planted here.
He's fared almost as well as the trees did.
Today, more than 1.5 million people come to Washington each year to see the blossoms lining the sidewalks alongside our most famous monuments to past Presidents.
I’m sharing this story because I think it is a great illustration of the partnership between the U.S. and Japan. Our countries share a commitment to democracy, prosperity, and—most relevant to our industry—open markets.
Last month, Prime Minister Abe visited the United States to discuss enhancing our coordination on trade, defense, and economic issues. I was pleased to see that when President Obama and Prime Minister Abe released their joint vision statement after the visit concluded, there was a reference to some issues of critical importance to our industry.
The two issues I’d like to highlight are cybersecurity and a commitment to promoting open markets and transparent rules and regulation.
Cybersecurity
On cybersecurity, Japan and the U.S. have pledged to increase information sharing on cyber threats—both those directed at government agencies and private industry.
In the U.S., Congress has been working on legislation that makes it easier for companies to share cyber threat information with the government while protecting customer privacy. The Commodity Futures Trading Commission—CFTC—our primary regulator, has also made cybersecurity a top priority for our industry.
FIA has been advocating for principles-based approach to these threats, rather than prescriptive government rulemaking. We believe that it’s critical to follow best practices but to remain flexible enough to adapt to the changing nature of cyber-attacks.
Cooperation on Transparent Rules and Regulations
FIA and our partners at FIA Japan are also committed to transparent rulemaking that recognizes the global nature of our markets. When it comes to the different regulations governing futures and derivatives markets, we’ve been strong proponents of mutual recognition and substituted compliance. That’s because—as long as each national regulator is adhering to international standards—it’s more efficient for foreign regulators to defer to local authorities instead of enforcing duplicative regulatory requirements.
As you know, this is still a sticking point between the U.S. and Europe. While Japan’s CCPs have been recognized as equivalent in Europe, the U.S. and Europe have yet to reach an agreement. This has real consequences for our markets, and ripple effects through the global economy. So I’m pleased that our regulators are continuing to prioritize this issue, and I assure you that FIA is following this closely.
FIA Update
In addition to our international policy advocacy, FIA continues to expand the international reach of our organization. We recently launched a new brand, a new website and are about to launch a new magazine for our industry, Market Voice.
We’re focusing our advocacy efforts on enhancing central clearing processes and procedures. We recently launched the CCP Risk Review—a service that helps market participants analyze and compare the rules and procedures of CCPs worldwide.
Central clearing can help mitigate market risk and reduce the probability of systemic economic consequences, but to do so, the risks involved in central clearing need to be transparent and effectively managed. To that end, FIA recently released a comprehensive position paper with recommendations on how best to identify, communicate and manage these risks. We’re looking forward to discussing it with national regulators and international standards organizations.
With that, I’ll conclude my update and let you get to the heart of this conference. Mitch has lined up some exceptional panels that focus on Japan’s markets and their role in the international economy.
I’m also looking forward to hearing remarks from Mr. Nobuhiro Maeda, the Vice Governor of the Tokyo Metropolitan Government. I’d like to extend my thanks to Vice Governor Maeda for joining us. And I thank all the panelists and speakers for contributing your knowledge and time to these valuable discussions.
Thank you for having me here. Please enjoy the conference.
