Japan’s FSA intends to use AI to examine annual securities reports

Maria Nikolova

Interested companies are invited to submit their applications for participation in the FSA project by May 20, 2019.

Japan’s Financial Services Agency (FSA) is planning a push into the world of artificial intelligence (AI) via a project suggested by its own staff.

The regulator has just announced the launch of a project about the use of AI when examining data such as securities reports.

Under the Financial Instruments and Exchange Act of Japan, listed companies are required to submit Annual Securities Reports (ASRs), which are made available via EDINET (Electronic Disclosure for Investors’ NETwork). These reports include information about a business model, its operations and financial results.

The project that FSA is launching would check whether AI can be used for efficient examination of securities reports. The experiment is set to start with reports published on EDINET.

The regulator is looking for companies that have interest in AI and that are willing to cooperate in this experiment. Companies are invited to submit their applications not later than Monday, May 20, 2019.

Japanese financial institutions have been known for deploying AI solutions. In March last year, for instance, Japan Exchange Regulation (JPX-R) and Tokyo Stock Exchange, Inc. (TSE) announced they would apply AI to market surveillance operations in order to detect misconduct such as market manipulation. The new AI technology enables surveillance personnel to complete preliminary investigations more quickly and to focus on detailed investigations. While the final decision on conducting such investigations will continue to be made by surveillance personnel, this initiative facilitates more in-depth and detailed investigations and is expected to improve their market monitoring functions, thereby protecting the fairness and credibility of the TSE market.

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