Regulatory Framework for Sustainability-linked Derivatives: Japan Analysis

Interest in environmental, social and governance (ESG) issues has grown globally, as countries, companies and investors have focused more on this area. The same trend has occurred in Japan.

Sustainability-linked derivatives (SLDs) are not yet a major product in the Japanese market, but they have emerged as one of the tools available to help firms meet their ESG objectives. As SLDs gain increasing attention around the world, and as some SLDs emerge in Japan, it is necessary for users to understand how these instruments fit into existing regulatory regimes.

This whitepaper analyzes two categories of SLDs in the context of the derivatives regulatory framework in Japan. Specifically, it considers:

  • Whether SLDs would be classified as ‘over-the-counter (OTC) derivatives transactions’ or ‘OTC commodity derivatives transactions’, and how they are regulated; and
  • Compliance issues for market participants to consider when executing SLDs.

Documents (1) for Regulatory Framework for Sustainability-linked Derivatives: Japan Analysis

The Derivatives Market in Japan

A healthy derivatives market is an important element to Japan’s plan to become a global leader in asset management. Asset managers are eager to increase their use of derivatives to better take and manage risk, but note that there is...

DRR Expanded to Cover Hong Kong's Revised Rules

ISDA has expanded its Digital Regulatory Reporting (DRR) solution to support revised derivatives reporting rules in Hong Kong, enabling in-scope firms to implement the changes cost-effectively and accurately. The amendments from the Hong Kong Monetary Authority (HKMA) and the Securities...

Joint Letter on Simplification of EU Taxonomy

On October 6, ISDA, the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), the European Association of Co-operative Banks (EACB) and the European Banking Federation (EBF) published a policy statement in support of...