The Financial Services Agency has added a new line to the way securities firms calculate their capital-adequacy ratio: a deduction tied to leases. The amendments to a Cabinet Office ordinance and an FSA notice were promulgated on October 30, 2026, and the agency says both are in force and apply from that day.
What changed
The rule sits in the provisions on fixed assets and similar items that are deducted from capital. A new item 3 in Article 177, paragraph 2, of the ordinance on financial instruments business operators covers right-of-use assets from leases whose underlying asset is tangible fixed property. For these, the amount that may be deducted from the fixed-asset figure is the lease liability or the right-of-use asset, whichever is smaller.
The FSA's notice carries the same item for special financial instruments business operators and their subsidiaries, in Article 6, paragraph 2, item 3. The agency describes the change as tidying up the treatment of cancellable leases within the fixed-asset deductions.
Where the line falls
The new item excludes leases that cannot be cancelled during the contract term, and those equivalent to them. In its replies to public comments, the FSA said that test should follow generally accepted accounting standards, citing Accounting Standard No. 34 on leases. It also said the lesser-of calculation should be judged lease by lease.
The FSA did not publish a threshold for contracts that can nominally be cancelled but carry heavy penalties. Commenters asked about such cases, including break fees close to the remaining rent and notice periods of six months, and the FSA's reply pointed to the accounting standard.
The amendment also adjusts the apportionment rule for borrowings secured on several assets. That rule now refers to the secured-building and secured-land items only, not to the new lease item. The FSA said the change does not alter the treatment of buildings and land pledged as collateral.
Comments and timing
The draft was open for comment from July 31 to August 31, 2026, and drew 27 comments. Some commenters asked for phase-in arrangements, including a five-year step-up in deductions for non-cancellable leases, or worried that the accounting change alone would depress capital ratios. The FSA declined a transition period, saying the change concerns what may be deducted from fixed assets.
Finance and compliance teams at affected firms should check which leases fall outside the non-cancellable carve-out, and whether their lease-by-lease figures match the lesser-of test. The ordinance and notice apply from October 30, 2026.