On September 30, Japan Investment Advisors Association (JIAA) notified its members of a public notice “Regarding Transaction Records, etc. Pertaining to Receipt and Acceptance of Remuneration under Discretionary Investment Management Agreement or Investment Advisory Agreement, etc.”  Article 4 of the Act requires a specified business operator that has conducted a transaction pertaining to the specified business to immediately prepare records of “certain matters” (transaction records, etc.) in a manner specified by the ordinance of the competent ministries and preserve them for 7 years from the date of the transaction, except for certain transactions.

Specific transaction records of investment managers and investment advisors

When preparing transaction records, etc., the matters listed in each item of Article 24 of the Ordinance for Enforcement of the Act (see the text below) must be recorded each time a transaction pertaining to the specified business is conducted.  An investment management company or investment advisory firm must record transactions involving a discretionary investment contract or investment advisory contract, etc.

[Matters to be Recorded in Transaction Records, etc.]
Article 24

The matters specified by an ordinance of the competent ministries as prescribed in Article 7, paragraph 1 and paragraph 2 of the Act shall be the following:

(i) The account number and other matters to be used for the purpose of searching customer identification records of the customer, etc. (in the case where there are no customer identification records, the name and other matters sufficient for identifying the customer, etc., the transaction, or the agent work, etc. for specified mandated acts)

(ii) The date of the transaction or the agent work, etc. for specified mandated acts

(iii) The type of the transaction or the agent work, etc. for specified mandated acts

(iv) The value of the property pertaining to the transaction or the agent work, etc. for specified mandated acts

(v) In the case of transactions or the agent work, etc. for specified mandated acts which accompany the transfer of property (prescribed in Article 15, paragraph 1, item (i) of Order for the Enforcement of the Act), the name and other matters sufficient for identifying the said transactions or the agent work, etc. for specified mandated acts, and matters sufficient for identifying the original possessor of the destination such as the original possessor or destination (in the case where the said specified business operators carries out only a part of the transaction, acts, or procedures pertaining to the transfer of the property, the first possessor or the last destination within the limits of his/her knowledge obtained through such procedures; the same shall apply hereinafter).

(vi) In addition to what is listed in the preceding items, in the case where an exchange transaction (excluding those pertaining to the payment from Japan to a foreign country or payment from a foreign country to Japan) carried out with a customer accompanies a funds settlement between the specified financial institution engaged in the said transaction and the specified financial institution pertaining to the original possessor or the destination of the property (hereinafter referred to as "the other specified financial institution" in this item), and the information pertaining to the said transaction is exchanged between the specified financial institution pertaining to the customer engaged in the said transaction and the said other specified financial institution by using an electromagnetic method (which means the method using an electronic data processing system or other types of information processing technology), the matters sufficient for conducting any of the acts specified in (a) or (b) below, according to the categories listed respectively in (a) or (b) below:

• (a) In the case of transactions accompanying the payment of funds to the other specified financial institution: when the other specified financial institution requests the verification of a customer pertaining to the transaction based on the transaction records, etc. preserved by the said other specified financial institution, the act of identifying the said transaction and searching the customer identification records of the said customer within three business days from the date of the request (in the case where there are no customer identification records, the act of identifying the said transactions and identifying the name and other matters concerning the said customer within three business days from the date of the request)
• (b) In the case of transactions accompanying the receipt of funds from the other specified financial institution: the act of searching information pertaining to the transaction exchanged with the other specified financial institution

(vii) In addition to what is listed in items (i) through (v), in the case listed in (a) to (c) below, the matters specified respectively in (a) to (c) below:

• (a) In the case where the specified financial institution makes a notification to the other specified financial institution or an exchange dealer residing in a foreign country (which means an exchange dealer residing in a foreign country prescribed in Article 10, paragraph 1 of the Act; the same shall apply hereinafter) pursuant to same paragraph: the matters on which the specified financial institution has made the said notification
• (b) In the case where the specified financial institution has received a notification from an exchange dealer residing in a foreign country pursuant to the provisions of foreign laws and regulations equivalent to those of Article 10 of the Act, and has accepted the entrustment or re-entrustment of a payment from a foreign country to Japan and will not re-entrust the said payment to the other specified financial institution or an exchange dealer residing in a foreign country: the matters on which the specified financial institution has received the said notification
• (c) In the case where the specified financial institution has received a notification from the other specified financial institution pursuant to Article 10, paragraph 3 or paragraph 4 of the Act, and has accepted the entrustment or re-entrustment of a payment from a foreign country to Japan and will not re-entrust the said payment to the other specified financial institution or an exchange dealer residing in a foreign country: the matters on which the specified financial institution has received the said notification.

The method for preparing transaction records, etc. is stipulated in Article 23 of the Act.

[Method for Preparing Transaction Records, etc.]
Article 23

The method specified by an ordinance of the competent ministries as prescribed in Article 7, paragraph 1 and paragraph 2 of the Act shall be to prepare records in the form of a written document, electromagnetic record or microfilm.