Segregation Assurance for Securities Company

Assurance Services for Segregation Management

In Japan, securities company is required to manage funds and securities entrusted by customers separately from its own assets (Article 43-2-1 of the Financial Instruments and Exchange Act in Japan). Furthermore, the company is obligated to securely maintain entrusted funds and securities to ensure return to customers in the event of insolvency and to entrust the amount to be returned to a trust company or similar entity (Article 43-2-2). This is referred to as “Segregation Management of customer assets.”

And then, the status of segregation must be periodically audited by an audit firm or certified public accountant (Article 43-2-3).

In terms of segregation management, we provide statutory assurance services primarily for unlisted securities companies. We also have track records of conducting assurance services mainly for clients under foreign capital, and we issue assurance reports in English.

Our Advantageous Points

Due to the diverse business models of securities companies, not all securities companies necessarily hold significant amounts of customer assets. Additionally, for securities businesses that do not sell a large number of financial products, the operational burden of segregation management is expected to decrease. Therefore, such circumstances lead securities companies to prefer lower expenditures on assurance services.

It is possible for such small and middle-sized entities to reduce the burden relating to audit for segregation management. And then, it could also potentially reduce the fees paid to audit firms. If you are considering reviewing the audit fee associated with segregation management, we encourage you to consult with our firm.