WASHINGTON, D.C. & TOKYO – November 16, 2018 – The Securities Investor Protection Corporation (SIPC) and the Japan Investor Protection Fund (JIPF) have entered into a memorandum of understanding (MOU) that will act as a framework for cross-border communication and cooperation with respect to the similar functions undertaken by the groups and covered by the laws of each country. In the U.S., SIPC maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms.
The new SIPC-JIPF MOU lays the groundwork for the two entities to facilitate communication between JIPF and SIPC, and to establish, foster, and develop a partnership, through which both investor protection and confidence in capital markets will be promoted.
SIPC President Stephen Harbeck said: "SIPC and JIPF recognize the need for protection of investors in both countries from insolvencies of member brokerage firms and the need for cooperation in handling cross-border claims from investors. The parties accept the responsibility of working with each other to ensure that investors in both countries receive compensation promptly, consistent with respective institutional regimes."
JIPF Chairman Yoshio Okubo stated: "JIPF and SIPC will both greatly benefit from enhanced communication and cooperation between the two institutions in protecting investors, as the securities market is becoming increasingly interlinked. "
In meetings with securities regulators and academic leaders in Japan to discuss SIPC’s response to the 2008 financial crisis, Mr. Harbeck emphasized the value of transferring customer accounts from a failing brokerage firm to an operating brokerage firm whenever possible. He noted that account transfers are the most effective way to return control over investment decisions to customers, which is even more important during periods of uncertainty and market fluctuation.
About The Groups
JIPF's mission is to ensure the protection of investors and thereby maintain the reliability of securities transactions, through compensation payments to general customers with eligible claims against failed securities firms in Japan if their customer asset segregation requirement is violated.
SIPC initiates proceedings to protect customers in the event a member brokerage firm fails and cannot satisfy its obligations to return cash and securities held in customer accounts. In such proceedings, SIPC makes advances to help satisfy customer claims from its reserve fund.