Interview with the President‘JASDEC now
and in the future’

Yoshinobu Takeuchi
President & CEO4

Jap an Secu ritie s Deposito ry C e n te r, I n c . A NNUA L R E P O RT 2 0 1 0

Q1: Eighteen months have passed since the dematerialization of stock certificates in Japan. What key system issues
are you looking to address in the post-dematerialization environment?

Our top priority is to ensure the continued stable operation

although Japan’s settlement systems functioned effectively,of all our systems in the new dematerialized context. Having

centred on the Central Counterparty (CCP*2) system estab-said that, it is clear that the Central Securities Depositories

lished to avert risk and the Delivery versus Payment (DVP*3)(CSDs*1) of the main markets outside Japan provide a mul-system, the situation has now changed. Having witnessed

titude of services to deal with the complexity and sophistica-

the failure of major global financial institutions, we needtion of financial and securities transactions. In addition toto revise our assumptions that risk management could beproviding a framework to support book-entry transfers fora function of the mutual reliance between the international

settlement of simple securities transactions, they provide sys-markets.

tems to support the book-entry transfer of securities associ-

At JASDEC, we aim to engage further in risk manage-

ated with various asset-backed financing structures, and havement by conducting feasibility studies on target areas,

systems aimed at optimizing the funds and securities usedclosely considering the operating environment and mar-for settlement. They implement international standards forket needs, and progressing issues to the next stage as

the sake of advancing the adoption of STP (Straight Throughappropriate.

Processing) as well as gathering and disseminating information on corporate actions and other key issues. So they offer
many services that we currently do not.
Given that the main players (the so-called ‘global players’) in all the systems operated by JASDEC command verylarge shares, we believe that reforms are needed to strengthen
and increase the competitiveness of our country’s settlement
systems by constantly keeping an eye on trends at overseas
CSDs.
There are lessons to be learned from the response by theclearing and settlement infrastructure agencies to the failureof Lehman Brothers in September 2008. Our belief is that,

Note 1: CSD
A Central Securities Depository is an organization that conducts administrative operations for account-based book-entry transfers related to the movement (and registration) of securities
corresponding to the delivery of spot stocks traded on securities exchanges. CSDs conduct safekeeping of such securities in a concentrated manner on behalf of individual investors in thesecurities and thus help eliminate the ‘paper-crisis’ of back-office settlement by securities companies and other financial institutions.
Note 2: CCP
A Central Counterparty is an organization set up with the aim of reducing the risks of, and obstacles to, settlement by providing settlement guarantee services between the seller and thebuyer in securities transactions.

J a p a n S e c u r i t i e s D e p o s i t o r y C e n t e r , I n c . A N N U A L REPORT 20105

Q2: What specific measures are you are taking to forge stronger relationships with overseas CSDs?

In overseas markets, the movement toward smoother cross-Vietnam, in October and the main theme was ‘Promoting theborder settlement in Europe and the US continues to influence

Development of Cross-border Linkage between ACG Members.’

the securities markets of Asia. This has led to discussion on theIn addition to the discussion groups and presentations, furtherformation or reorganization or a variety of bodies, character-consideration and debate was focussed on how to make the ACG

ized by the establishment of the International Central Securities

a more responsive and consistent organization. These interna-

Depository (ICSD*4) and the building of links between CSDs. Astional meetings provide valuable opportunities for promoting in-globalization continues, information sharing between overseas

tercourse and coordination between CSDs, and we will continue

CSDs, CCPs and related international agencies has increased,

to play an active role in them.

and we think this issue is set to become even more important.

Moreover, in terms of relationships with individual CSDs,In May 2009, JASDEC took part in the 10th Conference ofwe have formed MOUs with 12 overseas CSDs: DTCC in theCSDs in Budapest, Hungary. We participated in panel discus-USA, TDCC in Taiwan, KSD in Korea, SD&C in China, CDSL/sions about the views of the CEOs of each region on future

NSDL in India, CDC in Pakistan, TSD in Thailand, MCDR inprospects for CSD and the regulatory problems faced from a

Egypt, MSCH&CD in Mongolia, VSD in Vietnam and KSEI in

CSD perspective, and we also hosted an ‘Interim Meeting,’Indonesia. On the basis of these memorandums, which are aimed

which we had proposed as a forum to allow the representativesat furthering information exchange and mutual cooperation, weof regional CSDs to exchange views. Our focus here was to en-entered into fixed-term information exchange agreements withsure that a constant flow of information was maintained and that

Korea’s KSD and China’s SD&C last year and also accepted

discussions took place concerning topics based on a common

trainees from Thailand to facilitate the development of technicalawareness of the issues faced. Separately, JASDEC has acted as

support expertise in that country. In addition, we have constructedconvener of the Asia-Pacific Central Securities Depository

so-called CSD links with DTCC in the USA, Clearstream inGroup’s (ACG) ‘Information Exchange Task Force’ and hasGermany and KSD in Korea and are operating local custody fororganized cross-training seminars for administrative staff tooverseas securities along with other functions.

further interpersonal relationships and promote the exchange

JASDEC aims to contribute to the development of Japan’sof business-related information. The 11th such meeting was thesecurities markets as well as provide support to the fast-growing

seminar held in July 2009, hosted by the Bangladesh CDBL insecurities markets of Asia, and we intend to continue deepening

Dhaka. The 13th General Meeting of ACG was held in Hanoi,

our relationships with all overseas organizations.

Note 3: DVP
Delivery versus Payment is the process of linking the delivery of securities and the payment of the consideration funds in a transaction (on the basis of mutually binding terms).
Note 4: ICSDAn International Central Securities Depository is a securities book-entry transfer organization conducting concentrated, network-based settlement of international transactions for securities from various countries. The ICSD itself does not conduct safekeeping of securities but operates book-entry transfers by linking together, either directly or indirectly, the CSDs ofvarious countries.

6Jap an Secu ritie s Deposito ry C e n te r, I n c . A NNUA L R E P O RT 2 0 1 0

Q3: Can you outline your approach to business continuity planning?

The fundamental aim of our Business Continuity Plan (BCP) is

Our BCP of course prioritizes the safety and security of ourto minimize the impact on all JASDEC’s participants and stake-staff in disaster situations, and we conduct regular training drills

holders in the settlement infrastructure if some kind of disasterbased on a number of disaster scenarios.

or compromising incident should occur. Our goal is to enable

The recent health scares over new strains of influenza viruses

business to continue to the greatest extent possible and to restore

have focused attention on this aspect of business continuity, andservices rapidly if disruption is unavoidable. Specific aspects ofwe were already well prepared with hygienic supplies and other

our business continuity structure include having back-up centre

necessary equipment when the global H1N1 virus became afacilities in remote locations to cover for any failure of the main

global concern, having incorporated this possibility into our BCP

centre, and a robust data centre that has built-in redundancy ofand implemented appropriate staff training. Looking ahead, wecore systems. We have clear BCP implementation, operation

intend to create an even more robust BCP structure, capable ofand emergency communication procedures, a disaster strategy

keeping JASDEC up and running in the widest possible range of

coordination headquarters on standby, and provisions in place

circumstances.

for the delegation of authority. Data at the main centre is backed
up remotely almost in real time, and the system is designed toenable a full switchover to the back-up system within about 90
minutes. We even have back-up office space to host our business
operations should the head office become unusable.

Switch within 90 minutes
Main Center

Backup Center

Dedicated line, ISDN, Wide Area Ethernet (Optical line)

Integrated
channel(Online real-timesystem,Channel file system)

File transfer

Integrated
Web terminal

Participant
information webterminal

Japan Securities
Japan Government
Clearing Corporation
Bond Clearing(JSCC)
Corporation (JGBCC)

SWIFTnet

Bank of Japan
Financial Network
System (BOJ-NET)J a p a n S e c u r i t i e s D e p o s i t o r y C e n t e r , I n c . A N N U A L REPORT 20107