President’s Message

We are aggressively working tocreate the book-entry transfer
systems of an enhanced
securities clearing and settlement
infrastructure in Japan.
“We are fully aware of our social
responsibilities and will strive toreinforce our business foundation.”

added a pre-settlement matching function for domestic

T o date, the JASDEC Group has approached system

Bond Clearing Corporation, and in January 2006, wereform with three key developments in mind. The firstbegan providing a pre-settlement matching function foris to reinforce corporate governance. The second is to

Corporate Bonds and CP.

promote wider use of DVP as a means of minimizing
principal risk in clearing and settlement operations andour matching system as the cornerstone of STP. And thethird is to expand the range of eligible securities accepted
and to promote dematerialization thereof.
Four years ago, in a bid to achieve a level of corporate governance more appropriate to a central securities
depository, JASDEC shed its status as a not-for-profit
foundation and became a stock company with participating companies as shareholders. We continue to pursue business activities that put users before all else.

assumption of obligations by the Japan Government“Dematerialization of stock
certificates will mark the final
stage of reform.”

We seek to widen the scope of our business activities
and better meet the expectations of users. Toward thisend, we have endeavored to broaden the range of eligible securities we accept and, through advertisements innewspapers, television and other media, have worked toboost our custody ratio.
We have witnessed a dramatic rise in the volumeof transactions handled by the book-entry transfer sys-

“The pursuit of safety, efficiency andconvenience in securities clearing andsettlement is an enduring theme.”tem for CP, which became operational in March 2003.

To reduce principal risk, we introduced a DVP settle-book-entry transfer system for Corporate Bonds.

To enhance convenience to users still further, we upgraded this system in conjunction with the start of thement system for NETDs in May 2004 and simultane-

The book-entry transfer system for Corporate

ously linked it with PSMS. Currently, clearing andBonds was a noteworthy development in fiscal 2005,

settlement through this system accounts for nearly 60%

ended March 31, 2006. The system’s application to newlyof all book-entry transfers for NETDs, and participantsissued bonds has steadily increased since it debuted inregard the system as an important clearing and settle-January 2006, and we expect a considerable amount ofment tool.

outstanding physical bonds and recorded bonds to

We launched PSMS five years ago, and since thenwe have gradually expanded the range of products towhich this function is applied. In February 2005, we2

government bond repos and gensaki on the premise ofundergo transition in fiscal 2006. In April, we launcheda book-entry transfer system for foreign stocks.

of Domestic Securities‘Toward the FinalandStageSettlement
System Reform’
The book-entry transfer system for investment

9th General Meeting of the Asia-Pacific CSD Grouptrusts will be launched in January 2007. As we pursue(ACG) in Tokyo in November 2005. Looking ahead, wedevelopment of this system, we are promoting measures

will join Korea Securities Depository and Taiwanthat will ensure the smooth conversion of existing phys-Securities Central Depository Co., Ltd., in hosting theical certificates to dematerialized form.

9th Conference of Central Securities Depositories in

For stocks—the last certificates to be dematerial-Seoul, South Korea, in April 2007. In addition to theseized—we expect to have a book-entry transfer system inevents, we sign memorandums of understanding withplace by January 2009. We have already determined anoverseas central securities depositories, and will con-outline and are now working to achieve system develop-

tinue to promote greater harmonization with our coun-ment within the desired timeframe.

terparts abroad.

The custody ratio under the prevailing system isThe JASDEC Group upholds management poli-

well into the 80-percentile range, but it should be higher

cies designed to ensure highly transparent businessto facilitate conversion of paper stocks into dematerial-

activities that place system users before all else and toized form. To achieve this task, we must promote

provide services that are secure and exceedingly cost-greater awareness of book-entry services among issuers,efficient. These efforts will lead to higher custody ratios

brokers and investors.

within the Group and accelerate securities clearing andAt the same time, to ensure system security in line

settlement reform in Japan.

with the concentration of marketable securities and their

On behalf of the Board of Directors and employees

conversion to dematerialized form is an issue of increas-of JASDEC, I ask for the continued support of our users,

ing priority. With the Bank for International Settlements’participants and investors as we work toward our goals.

Lamfalussy Standards in mind, we established a backup
center already back in September 2000 to secure our systems. To reinforce information system management still

June 2006

further, we formulated our own security policy, based onsuch international standards as BS ISO/IEC17799 for
information security management. In addition, we maintain a personal information protection policy to ensurethat private data is handled appropriately.
In recent years, we have emphasized international activities, substantiated by our role in hosting theYoshinobu Takeuchi
President and Chief Executive Officer3