Japan FSAs XBRL Project Launch of New Public

Japan FSA's XBRL Project - Launch of New Public Disclosure System with Mandatory XBRL - May 2008 Toshinori Kobayashi Financial Services Agency, The Japanese Government

Outline of EDINET Electronic Disclosure for Investors’ NETwork • Electronic disclosure system under the Financial Instruments and Exchange Act –Used for Annual Reports, Semi-annual Reports, Quarterly Reports, Securities Registration Statements, etc. • Launched in June 2001 • Number of issuers (Annual Report): –Approx. 5, 000 companies (mainly listed companies) –Approx. 3, 000 investment funds 2

HTML format Issues of previous EDINET • No function for downloading reusable data • Investors can browse information on Web browsers but need to retype data when conducting analysis thereof. Retype EDINET HTML Browse 3 Analysis

EDINET Renovation Project XBRL format • By introducing the XBRL download function, investors can analyze the financial information efficiently. New EDINET Browse HTML XBRL Analysis XBRL 4

EDINET Renovation Project – Timeline Aug 2006 Start System & Taxonomy development Jan-Feb 2007 1 st Pilot Program Taxonomy test (Offline test) 50 companies participated Jul-Aug 2007 2 nd Pilot Program System & Taxonomy test (Online test) 1, 200 companies participated Feb 8 th, 2008 Release Taxonomy (Final version) http: //www. fsa. go. jp/singi/edinet/20080208. html Mar 17 th, 2008 Launch new EDINET system - XBRL filing will be mandated from the first quarterly report in FY 2008 5

EDINET Renovation Project – Scope of XBRL • Consolidated and Non-consolidated financial statements – contained in Annual report, Semi-annual report, Quarterly report and Securities registration statement – excluding notes and non-financial information • Japanese GAAP filers – excluding US GAAP filers, IFRS filers, etc. 6

EDINET Renovation Project • XBRL filing of financial statements is mandated in principle. • XBRL data is open to all investors and analysts. • The financial information of 5, 000 companies and 3, 000 investment funds is XBRLized One of the most advanced XBRL systems in the world 7

EDINET Renovation Project – Impact of XBRL - From “Readable Information” To “Usable Information” XBRL provides the strategic solution to Investors. - Providing “Global infrastructure” with “Global Technical Standard” XBRL encourages companies and investors to active more globally. Global, transparent and vibrant market 8

Feedback from EDINET Renovation Project Topics • Road to Mandatory XBRL • Extraction of Account Items • Time & Difficult Point to Prepare 9

Feedback from EDINET Renovation Project – Road to Mandatory XBRL Hurdle for mandate Actions Taxonomy Quality EDINET Advancement Council & Working Group System Quality Taxonomy Review (Public, Expert, Industry) User’s Guideline Quality Pilot Program XBRL Tools Enhancement Communication with Tool Vendors Filers Familiarity Seminar for Filers 10

Feedback from EDINET Renovation Project – Road to Mandatory XBRL EDINET Advancement Council & WG Taxonomy Review Pilot Program Communication with Tool Vendors Seminar for Filers Ø This council has been established to make collaborative efforts with EDINET stakeholders. Ø Members: industry, analysts, CPA, stock exchanges and others Ø 1 st review by industries & experts, 2 nd review by public Ø Several thousand comments were generated. Ø To modify the taxonomy took 3 months per review Ø Two pilot programs were held in January and July 2007. Ø Many collaboration to enhance XBRL preparing environment. Ø 30 seminars were held and 4, 000 companies are attended. 11

Feedback from EDINET Renovation Project – Extraction of Account Items Coverage 1. Concept of account items coverage Coverage - 90% Num. Items – 4, 700 Covers only account items based on accounting standards Covers all account items used in the practice Number of Items Less items, - More operable for preparer - Better performance for all users More coverage, - Less onerous for preparer 12

Feedback from EDINET Renovation Project – Extraction of Account Items 2. EDINET Taxonomy Development Process Accounting laws and standards (extracting based on laws) 50, 000 items Common practice (extracting based on historical data) Extract account items <Step 1> ・Standardize account items (grouping same concept) 30, 000 items <Step 2> ・Select major account items (frequency of use) Set information 2, 500 items Group A (Account items based on laws) 2, 200 items Group B (Account items based on CP) ・Set Concept layer (Japanese/English Label, Reference) ・Set Relationship layer (Presentation, Calculation, Definition) EDINET 13 Taxonomy 4, 700 items

Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare • Estimated time spent on preparing XBRL compared to previous EDINET – Analysis of questionnaire data (2 nd Pilot Program) Initial year Subsequent year Unclear Increase >100% Decrease [5%] [6%] Increase >100% [6%] [0%] [22%] Decrease Increase [4%] Same as before 50%-100% [14%] [28%] Increase <50% [9%] Same as before [50%] Increase 50%-100% [50%] 14 Increase <50% [6%]

Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare • Difficult point to submit – Analysis of questionnaire data (2 nd Pilot Program) Difficult Point Taxonomy Quality System Quality User’s Guideline Quality XBRL Creation Tools Enhancement Filers Familiarity • No major issue is found that disturbs submissions. • Obtaining XBRL report creation tools • Understanding how to use the tools • Understanding how to create the XBRL report and how to submit to EDINET • Much work beyond the expectations • Cost 15

Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare • Other Difficult point to submit – Analysis of questionnaire data (2 nd Pilot Program) • Identifying the cause of error • Setting of the English label • Choice of the proper items from the taxonomy 16

Feedback from EDINET Renovation Project – Time & Difficult Point to Prepare • Preparation for Mandatory Filing – Analysis of questionnaire data (2 nd Pilot Program) <Technical Issues> • Selecting and familiarizing with an XBRL tool • Early commencement of creating XBRL report <Accounting Issues> • Selection of items from EDINET Taxonomy • Consensus-building with auditor <Other Issue> • Securing human resources and budget 17

Future Issues Domestic Issues Filers -Requirements -Familiarity Investors Analysts XII – Notes, Non-financials Best Practice Global Markets Accounting Rules Scope of XBRL Changes New technology adoption JFSA New Technology – Dimensions, Versioning, Rendering, Formula International Issues Multinational Interoperability Technology Providers Software 18

Future Issues - Multinational Interoperability • To establish a global market, corporate financial information in all countries should be used in a crossborder fashion • Differences in data formats for financial information among countries may interfere with global usage. To maximize the benefits of XBRL as global infrastructure, It is necessary to ensure multinational interoperability and comparability of XBRL through global cooperation. 19

Future Issues - Multinational Interoperability Policy & Rules Cooperation among Regulators Cooperation among Taxonomy Owners JFSA, IASCF, EC and SEC has been discussing towards ”Multinational Interoperable Architecture”. 20

Future Issues - Multinational Interoperability <Process Overview> q Identify comparison points q Compare 3 taxonomies q Evaluate differences and their impacts q Prioritize the points to be “interoperable” q Decide action items for each point Identify Evaluate Compare We are here!! Feedback loop 21 Recomm end

Thank You！ toshinori. kobayashi@fsa. go. jp 22