Financial instruments: Transactions and consumer protection in Japan

Abstract

In Japan, financial instruments transactions are regulated by several laws, creating a complex landscape. Case law related to consumer protection also has accumulated, allowing for flexibility in securing a safe and sound financial instruments market for consumers. Basic directions indicated in such case law have been reflected in legislative texts, especially regarding information duties and the principle of suitability. At the same time, self-regulation has played an essential role, and ADR has supplemented judicial protection. Solicitations to consumers for financial transactions are regulated by special rules, with specific solicitations being prohibited. Amid a general trend towards deregulation, achieving a balance with adequate consumer protection in the field of financial instruments transactions has been a key concern. Recent developments in the era of digitalisation and the increased use of AI are posing new challenges. The increased use of AI in the financial sector creates new dynamics in Japanese law. This chapter analyses the development and current state of financial instrument transactions in Japan, as well as future perspectives, focusing on consumer protection.