Strategy by Business
Loans for Margin
Transactions
23.0%

Securities Investment
and Others 19.1%

Securities Finance Business

Loans for Margin Transactions Business

Operating Revenue

Japan Securities Finance Co., Ltd.
Net assets ¥121.1 billion¥Strengths and Opportunities

26,586 million

A securities finance company serves as a source of funds, stocks and other securities for the smooth implementation ofstandardized margin transactions through loans of funds and stocks necessary for settlement to the securities company

Number of employees 207

after a standardized margin transaction sale and purchase is made. The loans for margin transactions business requires aSecurities Financing
57.9%

license under the Financial Instruments and Exchange Act, and JSF’s mission as Japan’s only securities finance company
is to ensure stable operation of loans for margin transactions.
The ability of securities companies to procure funds and stocks has improved since financial liberalization in the late
1990s, and in recent years the utilization ratio for margin loans (the ratio of the margin loan balance to the standardized

Business Description and Policy

margin transaction balance) has declined. However, given the support for the convenience of loans for margin transactions,which provide the necessary funds and stocks in a standardized form without to the need to check the inventory of stocks
in advance, loans for margin transactions continue to occupy an important position in securities market infrastructure.

JSF was established in 1950 as an institution specializing in securities finance thatlends the funds and securities needed for the securities market. As the only securities

FY2021 Initiatives

finance company in Japan, its mission is to contribute to the development of theOperating Revenue(Loans for Margin Transactions Business)*securities market. Our securities finance business comprises operations such as theIn FY2021, the margin loan balance increased year onloans for margin transactions business, securities financing, and the securities

year, recovering in line with the recovery of theinvestment business for government bonds. The legally licensed loans for margin

standardized margin buying balance. On the other hand,transactions business is our core business, and serves as securities market infrastructure.

the balance of stock loans for margin transactions was

In addition, we leverage our expertise in handling securities and funds to expand oursignificantly lower than in the previous fiscal year, due tobusiness mainly through securities financing such as repo transactions and gensaki

a slump in the standardized margin transaction sellingtransactions for Japanese government bonds and other bonds, equity repo transactions,

14,000

Representative Executive Officer & President
Japan Securities Finance Co, Ltd.

volatile earnings due to stock market conditions and theoverseas business partners and transactions using foreignbalance of standardized margin transactions. Even so, securities

securities. In addition, in the securities investment business,financing business results in areas such as bond repo andwhich includes government bonds, we are working to ensure

gensaki transactions and equity repo transactions havestable earnings while appropriately controlling market risk andexpanded significantly in recent years due to successes inother factors.

Standardized
MarginTransactions
Business

Securities
Companies

Securities Financing
SubsidiaryBusinesses

Loans to financial
instruments companies

Loans for negotiablemargin transactions

Bond lending

Loans to retail

General stock lending

22,49020,000 3,281

Money Market, etc.

Institutional
Investors, Securities
Companies, etc.

5,955

20,971
3,586

4,016
8,849

27,5503,820

13,253

9,661
2018

2.0

5,076
15,391

12,517

11,35920192020

Loans for margin transactions
Securities financing
Securities investment and others

Japan Securities Finance Co., Ltd. Integrated Report 2022

26,586

1.50
2017

28

3,943

1.0
0.5

6,118
2021

4,262

4,146

3,285(FY)

2018

02017

2018

2019

2020

Standardized margin buying balance (Left axis)
Margin loan balance (Left axis)

2021

2019

2020

2021(FY)

Excluding premium chargesBalance of Stock Loans for Margin Transactions/Standardized Margin Selling Balance(%)(Trillions of yen)

1.0

100

45

0.9

90

40

0.880

35

0.770

30

0.6

60

250.5

50

200.4

40

15

0.3

30

100.2

20

50.1

10005012,3697,724

10,0005,000

Lender25,38325,00015,000FinancialInstitutions

Margin Loan Balance and Standardized
Margin Transaction Buying Balance

2.5

30,000

6,118

5,303

2017

3.0

(Millions of yen)

Investors

6,000

Loans for margin transactions(Trillions of yen)

Operating Revenue

Loans for Margin Transactions Business(Margin Loans/Stock Loans)

9,6610advancement and diversification of offerings based on theBorrower

10,0002,000

widening range of market needs, including the increase inSecurities

11,3594,000

The loans for margin transactions business is characterized byFunds

12,5178,000* The graph on the right includes data for operating revenue on an actualbasis, excluding premium charges, which do not affect profits.

Business Environment and Recognized Issues

JSF Business Overview

13,253

12,000balance.

Shigeki Kushidageneral stock lending and loans to retail secured by securities companies.

(Millions of yen)02022 （年度）（年度）2017

Utilization ratio (Right axis)

(%)

2018

2019

2020

2021

2022

Standardized margin selling balance (Left axis)
Utilization ratio (Right axis)
Balance of stock loans for margin transactions (Left axis)

Japan Securities Finance Co., Ltd. Integrated Report 202229

Strategy by Business

Securities Financing

Highlights

Strengths and Opportunities

International Finance Awards

Consisting of five business areas, securities financing is the generic term we use for the lending of funds backed by

At the International Finance Awards 2021, JSF received awards insecurities and the lending of securities other than in the loans for margin transactions business.

two categories relating to work in Japan—Most Innovative Securities

Since earnings from the loans for margin transactions business are easily impacted by market conditions and thebalance of standardized margin transactions, we have worked to ensure financial soundness by expanding and enhancing
our other businesses so that we can keep the loans for margin transactions business stable even when market conditions
are sluggish. In order to ensure JSF continues to grow sustainably and carry out its market infrastructure functions, we aremaking the most of our high credit ratings (creditworthiness) backed by solid equity capital and the expertise in securities
and finance-related businesses we have cultivated over the years as we work to expand our securities financing business.

Lending Services Provider and Most Innovative Financing Company.
Sponsored by British financial media company International FinancePublications, the awards recognize outstanding companies in 11
categories in the field of international finance, including bankingand brokerage. This is the first time JSF has received these awards.

As measures common to all of these businesses, we are working to increase the number of business partners,
including foreign financial institutions, and to expand our securities for transactions in foreign currency-denominatedsecurities such as foreign government bonds and foreign stocks. To this end, we actively participate in international
securities lending business conferences such as PASLA1 and ISLA.2
1. P
 an Asia Securities Lending Association: An industry group that promotes sound development of the securities lending business by developing market
practices for securities lending in Asian markets.
2. International Securities Lending Association: An industry group that promotes the growth of the securities lending and financial industries by developing
market practices related to securities lending in global markets and a legal framework for the Global Master Securities Lending Agreement (GMSLA).

Empirical Research on Securities Transactions Using Blockchain Technology(Joint Research with the University of Tokyo)
In recent years, awareness of distributed ledger technology (blockchain) has been increasing, and discussions

FY2021 Initiatives• Loans to Financial Instruments Companies
The balance of equity repo transactions reached a record high in FY2021 as transactions with major Japanese
securities companies and foreign financial institutions expanded due to the successful diversification of transactions

about its potential use in the securities field are progressing.
We have been conducting empirical research jointly with the University of Tokyo to verify whether smoothtransactions can be carried out through the use of blockchain technology. The focus of this research issecurities lending, one of our main business areas.
Specifically, we are conducting hypothetical transactions in which tokenized securities (cryptographic assets

such as those targeting foreign stocks and those secured by government bonds. We will continue to flexibly respondissued using blockchain technology) and collateral are exchanged virtually between limited parties. We areto customer needs, diversify the collateral we accept and the currencies we handle to improve the commercial

examining the possibility of (1) enabling the near-simultaneous real-time transfer of securities and collateralappeal of our products and improve transaction convenience.

denominated in foreign currencies, which normally involves time differences, (2) obtaining benefits from• Bond Lending

increasing both system availability and the efficiency of administrative processing, and (3) utilizing various

The balance of bond lending transactions remains at a record high, due to an increase in the balance of loans toassets, including illiquid assets, as collateral backed by these advantages.

foreign financial institutions. In addition to trust banks and insurance companies, we are working to expand our bondprocurement sources to include regional financial institutions and others.

Overview of Empirical Research• General Stock Lending
In the general stock lending business, the demand for loan stock to avoid failed transactions is decreasing. Goingforward, we will focus on identifying transaction needs and demand, mainly from foreign financial institutions, andTokenized collateral pledge

will work to further increase our stock procurement sources.

• Loans for Negotiable Margin Transactions
Loans for negotiable margin transactions help finance negotiable margin transactions by securities companies. Thebalance of loans for negotiable margin transactions was on a recovery trend in FY2021 due to the acquisition of new
business partners and the identification of dormant business partners.

• Loans to RetailThe balance of securities-backed loans to individual investors or firms increased year on year due to meticulous
improvement of the commercial appeal of mainstay COM-STOCK loans (securities-backed loans that can be traded

Tokenized securities loanCompanyA

Simultaneous fulfilmentCompany
B

Daily mark-to-market andcollateral transfersonline) and an increase in business partners. In face-to-face transactions, we are focusing on identifying transactionneeds in cooperation with securities companies and independent financial advisors.

30

Japan Securities Finance Co., Ltd. Integrated Report 2022

Japan Securities Finance Co., Ltd. Integrated Report 2022

31

Strategy by Business
Other0.4%

Trust Banking Business

Trust Fees
44.4%

Ordinary Profit (Non-consolidated)(Billions of yen)

(Millions of yen)

3,500

Ordinary Profit

JSF Trust and Banking Co., Ltd.
Net assets ¥30.4 billion

Balance of Trust Assets¥

Number of employees 41

2,962 million

Fund Management
Revenue 55.2%

2,923.0

3,000
2,500
2,000

3,170.9

2,078.9

2,125.1

2,237.8

3,500
3,000

3,002

2,500765

1,500

1,000

1,000

50050002019

20202021

2022(As of March 31)

1,415

1,416

794817848

20172018

2019

Trust fees

2,813
210

705

1,4430
2018

2,562
330

2,000

1,500

2,969

Fund management revenue

1,509

2,962
11
1,635

1,094

1,316

2020

2021

(FY)

Other

Business Description and Policy
JSF Trust and Banking Co., Ltd. was established in 1998 amid financial system reforms

Real Estate Leasing Business

known as the “Japanese Big Bang.” A wholly owned subsidiary of JSF, it aims tocontribute to JSF’s securities market functions through its trust business. As times
change and financial technology becomes increasingly sophisticated, JSF Trust andNihon Building Co., Ltd.

Banking provides trust services to meet needs that get more diverse by the year andcontribute broadly to the development of Japan’s financial market.

Net assets ¥8.2 billion

Business Policy

Other
0.1%
Management
Fees 19.5%

Operating Revenue

1,286 million¥
Number of employees 16

Rental Revenue from
Leased Real Estate
80.4%

In light of its founding philosophy of being a trust bank that supports the business
infrastructure of securities companies and other financial instruments companies, JSF
Trust and Banking aims to deepen and expand its business model through financial
and securities-related services that only it can provide.

Toshihiro OritatePresident
JSF Trust and Banking Co., Ltd.

• As a highly specialized trust bank, JSF Trust and Banking works to expand its
business through a focus on securities market-related operations.

• We handle lending to securities companies and others, and carry out banking functions in accordance with our size.
• We contribute to the sound development of the financial and securities markets by providing comprehensive financial services

Business Information and Policy
A wholly owned subsidiary of JSF, Nihon Building Co., Ltd. was established in 1958.
As the JSF Group’s real estate leasing company, Nihon Building is tasked within cooperation with our parent company, JSF.

providing suitable, comfortable office space to tenants and customers, especially

Business Environment andRecognized Issues

The strength of JSF Trust and Banking lies in its ability toin the trust business, focusing on trusts for cash segregatedmake proposals based on its extensive experience and track

as deposits for customers and securities trusts. In recent

record, its flexibility, and the meticulous administrative

years, laws and regulations have been established for various

support it provides. In recent years, as well as building a trackfinancial products such as forex transactions, overseas futures

record of handling ABL trusts through referrals from securities

trading and CFD transactions, investment crowdfunding, andcompanies, we have received many inquiries, mainly from

crypto asset transactions, making the protection of customer

other financial institutions and fund management companies,

assets mandatory. In response, JSF Trust and Banking has

about investment trusts managed under instructions from theleveraged the expertise and technical information it hastrustor and securitized receivables trusts that help customers

cultivated through trusts for cash segregated as deposits for

manage their assets. In cooperation with its parent company,

customers and securities trusts to increase trust products for

JSF Trust and Banking will work to meet market needs as afinancial instruments businesses, commodity futures traderstrust bank that contributes to the improvement of marketand crypto asset exchange traders.

functions and investor convenience.

products. In addition to trust services, we are focusing onbanking services such as business development support loans
for financial instruments businesses and other business partners.

Japan Securities Finance Co., Ltd. Integrated Report 2022

JSF head office building, and steadily promoting the leasing business for buildings
owned by the Group in Nihonbashi-kayabacho, Nihon Building will continue toSince its founding, JSF Trust and Banking has been engaged

We will continue to develop asset preservation trust

32

members of the Group. In addition to working for the Group, such as managing theStrengths and Opportunities

improve its services in cooperation with Group companies while responding tochanges in the business environment, including redevelopment under way in theNihonbashi area.
Kazuhiro Maeda
President
Nihon Building Co., Ltd.

Operating Revenue(Millions of yen)

1,500
1,200

1,267

1,275

1,282

1,295

1,286

2017

2018

2019

2020

2021

900
600
3000(FY)

Nihon Building No. 3

Japan Securities Finance Co., Ltd. Integrated Report 202233