Custody Services for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

18

DVP Settlement Services for NETDs

Book-Entry
Transfer System
for Stocks, etc.

Book-Entry Transfer System for Investment Trusts

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Business Overview 1Under the New System, Ownership of Stocks is Determined by Electronic Records
page 10 “Dematerialization of Stock Certificates”), a new
Book-entry Transfer System for Stocks, etc. (hereinafterreferred to as “new system”) was inaugurated, replacing theformer system. Under the new system, stock certificates are
no longer deposited, held in custody, or withdrawn. Instead,ownership of stocks is determined by electronic records
maintained in the computer system of JASDEC and accountmanagement institutions (AMIs).

Under the former “depository and book-entry transfer system"(hereinafter referred to as “the former system”), in whichp a p e r s t o c k c e r t i f i c a t e s a r e e m p l o y e d , JA S D E C h o l d s
securities in custody, and settlement of securities transactions
is processed through the book-entry transfer in accounts atsecurities companies or JASDEC, without delivery of physicalcertificates.
Wi t h t h e s t a r t o f t h e d e m a t e r i a l i z a t i o n o f s t o c kcertificates, etc. in January 2009, (see the Special Feature on

Number of issues and account balance under the former system (depository and book-entry transfer system)
Number of issues(Issues)

2,654 2,804 2,977

4,000

3,616

3,498

3,366

3,287

3,116 3,228

3,666

3,626

3,838

3,758

3,952

3,948

3,892

2,000
0
(Million shares)

Custody balance

400,000

Number of uncertificated shares
Custody ratio (%)

129,774 157,074

300,000

46,91921,908 30,444

100,000

68(FY) 1993

1994

0

61,747 84,443 108,064

13
6,663

1995

29

23

17

42

34

73,58544,059 54,226
17,961 30,581

1996

1997

1998

1999

2000

95,557 105,490

2001

2002

128,577

2003

281,914 303,382 320,090
77

72

64

58

54

Uncertificatedpart of sharesin custody
14.2%

200,000

191,562 203,181

228,201 262,128

84

81

344,842
91

(%)

100
80

157,756

173,456

192,117

211,037 228,158 60

Uncertificatedpart of sharesin custody
65.9%

2004

2005

2006

2007

Uncertificated shares in custody are ones that JASDEC has offered not to possess shares certificates to issuing companies.

Uncertificatedpart of sharesin custody
66.2%

2008

40
20
0

(Apr-Dec)

Deposits and Withdrawals
Number of shares deposited(Million shares)

Number of shares withdrawn

60,000Withdrawals to deposit ratio (%)

40,00036,23440.1
14,52420,000047,32545,380(FY) 1999

56,21553,217

(%)

69.0

80

49,84031,52545,838 40,557
37,49460
37,34851.2
34,41535,91247.0
42.3
33,786
34,97631,982
38.6
30,77525,875
40.2
31.9
27.6
40
21,727 28.5
33.0
20,771
20,025
18,331
24,611
28.0
21.6
19.8
15,913
21.4
16.7
14,81715.1
9,663 20
14,445
12,51012,328
10,524
9,649
20.8
6,907
7,491
5,135
5,321
3,820
1,944

2000

2001

2002

2003

2004

2005

2006

2007

2008

Note: The number of shares indicated by the dotted line excludes the amount in shares deposited primarily because of a stock split, stocks for transfer, share exchanges, or as a result of a merger.
(Not available prior to fiscal 1999.)

(Dec)

0

Number of inquiries to the Securities Information Tracing System (SITRAS) (daily average)(Shares)

180,000

160,572
114,818 114,000

114,210120,000

69,04067,81770,731

2005

2006

2007

74,13765,86773,5472008.45

6

141,092 135,689

161,573 151,861

60,0000 (FY)

2004

2008

7

8

9

10

11

12

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 919

B us i n e ss O v er v iew 1

Book- Entr y Tran sfe r Syst e m for St ocks, e t c.

Promoting Infrastructure Development for a Smooth Transition to the New System
In fiscal 2008, along with reliable operations of the formers y s t e m , JA S D E C f u r t h e r s t r e n g t h e n e d t h e o p e r a t i o n a linfrastructure to facilitate a smooth transition to the new
system in January 2009. As a part of the efforts, JASDEC,
a d m i n i s t r a t o r s o f s h a r e h o l d e r r e g i s t r y, a n d a c c o u n t
management institutions (AMIs) cooperated in the
management of shareholder information and then launched theParticipant Information System in September 2008 ahead of
the implementation of the dematerialization.
The Participant Information System facilitates nameidentification when shareholders have accounts at more thanone AMI and manages shareholder information after the nameidentification. Under the former system, name identification
for the purpose of entry in the shareholder registry was carriedout separately by each administrator of shareholder registry
appointed by individual issuing companies. In the new system,
to further streamline administrative work related toshareholders, JASDEC receives all essential information forshareholders of all listed companies, including the names andaddresses, from the AMIs, and identifies the shareholders.
JASDEC then delivers the shareholder information to theadministrators of the shareholder registry. This new system ofnotice, referred to as “General Shareholders Notification”,
formally commenced in January 2009 with the start of the new
Book-entry Transfer System. Prior to the formal start, theParticipant Information System was partially introduced forbeneficial shareholder notification applied for record dates on
and after October 27, 2008.
In addition, we took various steps to urge shareholders todeposit their certificates with JASDEC at an early date to
avoid problems caused by shareholders rushing to deposit
their certificates at the last minute prior to the dematerialization.
We also conducted test runs of preliminary operations fors m o o t h t r a n s i t i o n t o t h e n ew s y s t e m . A f t e r a n o r d e r l ytransition to the new system was accomplished, we werecommitted to secure and reliable operations of the system.

JASDEC participants and indirect AMIs (as of March 31, 2009)
JASDEC Participants by Category

Indirect AMIs by Category

Securities finance companies
3 (1%)
Stock exchanges, etc.
12 (5%)
Securities companies, etc.
16 (28%)Life & non-life
insurance companies
2 (1%)
Banks, etc.
26 (10%)Stock exchanges, etc.
1 (2%)

Total

Total

258

57

Securities companies, etc.
215 (83%)

companies

Foreign indirect
AMIs
22 (38%)companies

Banks, etc.
18 (32%)
Note: “Banks, etc.” include The Norinchukin Bank, Tokyo Shoken Shinyou Kumiai, and Tokyo Bankers Association.
“Stock exchanges, etc.” include Japan Securities Dealers Association, Japan Securities Clearing Corporation, JASDEC DVP Clearing Corporation, three securities agents and three tanshi companies(which offer short-term credit brokerage services)

Number of issues and account balanceBook-entry transfers
under the current system (Book-entry Transfer System)
Stock exchange transaction

Balance in custody(Million shares)

Number of issues

400,000

3,870(Issues)

3,855

394,620

3,839

394,558

390,000

391,800

3,900(Billion shares)

1,100
600

3,800

400

Non-exchange transaction deliveries (NETDs)

1,099
364

615
484
279

0

20

Jan. 31, 2009

Feb. 28, 2009

Mar. 31, 20090

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

0

231
84

200
2008. 4~2009. 3(Full year)

2008. 4~12

(Former system)

2009. 1~3

(Current system)

25

1

139
112
27
31

2

3

Bus iness Ove rvie w 1

B ook-E n t ry Tran sfe r Syst e m for St ocks, e t c.

Bond with Share Option account balance and number of issues
Balance in custody (end of FY or month)(Billion yen)

(Issues)Number of issues (end of FY or month)

2,604

3,000

1,540
1,408 1,154
146
117
1,689
96

1,407 1,383 1,377 1,377 1,376 1,261 1,243 1,293 1,317

158

2,000

96

70

90

150

88

88

200

1,267 1,266 1,154

88

77

76

76

75

71

70

100

70

1,000
0

50
2004 2005 2006 2007 2008

(FY)

2008. 4

5

6

7

8

9

10

11

12

2009. 12

30

Exchange Traded Fund (ETF) account balance and number of issues
Account unit balance (end of FY or month)(Billion yen)

66

201

300

188

187

2004 2005 2006 2007 20082008. 4

162

16

100
(FY)

190
39

170

200
0

(Issues)Number of issues (end of FY or month)

400

38

192

14

173
39

39

59

59

64

65

65

65

65

66

66

178

179

191

198

196

195

197

196

187

7

8

9

10

11

12

2009. 1

2

3

80
60
40

14

20
5

6

0

Real Estate Investment Trusts (REITs) account balance and number of issues
Account unit balance (end of FY or month)
Number of issues (end of FY or month)(Billion yen)

43

1,200

34

345

900

18

600

517

678

(Issues)

44

43

44

44

44

44

44

44

44

44

43

43

43

43

760

804

758

764

782

785

793

797

797

797

790

800

801

804

2008. 4

5

6

7

8

9

10

11

12

2009. 1

2

3

50
40
30
20
10
0

300
0

2004 2005 2006 2007 2008

(FY)

Shareholders Notification (1)Participant information
Data for Shareholders
Notification (approx.)

Participant accountinformation (approx.)23,555 thousand

General shareholder notification(Notification,in thousand)

4,000

14,935 thousand

Number of general shareholder
notification (approx.)

3,000* As of March 31, 2009

2,000
1,000
0

34

Number of issues (approx.)
Total of shareholders (approx.)

18
4 59
3

2,802
135

1,233
69

2009. 1

(Issues/Billion shares)

2

40
30
20
10
0

3

* Figures are as of day of notification to issuers* Regarding general shareholder notifications relating to stocks with shareholder date of record at
the end of March 2009, the total of shareholders stood at 45,283,000, issues at 2,867 andnumber of shares whose ownership was notified using the general shareholder notification system
at 359.9 billion. Notification was made to issuers in April 2009.

Shareholders Notification (2)Individual shareholder notification

Information requests

Number of notices(Notification)

Number of issues

296

300
42

200
100
0

25
5

58

2009. 12

5(Issues)(Notification)

60

80

40
20

3

0

(Total record) notification(Partial record) notification

19

60
40

(Total record) number of issues(Partial record) number of issues

61 11

13

65

9

3
6

20

20

4
53

0

2009. 1

2

3

(Issues)

15
10
5
0

* Requests for information (total record) refer to requests for data recorded on book-entry transfer registries of either JASDEC participants (direct AMIs) or indirect AMIs where shareholders in question have opened
accounts.
Requests for information (partial record) refer to requests for data recorded solely on book-entry registries of JASDEC participants where shareholders in question have opened accounts.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 9

21

Custody Services for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

Book-Entry
Transfer System
for Commercial Papers
and Corporate Bonds

DVP Settlement Services for NETDs

22

Book-Entry Transfer System for Investment Trusts

Book-Entry Transfer System for Stocks, etc.

Business Overview 2

For seamless and secure settlement of CP and corporate bonds,
which play crucial roles in business fund procurement
In March 2003 JASDEC launched the Book-entry Transfer
System for Short-Term Corporate Bonds (dematerialized CP),the first dematerialized Book-entry Transfer System in Japan,
and for Corporate Bonds in January 2006. In each system,
custody procedures – issuance, transfer (trading), andredemption – are conducted based on the balance recorded in
the transfer account books. In addition, all transactions related
to issuance, transfer and redemption of CP and corporate
bonds can be processed by the DVP settlement link with the
Bank of Japan’s Financial Network System. By linking theBook-entry Transfer System with our PSMS (Pre-Settlement
M a t c h i n g S y s t e m ; s e e p a g e 3 6 ) , JA S D E C h a s r e a l i z e dstraight-through processing (STP), which fully automates theentire process, including trade matching and fund/securities
settlement.
Regarding participation in JASDEC’s Book-entry Transfer
System, JASDEC set up a multilayer holding structure foraccount management institutions (AMIs) to address thed iv e r s e n e e d s o f p a r t i c i p a t i n g i nv e s t o r s a n d f i n a n c i a linstitutions. Direct AMI can open an account directly at
JASDEC, and indirect participation is possible by opening an
account at an AMI. Another option for indirect participation isthrough the opening of an account at an indirect AMI.
Redemption is made for and interest is paid to bondholders
by paying agents via AMIs, in accordance with the multilayered
structure.

Flowchart for Book-Entry Transfer for CP/Corporate Bonds (in the case of DVP)
Trade

Seller

Buyer

JASDEC
Affirmation of trade

Affirmation of trade

Affirmation

Notice of settlement
matching status

Settlement
parties

Notice of settlement
status(Awaiting fundsettlement)

Settlement matching
Pre-Settlement Matching
SystemSecurities transfers
Book-entry Transfer System
for CP/Corporate Bonds

Notice of transfer
completion

Notice of settlement
status(Awaiting fundsettlement)

Payment instruction
Payment request

Notice of receipt
completion

Settlement
parties

Notice of transfer
completion
Notice of receipt
completion

Fund
settlementcompany

Notice of settlement
matching status

Bank of Japan
Payment instruction

Fund
settlementcompany

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 9

23B us i n e ss O v er v iew 2

Book- Entr y Tran sfe r Syst e m for Comme rcial Pap e rs

Working to upgrade settlement statistics data to enhance transparency of CP transactions
CP market, including direct CP purchases by the Bank ofJapan and other measures as part of a strategy for supporting
the provision of funds to business companies. As a result, theCP balance at the beginning of January 2009 had surpassed¥20 trillion, roughly the same level as at the end of March
2008. As of March 31, 2009, however, the total amount of CP
using the system and the balance for the CP declined to ¥18
trillion (the record was ¥23 trillion at the end of 2007) and
5,869 issues, respectively.
To i m p r ove m a r k e t t r a n s p a r e n cy, JA S D E C a c t ive l ydiscloses information on settlement figures. In January 2008,
JASDEC began issuing weekly reports on the CP balance byissuer category. Moreover, on JASDEC’s website in October
2009, daily reports on average issuance rates of CP, classified
by maturity, industry and credit rating, will be provided for
public use in line with an agreement with the Bank of Japan.
These new services will promote a fairer and more transparent
CP market in Japan.

Commercial paper (CP) currently refers to short-term bonds
in a dematerialized form issued by business companies as ameans of procuring short-term funds. As commercial paper
was previously drawn as a promissory note in a physical form,
risks involved in the transfer and deposit of notes for large
amounts were not always avoidable, not to mention the needto pay documentary stamp tax. Accordingly, requests wereraised for an electronic book-entry system that would
eliminate the need for paper certificates. The result was thecreation of our first fully electronic book-entry transfer
system for dematerialized CP. Since the launch of the system
six years ago, almost all CP issued in Japan has been handled
by this system.
The world financial crisis triggered by the bankruptcies offinancial institutions in the autumn of 2008 brought a sharp
deterioration in the environment for the issuance of CP, andcaused its balance to decline sharply. Subsequently, theauthorities took steps to restore the proper functioning of theParticipants of Book-Entry Transfer for CP (as of the end of March 2009)

Issuers

Issuing/
paying agents

490

JASDECJASDEC
Participants(Direct AMIs)

Indirect
AMIs

68

12

19

companies

Fund settlement corporations

Participants(CP holders)148

CP Account balance and number of issues
Account balance (end of FY or month)
Number of issues (end of FY or month)(Trillion yen)

30

5,848

20

6,129

18.6

(Issues)

5,759 5,869

18.9

20.2

18.7

6,063 6,067 5,938
5,820 5,926 6,012
22.4

22.3

20.9

20.8

22.5

5,430 5,505

5,853 6,057 6,061 5,869

21.2
18.4

18.4

7,000
6,000

19.4

20.4

20.0

18.7

5,000
4,000
3,000

10

1,314

2,000
4.8

0

24

(FY)

1,000

2004 2005 2006 2007 20082008. 4

5

6

7

8

9

10

11

12 2009. 1

2

Issuance, transfer and redemption of CP (daily average)

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9
Redemption(Trillion yen)Transfer

Total: over
¥5 trillion

Transfer: ¥4.3 trillion(Annual total: over ¥1,000 trillion)

Impact of U.S. financial crisis(particularly on issuance)

30Participants of Book-Entry Transfer for CP (as of the end of March 2009)

Issuers

JASDEC

Issuing/
paying agents Bus ines s O v er vie w 2
JASDEC

490(Direct AMIs)

19

companies

Indirect

Participants
B ook-En t ry Tran sfe r Syste m for Comme rcial
Pap e rs
Participants
AMIs

68

(CP holders)

12

148

Fund settlement corporations

CP Account balance and number of issues
Account balance (end of FY or month)
Number of issues (end of FY or month)(Trillion yen)

30

5,848

20

6,129

18.6

(Issues)

5,759 5,869

18.9

20.2

18.7

6,063 6,067 5,938
5,820 5,926 6,012
22.4

22.3

20.9

20.8

22.5

5,430 5,505

5,853 6,057 6,061 5,869

21.2
18.4

18.4

7,000
6,000

19.4

20.4

20.0

18.7

5,000
4,000
3,000

10

1,314

2,000
4.8

0

(FY)

1,000

2004 2005 2006 2007 20082008. 4

5

6

7

8

9

10

11

12 2009. 1

2

0

3

Issuance, transfer and redemption of CP (daily average)
Redemption(Trillion yen)Transfer

6.0

Issuance

0.7

4.0

0.6

0.6

0.6

0.6

0.6

0.7

0.6

0.5

0.5

0.5

0.5

0.5

3.9

4.1

4.5

0.6

0.5

0.5

0.5

0.5
3.7

4.1

4.3

4.2

4.5

4.4

4.4

4.4

4.3

0.7

0.7

0.6

0.6

0.6

0.7

0.6

0.6

0.7

4.7

4.4

4.1

2.5

2.0

0.6

0

0.7

Impact of U.S. financial crisis(particularly on issuance)

Transfer: ¥4.3 trillion(Annual total: over ¥1,000 trillion)

Total: over
¥5 trillion(FY)2005 2006 2007 20082008. 4 5

6

7

8

9

0.5

0.4

10

11

12 2009. 1

2

0.5

3

Continually adapting to CP market needs
The settlement amount of issuance, transfer, and redemptionof CP handled by JASDEC’s Book-entry Transfer System
exceeds ¥5 trillion per day, and the more than ¥10 trillion at
the end of each month surpassed the trading value per day at
the Tokyo Stock Exchange. In fiscal 2008, the aggregate
settlement amount passed the ¥1,000 trillion mark for the firsttime, setting a record for active trading since the start of thesystem. This huge settlement amount reflects the importanceof CP, which plays a crucial role in fund procurement bybusiness entities in Japan. As the sole provider of
infrastructure for the settlement of securities transactions,
JASDEC fully recognizes its responsibility to secure a highlevel of reliability in the book-entry transfer system. We will
make further efforts to improve the Book-entry Transfer
System for CP to promptly reflect changes in market needs
for CP transactions.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 925

B us i n e ss O v er v iew 2

Book- Entr y Tran sfe r Syst e m for Corp orat e B on ds

Further expansion of Book-entry Transfer System functions,for the convenience of participants
conversion of bonds that had been issued prior to the system’s
inauguration (referred to as “existing bonds”) for the inclusionof these bonds in the current Book-entry Transfer System, wascompleted by the end of 2007, and thus the transferred“existing bonds” were successively reaching their redemptiondate.
In fiscal 2008, a number of cases emerged of default on
obligations relating to publicly-offered bonds, as a result of
the business downturn. To ensure the smooth progress of civil
rehabilitation proceedings in these cases, JASDEC contacted
the parties concerned at an early stage, and worked together
with them to ensure that all parties concerned were kept fully
informed of the state of play. We also collaborated closelywith the parties concerned to organize meetings of bondholders, and we published the “Guidelines for the Holding ofBondholders’ Meetings”.
As recent new legislation has opened up the way to aconsiderable diversification of product types in this market,
we have developed ways for the Book-entry Transfer System
to handle such new products as trust bonds and exchangeablebonds.

JASDEC’s Book-entry Transfer System for Corporate Bonds
handles various types of bonds, both through public offeringsand private placements. These include corporate bonds,
municipal bonds, bonds issued by investment firms, specified
bonds issued by special purpose companies (SPCs) and others,
bonds of special corporations, such as quasi-government andlocal government bodies, and Samurai bonds (yendenominated bonds issued in Japan by non-Japanesecompanies or foreign governments).
As in the case of the CP market, the corporate bondmarket was hit hard by the aftereffects of the worldwide
financial crisis in the latter half of 2008. However, the firsthalf of fiscal 2008 saw active issuance of industrial bonds,
Samurai bonds, and others, and the issue value of corporate
bonds for individual investors set a record. As of the end of
March 2009, the number of bonds using the system was
73,298 issues, and the issue balance stood at ¥240 trillion. In
mid-March, the highest balance of bonds since the start of the
B o o k - e n t r y Tr a n s f e r S y s t e m f o r C o r p o r a t e B o n d s w a s
recorded, at ¥244 trillion. There was an increase in the valueof redemptions during fiscal 2008, at ¥36.5 trillion, threetimes the level in fiscal 2007. This was because the process ofParticipants of Book-Entry Transfer for Corporate Bonds (as of the end of March 2009)
Issuing/
paying agents

Issuers

2,390

companies andorganizations

JASDECJASDEC
Participants(Direct AMIs)

Indirect
AMIs

Indirect
AMIs

86

407

13

208
Fund settlement corporations

Participants(Bond holders)148

Outstanding balance of corporate bonds and number of issues
Outstanding balance (end of FY or month)
Number of issues (end of FY or month)(Trillion yen)

72,817 73,298

300

72,790 72,295 72,408 72,704 72,922 73,959 73,924 73,967 74,168 74,353 74,460 73,298

65,456
241.0

240.2

242.5

242.2

242.3

241.5

241.3

240.9

241.9

242.0

242.1

243.6

242.4

(Issues)

80,000240.2

60,000200

181.3

40,000100
20,000
0

26

(FY)

2006

2007

2008

2008. 45

6

7

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

8

9

10

11

12

2009. 12

30

Participants of Book-Entry Transfer for Corporate Bonds (as of the end of March 2009)
JASDEC

Issuing/
paying agents

Issuers

2,390

companies andorganizations

Indirect

Indirect407

13

Bus ines s O v e rvieParticipantsw 2
B ook-E n t ry
Tran sfe r SystAMIse m for Corp orat e B on ds
AMIs

JASDEC

Participants(Bond holders)(Direct AMIs)

208

86
148

Fund settlement corporations

Outstanding balance of corporate bonds and number of issues
Outstanding balance (end of FY or month)
Number of issues (end of FY or month)(Trillion yen)

72,817 73,298

300

72,790 72,295 72,408 72,704 72,922 73,959 73,924 73,967 74,168 74,353 74,460 73,298

65,456
241.0

240.2

242.5

242.2

242.3

241.5

241.3

240.9

241.9

242.0

242.1

243.6

242.4

(Issues)

80,000240.2

60,000200

181.3

40,000100
20,000
0

(FY)

2006

2007

2008

2008. 4

5

6

7

8

9

10

11

12

2009. 12

30Further steps to promote investments in Japanese bonds by nonresidents
Investments in domestic securities by nonresidents alreadyoccupy a very large proportion of the total investment inJapan’s securities market. To raise the position of Japan’s
capital markets in the world, however, market functions must
be upgraded so as to attract more foreign investors. In January
2008, a system for tax exemption for nonresidents on theinterest accrued on municipal bonds was inaugurated,f o l l ow i n g a s y s t e m s i m i l a r t o t h a t u s e d f o r B o o k - e n t r yTransfer of Japanese government bonds. In response, we tookappropriate measures to include municipal bonds under ourBook-entry System for taxation purposes. To promote theg l o b a l i z a t i o n o f J a p a n ’s c a p i t a l m a r ke t s , w e w i l l m a ke
p r e p a r a t i o n s f o r a f u t u r e ex p a n s i o n i n t h e s c o p e o f t a x
exemptions for nonresidents.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 9

27

Custody Services for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

Book-Entry
Transfer System
for Investment Trusts

DVP Settlement Services for NETDs

28

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Book-Entry Transfer System for Stocks, etc.

Business Overview 3

A faster, safer approach to investment trusts
The Book-entry Transfer System for Investment Trusts is acomputer system for managing beneficial rights of investment
trusts. Under the system, beneficial certificates aredematerialized, and beneficial rights are recorded
electronically in the transfer account books. This facilitates
the prompt creation, extinction and transfer of beneficial
rights, and lowers costs of issue and custody of physicalcertificates as well as risks of loss, theft or fraud.
The system covers investment trusts managed by trustors( h e r e i n a f t e r, s i m p l y c a l l e d “ i nve s t m e n t t r u s t s ” ) . T h e s einvestment trusts are contract-type investment trusts with thei nvol ve m e n t of three parties – a trus tor, a trus tee and ab e n e fi c i a r y w h o i s a n i nve s t o r i n t h e i nve s t m e n t t r u s t .
(Exchange traded funds (ETFs) and investment trusts of the
non-trustor instruction type are outside the scope of thesystem.) Since the system was launched on January 4, 2007,

all trustors and trustees involved in investment trusts haveparticipated in the system, and thus almost all investment
trusts issued in Japan have been dematerialized.
T h e p a r t i c i p a n t s a r e d ive r s e , c o n s i s t i n g o f n o t o n l ysecurities companies but also banks, insurance companies,
shinkin banks, credit cooperatives, agricultural cooperatives,
investment trust management companies in direct marketing,etc. The number of AMIs or JASDEC participants has reached
897 companies.
The Book-entry Transfer System for Investment Trusts
enables the direct or indirect connection among trustors,
trustees, account management institutions, and JASDEC. This
ensures greater security, accuracy, and speed of processing
through the electronic management of the accounts ofinvestment trust beneficiaries.

Basic Model of Book-Entry Transfer System for Investment Trusts

Investors

Flow of funds
Flow of data

(Beneficiary)

Private vendor financial network systems/Fax

Fund
distributors

Issuers(Trustors)(securities companies,
banks,
insurance companies,
etc.)

AMIs

Fund settlement
corporations（BOJ Net Fund
settlement
corporations）

JASDECBank of Japan
Japanese Bankers
Association financial
network system

Trustees
Fund settlement
corporations（BOJ Net Fund
settlement
corporations）

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 929

B us i n e ss O v er v iew 3

Book- Entr y Tran sfe r Syst e m for In ve st me n t Trust s

Strong support from users
investment trusts), a slight decline of ¥261 billion.
Fund settlement systems in the Book-entry Transfer
System for Investment Trusts include DVP settlement (using
the Bank of Japan financial network system) and non-DVP
settlement (using the Japanese Bankers Association financial
network system for online fund settlement among financial
institutions). The use of DVP settlement, which involves lesssettlement risk, has been increasing steadily among systemu s e r s . I n fi s c a l 2 0 0 8 , 2 6 % o f t r a n s a c t i o n s u s e d DV P
settlement. By value, the percentage slightly declined to 58%.

The total number of investment trusts handled by JASDEC at theend of fiscal year 2008 (ended March 31, 2009) rose to 5,906(3,323 publicly-offered and 2,583 privately-placed investment
trusts), increased by 303 from the end of the previous fiscal
year. On the other hand, reflecting weak stock prices, theprincipal value of new registration (purchase) and elimination(cancellation and redemption) was decreased. The decline in
the principal value of new registration was particularly
dominant, and as a result, the account balance of principal
decreased to ¥105 trillion (¥74 trillion in publicly-offeredi nv e s t m e n t t r u s t s a n d ¥ 3 1 t r i l l i o n i n p r i v a t e l y - p l a c e dBook-Entry Transfer System for Investment Trusts – account balance and number of Issues
Account balance (end of FY or month)
Number of issues (end of FY or month)(Trillion yen)

200
150

(Issues)

5,603

5,906

5,658

5,704

5,764

5,816

5,845

5,873

5,888

5,877

5,864

5,902

5,915

5,906

105.8

105.5

106.7

107.4

107.6

107.9

108.3

107.8

106.5

106.4

106.1

106.3

106.3

105.5

8,000
6,000

100

4,000

50

2,000

0 (FY) 2007
2008
Account balance is sum of principal

2008. 4

5

6

7

8

9

10

11

12

2009. 12

0

3

Purchase and Redemption Transaction (Daily average)
Purchase(Transactions)

Redemption

8,000

5,275

6,000

4,972

5,130

4,769

4,509

5,396

5,111

5,045

4,901

5,323
6,118

4,967

4,969

5,087

4,709

4,838

5

6

7

8

9

4,637
6,171
5,171
4,934
4,328

4,835
4,589

4,781

4,759

4,288
4,365

4,709

4,000
2,000
0

(FY)

2007

2008

2008. 4

10

11

12

2009. 1

2

3

Principal Values of Investment Trusts for Purchase and Redemption (Daily average)
Purchase
Redemption(Billion yen)

600
312

400

261

364
260

261

279

259

220
296

291

274

249

248

291

284

231

352

305

212

263

242

237

226

300

210

220

265

211

200
0

30

(FY)

2007

2008

2008. 45

6

7

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

8

9

10

11

12

2009. 1

2

3

Bus ines s O v ervie w 3

B ook-E n t ry Tran sfe r Syst e m for In ve st me n t Trust s

Participants of Book-Entry Transfer System for Investment Trusts(as of March 31, 2009: Numbers in parenthesis show the numbers as of March 31, 2008)

Trustees 12(12)Issuers 85(78)JASDECJASDEC Participants 191(186)

BOJ Net Fund settlement
corporations 45 (45)

Designated fund distributors 386(383)
Indirect AMIs 706(701)Indirect AMIs

JASDEC Participants

Investment
trust management
2companies

Life & non-life
insurance companies

Financial institutions
for small businesses*

Securities
companies
92

Banks

Others706

Others

8

2

Total

102

6

8

11

Life & non-life
insurance companies

Financial
institutions
for smallbusinesses*
497

Investment
trust
managementcompanies 17
Banks

37

Total

191
Securities
companies
115*Sinkin banks, Credit cooperatives, Agricultural cooperatives, Labor banks, etc.

Further improvement of the system
By the amendment of the Law Concerning Book-entry
Tr a n s f e r o f C o r p o r a t e B o n d s a n d S t o c k s , e t c . , JA S D E C
launched services to make the split and merger of beneficial
rights available in January 2009. For example, a 2-for-1 splitof beneficial rights will reduce the amount required forpurchasing by half. In this way, the System will providet r u s t o r s a n d t r u s t e e s w i t h a c o nve n i e n t m e t h o d f o r t h e
reduction of unit prices.
JASDEC continues to make further efforts to respond torequests made by participants through questionnaires
conducted at the end of fiscal 2007.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 9

31

Custody Services for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

32

Book-Entry Transfer System for Investment Trusts

DVP
Settlement Services
for NETDs

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Book-Entry Transfer System for Stocks, etc.

Business Overview 4

Secure and reliable securities trading has come to realization
participants who prefer the DVP settlement must apply to JDCC
for approval of participation in the DVP system, following ascreening process covering primarily the financial positionand operational capability of the applicant.
To manage participants’ risks rigorously, JDCC requests
participants to provide, as collateral, assets with carrying
value exceeding the total amount of accounts payable (assured
assets), and sets a limit for the total of accounts payablereflecting the trading records of each participant (Net Debit
Cap).
DVP settlements for NETDs are conducted by the grossnet type DVP model. Securities are transferred on a grossbasis from the seller’s account to the buyer’s account through
JDCC’s accounts. Meanwhile, payment is performed in lumpsum on a net transaction basis on each settlement day, througha current account held with JDCC under the Bank of Japanfinancial network system.

There are two types of settlement services for non-exchangetransaction deliveries (NTEDs) — DVP and non-DVP. Usersof the DVP settlement services for NTEDs consist primarilyof domestic and overseas institutional investors trading inJapanese stocks and other securities.
U p t o n ow, i n m a n y c a s e s o f n o n - e x c h a n g e t r a d e s ,transfers and fund settlement were separately processed, andwere exposed to principal risk — the risk that a counterparty
who delivers securities may not receive payment, and viceversa. The DVP settlement system for NETDs reduces theserisks by linking securities transfers with payments on thesystem, thereby ensuring secure and reliable settlement.
JASDEC also facilitates STP (Straight-Through Processing),
which electronically automates all the processes related toadministrative procedures.
The DVP settlement system for NETDs has been operateds i n c e M a y 2 0 0 4 b y JA S D E C DV P C l e a r i n g C o r p o r a t i o n(JDCC), a wholly-owned subsidiary of JASDEC. JASDEC

Reducing principal risk by using the DVP settlement method
Delivery of securities

SellerTransfer of securities and payment carried out separately

Buyer

Payment of settlement amount

Use of DVP settlement
Account delivery through JDCC

Seller’s
account

Securities
data

Account of JASDEC
DVP Clearing Corp.

Stocks data transfer and payments are linked on

Securities
data

Buyer’s
account

the system, enabling secure and reliable settlement

Provision/receipt of funds through current accounts at the Bank of Japan

Seller’s
account

Funding data

Account of JASDEC
DVP Clearing Corp.

Funding data

Buyer’s
account

DVP system is a system that links the delivery of stocks with payments, enabling secure settlement.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 933

B us i n e ss O v er v iew 4

DVP Settleme n t Se rvice s for NE TD s

As DVP system becomes more convenient for participants, number of
DVP settlements for NETDs increases
year-over-year. As JDCC achieved economies of scale, ¥10
out of the ¥25 fee charged per DVP transfer was returned toparticipants as rebates from the fee revenues in fiscal 2008. In
April 2009, fee per transaction using the DVP settlement wasdetermined as ¥20, reduced by ¥5.
To fine-tune the system to improve the efficiency ofutilization of collateral money deposited with JDCC
(participants’ funds), from January 2009 DVP participants areable to use deposited money as collateral right from the dayon which the money is deposited rather than from the nextday, as was the case previously. Restoration of depositedmoney is also now implemented on the day of receipt of such
request from the participant.

T h e DV P s e t t l e m e n t s e r v i c e s f o r N E T D s m a i n l y c o v e r
securities handled by JASDEC under its Book-entry Transfer
System for Stocks, etc. such as Japanese stocks, bonds withshare options, etc. The scope of securities handled by JDCC
h a s ex p a n d e d eve r y y e a r. I n J a n u a r y 2 0 0 9 , a r eg u l a t o r yframework was set up to enable JDCC to handle foreign
stocks, etc. listed on Japanese stock exchanges in the DVP
settlement system for NETDs.
At the end of fiscal year 2008 (ended March 31, 2009),
participants in the DVP service totaled 61 companies (16banks and 45 securities companies). As the system became
widely available, the average daily volume of transfers under
the system in fiscal 2008 stood at 96,301 increased by 9,116

DVP Settlement for NETD Transactions (Daily average)
Non-DVP transactions(Transactions)

DVP transactions

202,218

300,000
92,670100,411200,000

71,70567,25572,231

71,366

68,78067,432087,185(FY)

2007

96,301

2008

88,98988,572

2008. 4

5

91,292

88,34472,3536

7

8

DVP transactions are the number of transfers executed (transfer from DVP participants to JASDEC DVP Clearing Corporation)

34

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

118,947
96,67490,55487,2189

173,427

81,93777,061
122,494

100,000

166,525

10

11

12

102,604

86,4072009. 1

2

94,7803

B usin e ss Ove rvie w 4

DVP Se t t le me n t Se rvice s for NE TD s

DVP Settlement for NETD Fund Settlement (Daily average)
Total of payments
Total value of net settlement payments(Billion yen)(%)

Rate of reduction (Total value of net settlement payments/Total of payments × 100)

2,500

1,804

2,000

1,600

1,751

1,637

40
1,492

1,294

1,500

50

1,475

1,336

1,444

30

1,188
958

1,000

10.4

500
0

187
(FY)

2007

12.8

12.9

166

207

2008

2008.4

10.5

12.2

10.9

10.8

12.3

12.7

13.7

183

199

162

143

181

184

163

5

6

7

8

9

10

11

900

884

776

15.1

16.4

16.6

16.5

144

127

146

148

12

2009.1

2

3

20
10
0

Securities covered: Stocks, Share options (Share subscription warrants), Foreign stocks, Bonds with share options (Convertible bonds), REIT investment certificates, Preferred securities, Beneficiary certificates of investment trusts
Total of payments is the total amount used for execution of securities transfers
Total value of net settlement payments is the total amount used for account settlement on a net transaction basis

Working to further enhance convenience on basis of secureand reliable operation of the system
To p r o v i d e a bu ff e r i n t h e ev e n t o f t h e d e f a u l t o f DV P
participants, JDCC ensures a sufficient level of cash liquidity,
by utilizing participants’ funds and bank commitment lines.
Additionally, JDCC sets a limit for net accounts payable (netdebit cap) for each participant to minimize the risk within therange of cash liquidity. JDCC monitors the framework of thesystem on an ongoing basis to maintain an appropriate levelof capital for risk management.
JDCC will continue examining a wide range of possible
steps to further increase the user convenience of this system.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 935

Custody Services for Foreign Stocks, etc.

DVP Settlement Services for NETDs

36

Book-Entry Transfer System for Investment Trusts

Pre-Settlement
Matching
System (PSMS)

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Book-Entry Transfer System for Stocks, etc.

Business Overview 5

Input/output transactions hit record high for the second consecutive year
Matching services are needed for institutional investors’transactions as a wide range of organizations are involved,
including investment trust management companies, securities
companies, trust banks and custody banks, and as a hugeamount of transaction data is exchanged between them. In thepast, matching was done manually by faxes or telephone calls.
Now, the process is being computerized and automated.
JASDEC provides centralized matching services using highly
advanced computer systems.
Since launching the system in September 2001, JASDEC
has been increasing the range of asset classes and services thes y s t e m c ove r s . I n O c t o b e r 2 0 0 7 , w e l a u n c h e d m a t c h i n gservices for stock lending/borrowing transactions. We have

expanded this service making it available not only toinstitutional investors but also to other investors who meets p e c i fi c “ D e s i g n a t e d I nve s t o r ” q u a l i fi c a t i o n s u n d e r t h eFinancial Instruments and Exchange Act. As of the end of
March 2009, 17 Designated Investors use these services.
In line with this expansion, the number of users has also
been increasing annually. In fiscal 2008, the number of input/
output transactions (daily average basis) rose by 141,935 torecord a new high of 1,503,366. As of March 31, 2009 users
increased by 111 to 637, primarily as a result of increases in
the number of credit unions and life and non-life insurancecompanies.

PSMS (for non-resident transactions)

Overseas
GlobalcustodiansJapan

Settlement
instruction

Investment
managers

Settlement
instruction

Order
Notice ofexecution
Allocation,
matching

Securities
companies

Settlement
instruction

Settlement
instruction

Subcustodians
Notice ofmatching status

Pre-settlement
matching
systemSettlement
instruction
Notice ofmatching status

Notice ofOrderexecution

Securities
companies
Notice ofexecution

Request for DVP transfer
Linkage with book-entry transfer systems for stocks and CBs, corporate bonds
and CP (excluding Japanese government bonds)

Order

Stock
exchanges

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 937B us i n e ss O v er v iew 5

Pr e- S ettlement M at chin g Syst e m ( PSM S)

Steady progress in international system standardization
The securities market is becoming more internationalized. Our
computer systems, however, have not yet fully conformed torecent developments in this field. For example, although wehave adopted ISO15022, an international standard for message
f o r m a t , w e h av e m o d i fi e d i t i n o r d e r t o s a t i s f y u n i q u erequirements from Japanese market community. However we
recognize the need to promote convenience for users byachieving greater awareness of harmonization withinternational standards and system connectivity with overseas.
From the point of view mentioned above, JASDEC has
been pursuing a project to achieve full conformity withinternational standards since fiscal 2007. With regard tomessage formats, JASDEC became a member of ISO20022
Standards Evaluation Group for Securities under TC 68 of theInternational Organization for Standardization. ISO20022 is
the next-generation message format designed to replace the38

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

current ISO15022, and as such we are making efforts to ensurethat the conditions prevailing in Japan will be reflected in it.
JASDEC is discussing with the PSMS Subcommittee
member users the practical issues of adopting ISO20022 in linewith the discussion at ISO20022 Securities SEG.
Wi t h r eg a r d t o t h e c o m p u t e r n e t wo r k , o u r a i m i s t ointroduce the SWIFT network which is widely used overseas
while running existing computer network in parallel, enablingusers to choose between them. Introduction of the SWIFT
network will, we believe, enable smooth overseas connectivity,
further increasing user convenience and the number of theparticipants.
By expanding the range of asset classes and services
handled by PSMS, and by steadily building conformity withinternational standards, we are contributing to still greater
efficiency in Japan’s securities markets.

Busin e ss Ove rvie w 5

Pre -Se t t le me n t M at chin g Syst e m ( PSM S)

Centralized matching method for three parties (domestic transactions)

Stock exchanges
Notice of execution

Investment trust
management/
advisory
companies

Order

Order
Notice of execution
Allocation

Pre-settlement
matching system
Investment instruction

Trade report

Trade matching

Notice of matching status

Notice of matching status

Investment instruction andtrade report

Securities
companies

Affirmation/
Disaffirmation

Trade reportaffirmation

Notice of trade reportaffirming status

SSI

Trust banks

Settlement
matching

Notice of matching status

Notice of matching status

Request for DVP transfer

Linkage with book-entry transfer systems for stocks and CBs, corporate bonds and CP(excluding Japanese government bonds)

Total number of PSMS input/output instructions using the PSMS system (Daily average)(Thousand)

1,947

2,000
1,362

1,500

1,503

1,408

1,390

1,404

1,449

2008. 4

5

6

7

1,665

1,560
1,343

1,568

1,424

1,396

12

2009. 1

1,478

1,000
500
0

(FY)

2007

2008

8

9

10

11

2

3

Note: Total of the number of inputs of contract-type matching data and PSMS data relayed by the user and the number of transactions of data (outputs) reported to the user as a result of matching processes.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 9

39

Custody Services
for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

DVP Settlement Services for NETDs

Book-Entry Transfer System for Investment Trusts

40

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Book-Entry Transfer System for Stocks, etc.

Business Overview 6

Improving the convenience of custody services through new systems and services
In addition to Japanese securities such as stock certificateslisted on the domestic stock exchanges, in April 2006
JASDEC inaugurated services involving the processing ofdeposit, transfer and ownership rights for foreign stocks, etc.
In January 2009 we introduced new systems and services
including a highly convenient system for foreign stocks, etc.,
w h i c h e n a b l e s DV P s e t t l e m e n t f o r N E T D s , a s w e l l a s
providing dividend payment data to JASDEC participants.
Although foreign share certificates, etc. are generally
deposited with central securities depositories or custodians in
the countries where the issuing companies are located,settlements of transactions at the stock exchanges in Japan are
conducted through book-entry transfers in JASDEC. JASDEC
entrusts dividend payments to relevant share-handling serviceo rg a n i z a t i o n s . I n f o r m a t i o n o n s h a r e h o l d e r s ( b e n e fi c i a lshareholders) at the record date for dividend is transferred tothe share-handling service organizations by the JASDEC
participants through JASDEC. Based on this information, theshare-handling service organizations calculate the amount ofdividends, which are then paid directly to the beneficial
shareholders from the dividend-payment handling bank.
JASDEC also undertakes the necessary procedures regarding
dividend taxation for local tax authorities, etc. to ensure
reduced tax rates under tax treaties with the countries
concerned. Voting rights at general meetings of shareholders
can also be exercised by beneficial shareholders throughinstructions issued to JASDEC.
JASDEC thus provides the infrastructure and services
necessary for reliable settlement of trading activities inforeign stocks, etc., smooth exercise of shareholder rights,
and error-free receipt of dividends and other payments.

Overview of the new system relating to foreign stocks (effective in January 2009)

Share-handling services organization (trust banks)

Japan Securities Clearing Corporation

Notice ofDividend
beneficial
shareholders information

Stockexchange
DVP

Shareholder notice host

Account transfer host(settlement)(handling of information concerning beneficial
shareholders, dividends etc.)

Collateral Beneficial
Dividend Notice ofshareholder
matching
information
balancereportStandard
non-DVP
transfer

Standard
DVP
transfer

Overseas CSDs/
custodian banks

Communication serverwith foreign CSDs/banks

Localcustody/transfer

AMIs (Securities companies and banks)
Beneficial shareholders of foreign stock certificates etc.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 941

B us i n e ss O v er v iew 6

C us tody S er v ice s for Fore ign St ocks, e t c.

Custody services for foreign covered warrants were inaugurated
In recent years, foreign companies have come to regard Japanas a major market for their financing needs. There have beenlistings only on the Tokyo Stock Exchange or the Osaka
Securities Exchange (no listing in home countries), and also
continuous listings in Japan of overseas ETFs (ExchangeTraded Funds) or foreign covered warrants.
Responding to these developments, JASDEC commenced
custody services for ETFs linked to movements in a South
Korean stock index in November 2007. In addition, in March
2008, we made amendments to rules to enable custodys e r v i c e s f o r ove r s e a s c o m m o d i t y E T F s a n d c o m m e n c e dcustody services for ETFs linked to gold prices and ETFs

linked to commodity indexes.
JASDEC began the handling of foreign covered warrants
in September 2008 following the listing of such warrants on
the Osaka Securities Exchange in the same month. As a result,Book-entry Transfer System for foreign stocks, etc. came toinclude the four categories of foreign stocks, etc. (including
ADRs), overseas ETFs, country funds, and foreign covered
warrants. At the end of March 2009, the number of different
issues handled by JASDEC in the three categories of overseas
shares, overseas ETFs, and country funds stood at 25, while
the number of foreign covered warrants handled stood at 106.

Foreign stocks – number of issues/balance in accounts(excluding foreign covered warrants)
Balance in accounts (end of month)
Number of issues (end of month)(Thousand shares)

30(Issues)

150,000

25

25

25
113,373

106,851

105,116

100,000

25

30
130,692

100,02120

50,0000

10

2008. 1112

2009. 1

2

15

3

10

5

0

Foreign covered warrants – number of issues/balance in accounts
Balance in accounts (end of month)40

Number of issues (end of month)(Thousand warrants)

106

400,000
300,000
200,000

96
76

76
181,30076
181,300

281,300
181,300

42

371,300

120

30

90

20

60

10

30

100,000
0(Issues)2008. 1112

2009. 1

2

J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

30

Bus in e ss Ove rvie w 6

Cust ody Se rvice s for Fore ign St ocks, e t c.

Number of shares deposite/withdrawal
Number of shares deposite
Number of shares withdrawal(Thousand shares)

931,198
539,187

1,000,000

67,346
16,49880,000309,466
195,625
282,941

405,874

121,270

18,488

7,447

6,855
3,480

4,000

2,940

2,576

2,000

1,879
1,312

1,006
212

0

105,077

(FY)

2008

2007

147

2008. 4

1,205

703

387

5

381

6

7

8

9

598

308

197

10

11

12

2009. 1

2

3

Note: Transactions of less than 1 thousand shares are rounded up/down to the nearest thousand shares.

Account transfer
Non-exchange transaction transfer
Exchange transaction transfer(Thousand shares)

486,660

500,000

38,34749,995100,000

302,585

171,468

16,00013,37412,000

9,977

7,092

4,000
0

14,814

7,348
9,265

8,000
2,244
(FY)

2007

2008

2008. 4

5

6

7

11,591

6,472
4,460

3,366
1,913
2,997

23,187 74,965
105,556
38,216

8

2,956
3,580
4,392
3,352
2,425
1,991

9

10

11

12

2009. 1

2

3

Note: Transactions of less than 1 thousand shares are rounded up/down to the nearest thousand shares.

Providing investors with new opportunities
through the expansion of the scope of investment vehicles
Thanks to the introduction of new systems and services inJanuary 2009, the Custody and Book-entry Transfer Systemf o r Fo r e i g n S t o c k s , e t c . h a s i n c r e a s e d c o nve n i e n c e f o r
investors. Following the introduction of overseas ETFs andforeign covered warrants, JASDEC will aggressively expand

the scope of its handling of investment vehicles with different
features to domestic securities. In this way, we will provide
J a p a n e s e i n v e s t o r s w i t h n e w, a t t r a c t i v e i n v e s t m e n topportunities in the future.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 943

Business Overview 7International
Relationships
Asian Bond Markets Initiative(ABMI)
Background

Custody Services for Foreign Stocks, etc.

︵ PSMS︶
Pre-Settlement Matching System

DVP Settlement Services for NETDs

Book-Entry Transfer System for Investment Trusts

Book-Entry Transfer System for Commercial Papers and Corporate Bonds

Book-Entry Transfer System for Stocks, etc.

44

The Asian Bond Markets Initiative (ABMI) was adopted by the
ASEAN+3(ASEAN plus Japan, South Korea and China)
Finance Ministers’ Meeting as a measure to tackle the 1997
Asian financial crisis. Asian countries have been facing
common difficulties in the fund procurement required for
medium- to long-term investments within the region. Althoughsavings rates are high in the region, capital markets are not yet
fully developed. In these circumstances, the region had
depended heavily on short-term bank borrowings for long-term
investments on a foreign currency-denominated basis from
Western financial institutions. This caused maturity andcurrency mismatches in financing, which were primary factors
in generating the Asian financial crisis.
The financial authorities of the countries participating in the
ABMI have been endeavoring to develop bond markets within
the region to enhance financial intermediary functions and allow
savings to be used for investment in the region. The successful
procurement of funds for long-term investments in the region
would significantly reduce currency and maturity mismatches inregional financing.

B usin e ss Ove rvie w 7

In t e rn at ion al R e lat ion ship s

JASDEC engagement
Under the supervision of the Finance Ministries and theCentral Banks of the ASEAN+3 countries, four Task Forces
have been established with the common goal of the further
development of well-functioning bond markets with
sufficient liquidity in the region.
Since April 2008, JASDEC has been taking part (as therepresentative of Japan) in the Group of Experts (GOE),
which was established by Task Force 4 (whose responsibility
is to improve the bond market infrastructure) to discuss key
issues related to cross-border bond transaction andsettlement systems.
In its turn, the GOE has set up two subcommittees: one
to conduct feasibility studies on proposals for the creationof settlement systems for the region (Subcommittee A), andone to examine possible barriers to cross-border transactions
in ASEAN+3 Bond Markets (Subcommittee B). These two
subcommittees – comprising national and international
central securities depositories and major private-sector
players such as custodian banks and securities companies,
who have extensive expertise in the field of securities
transactions in Asia, are carrying out intense discussions ofthese questions. As the representative of Japan, JASDEC isacting as the leader of Subcommittee B in pushing forwardwith the project agenda.
In April 2009 the 5th meeting of the GOE was held inTokyo with the participation of 15 institutions, including thecentral securities depositories, custodian banks for crossborder transactions, and the International Central Securities
Depositories (ICSDs). Issues that were the subject of intense
examination and discussion included analyses of crossborder transaction costs, settlement administration models,and issues selected from surveys (by questionnaire orinterview) of market participants’ views, such as thestandardization of electronic message formats, tax systems,
foreign exchange controls, capital controls, and othermatters likely to present problems.
Subcommittee A will continue to conduct feasibility studies
on the legal and regulatory aspects of the cross-border settlement
models, as well as a feasibility study from the practical businessstandpoint. Subcommittee B plans to examine measures toremove barriers, and to prepare its roadmap with the aim of
putting together GOE recommendations by the spring of 2010.

ASEAN+3 Finance Ministers’ Meeting
ABMI steering Group(coordination of efforts made by each Task Force)

Task Force 1

Task Force 2（Promoting the Issuance ofLocal Currency-DenominatedBonds (supply-side))(Facilitating the Demand for
Local Currency-DenominatedBonds (demand-side))

Task Force 3(Improving theRegulatory Framework)

Task Force 4(Improving the Related
Infrastructure for theBond Markets)

GOE (Group of Experts)
Chair: Korea, Vice-Chairs: Singapore, Thailand
Members: Representatives of Asian countries(Japanese representatives: JASDEC, etc.) and international players

Subcommittee A
Studies on establishment of regional settlement intermediary
Leader: Korea
Members: Representatives of Asian countries and international players

Subcommittee B
Identify settlement barriers in the Asian regional market(from practical and legal perspectives)
Leader: Japan
Members: Representatives of Asian countries and international players

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 945

B us i n e ss O v er v iew 7

I nter nationa l R e lat ion ship s

Enhancing JASDEC’s Global Presence
JASDEC signs Memorandums of Understanding on information exchange and collaborates with overseas CSDs
JASDEC has been following a policy of signing MOUs on
the exchange of information and the undertaking ofcollaborative projects with the worldwide CSDs. The
relationship between JASDEC and the overseas CSDs
involves not simply their role as the local depository
institutions of foreign securities listed on Japan’s exchanges,
but also their vital role in exchanging information andopinions on common securities settlement issues, collecting
example cases and sharing know-how on new business andsecurities issues. This relationship also plays an importantrole in promoting the exchange of background information(business practices, legal restrictions, etc.) which is acontributing factor in the differences in the handling ofoperations between JASDEC and its MOU signing partners.
In 2008, JASDEC signed an MOU with the CDC (Central
Depository Company of Pakistan) in April, with CDSL

46

(Central Depository Services (India) Limited) and NSDL(National Securities Depository Ltd.) of India in May, andwith TSD (Thailand Securities Depository Co., Ltd.) ofThailand in July. In 2009 JASDEC signed an MOU with
Misr for Central Clearing, Depository and Registry (MCDR)of Egypt in March, and with MSCH&CD (Mongolian
Securities Clearing House & Central Depository Co., Ltd)of Mongolia in April. JASDEC at last count had signed
MOUs with 10 CSDs, and plans for collaboration withthem, such as holding regular consultative meetings, will bedrawn up in the near future.

CDC (Central Depository Company ofPakistan Limited)

CDSL (Central Depository Services (India)
Limited)NSDL (National Securities Depository Ltd.)TSD (Thailand Securities Depository Co.,Ltd.)MCDR (Misr for Central Clearing, Depository
and Registry)

MSCH&CD (Mongolian Securities Clearing
House & Central Depository Co., Ltd)J a p a n Securi ti es Depo si to ry C enter, Inc. A nn u al R e p ort 2 0 0 9

B usin e ss Ove rvie w 7

In t e rn at ion al R e lat ion ship s

Participation in International Forums
In order to provide appropriate information on Japan’s
securities markets infrastructure to overseas CSDs on atimely basis as well as to enhance JASDEC’s internationalpresence, JASDEC actively attends general CSD meetings,
regional CSD meetings (general meetings of Asia-Pacific
CSD Group), seminars, and other meetings.
In June 2008 an ACG (Asia-Pacific CSD Group) Cross
Training seminar was held by the ACG’s task force in Bali,
Indonesia. It was hosted by KSEI (the Indonesian Central
Securities Depository) and KPEI (the Indonesian Clearing
and Guarantee Corporation), and jointly supported by the
Information Exchange Task Force (chaired by JASDEC)
and the New Businesses Task Force (chaired by Korea
Securities Depository).
In September, JASDEC attended the Sibos international
financial services industry conference sponsored by SWIFT,

Participants at the ACG Cross Training Seminar in Bali, Indonesia

JASDECNEWSLET TER

which operates a worldwide settlement network utilized byapproximately 8,700 financial institutions among 209
countries. At this event, Yoshinobu Takeuchi, President &CEO of JASDEC, took part as a panelist and engaged invigorous discussion with representatives of the CSDs on
the issue of “who will be the next major market?”
In November, at the 12th General Meeting of the AsiaPacific CSD Group (ACG12) held in Singapore, JASDEC
proposed a structural change in the ACG, aiming to activate
its organizational operation. The proposal gained acceptancefrom ACG members, and detailed studies will be conductedin the near future. JASDEC also sent staff to deliver lectures
on Japan’s securities settlement system at seminars held for
related parties of overseas securities markets, and toparticipate in activities on reform of the securities taxation
system, with the aim of facilitating cross-border transactions.

Participants at the 12th General Meeting of ACG

JASDEC has begun publishing a quarterly newsletter containing information about businessactivities and related developments in Japan and overseas, to raise awareness about the role of
JASDEC within domestic and international securities markets.

J ap an S e c urit ie s De p os it ory C e nt e r, I nc . A nnu al R e p ort 2 0 0 947