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UPDATE 2-Japan to expand oversight of big brokerages

Published 10/22/2010, 06:12 AM

* Tighter oversight targets those with over Y1 trln in assets

* Many bank unit firms, foreign players likely to be excluded

* Aimed at better tracking activities of group companies (Updates with official announcement)

TOKYO, Oct 22 (Reuters) - Japan's Financial Services Agency said on Friday it would expand its oversight of brokerages with assets of over 1 trillion yen ($12.3 billion) to better track their group operations.

The move comes as Nomura Holdings and other Japanese brokerages are increasing their operational and geographical reach through various subsidiaries.

Global regulators are also stepping up oversight of financial institutions in the wake of the financial crisis, including Basel III banking rules that call for higher levels of quality capital to withstand future shocks.

Japan's FSA said there are 14 brokerages with assets of more than 1 trillion yen, but most of those under bank holding companies and foreign firms are unlikely to be included, since they are already under scrutiny from other regulators. That leaves Nomura and Daiwa Securities Group among the few to be targeted.

Under the expanded oversight, which is scheduled to start in April, brokerages will be required to submit financial and other documents on a consolidated basis.

Nomura has been expanding its business globally through the the Asian and European operations of failed investment bank Lehman Brothers, which it bought in 2008, while it is building up operations from scratch in the United States.

After ending a decade-long investment banking alliance with Sumitomo Mitsui Financial Group, Daiwa has been looking for ways to tap growth in Asian markets with a $1 billion war chest.

"Until there are details of what the change involves, we can't say how it will affect our business," Nomura spokesman Kenji Yamashita said.

Nomura's expanding overseas business, he added, has to cope with tighter oversight anyway as it complies with stricter operating rules from U.S. regulators. ($1=81.34 Yen) (Reporting by Noriyuki Hirata, Taiga Uranaka and Tim Kelly; Editing by Chris Gallagher)

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