Japan Securities Finance Co., Ltd.
Integrated Report 2022

All for the
securities
market.

Corporate Philosophy

As an institution specializing in securities finance, JSF has a mission to contribute to thedevelopment of the securities market by proactively meeting the diverse needs of the
securities and financial sectors and to enhance the long-term interests of users, while
always maintaining a keen awareness of its public role.

Management Principles

1. T
 o practice sound business management by thoroughly implementing compliance,
corporate governance, and risk management under a new governance structure, thereby
establishing solid credibility, while always maintaining a keen awareness of our social
responsibilities as a securities finance company.
2. T o enhance corporate value while maintaining solid equity capital in order to ensure stability
in management and the financial soundness required of a company that is a key player insecurities market infrastructure, to give comprehensive consideration to the earnings
environment, investment plans, etc., and to ensure profits are returned to shareholders.
3. T
 o further enhance JSF’s core loans for margin transactions business while also striving to
expand the finance- and securities-related services provided by JSF and Group companies,
develop new business, and to further grow and solidify our base.
4. T o build a quick and efficient business management structure and strengthen our competitive
base in order to address changes in the business environment in a flexible manner.

Japan Securities Finance Co., Ltd. Integrated Report 2022

1

Toward the Developmentof the Securities Market
Established in 1950, Japan Securities Finance (“JSF”) is Japan’s only
securities finance company, specializing in lending funds and securities
needed for the securities market.
As such, our mission is to contribute to the development of the
securities market by proactively meeting the diverse needsof the securities and financial sectors and to enhance
the long-term interests of users.

Contents
About the JSF Group
Corporate Philosophy/
Management Principles
Interview with the President
History of the GroupAt a Glance
Value Creation Process
Business Model

1
4
10
12
14
16

Our Vision
Medium-Term Management Policy 18
The Sixth Mid-Term
Management Plan
21

2

Message from the Executive Officer
in Charge of Corporate Planning 22
Financial and Non-Financial
Highlights
26

Officers

42

ESG Initiatives

44

Risk Appetite Framework

52

Risk Management

54

Strategy by Business

Compliance

56

Securities Finance Business
Trust Banking Business
Real Estate Leasing Business

28
32
33

Management Foundation
Supporting Corporate Value
Message from an Outside Director 34
Corporate Governance
36

Japan Securities Finance Co., Ltd. Integrated Report 2022

Corporate Data
11-Year Highlights (Consolidated)

58

Financial Section

60

Shareholder andInvestor Information

124

Company Information

125

Editorial Policy

Report Coverage

Cautionary Note Regarding

Japan Securities Finance has issued thisForward-looking Statements

integrated report so that investors andJapan Securities Finance Co., Ltd. andits consolidated subsidiaries

other stakeholders may gain an

Reporting Period

performance forecasts in this report areunderstanding of our efforts to create

April 1, 2021 to March 31, 2022

sustainable value.

(Some sections include information regarding mattersoccurring before or after the reporting period.)

We hope that this report deepens

forecasts made by the Company basedon information available at the time ofcreation and include risks, uncertainties
and other factors. Therefore, actual results

understanding of the JSF Group, whose

Reference Guidelines

mission is to contribute to the∙ IFRS Foundation, International
Integrated Reporting Framework∙ Ministry of Economy, Trade andIndustry, Guidance for Collaborative
Value Creation

development of the securities market.

Forward-looking statements such as

may differ significantly from forecasts
due to changes in various factors.

Japan Securities Finance Co., Ltd. Integrated Report 2022

3

About the JSF GroupInterview with the President

Japan Securities Finance,
growing in step with thesecurities industry andsupporting its future
development
Japan Securities Finance (“JSF”) aims to maintainstrong financial soundness, achieve the sustainablegrowth expected of a listed company, and increase
corporate value over the medium to long term, while
maintaining a keen awareness of the public role
expected of it as a securities finance company
functioning as infrastructure for the securities market.

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

4

Japan Securities Finance Co., Ltd. Integrated Report 2022

Q. Please tell us about JSF’s history from its inception to the present.
The Company launched operations as an institution

margin transactions, we proactively meet the

specializing in securities finance in 1950 after

diverse needs of the securities and financial sectors

considering what kind of mechanism would beby providing a variety of services that leverage ournecessary to increase the liquidity of the securities

expertise in handling securities and funds.

market in Japan as it resumed activities following

Specifically, we have expanded the scope of ourWorld War II. Looking back on the situation in thebusiness to include repurchase (repo) and gensaki

securities market at that time, the ability oftransactions for the purchase and resale ofsecurities companies to raise funds was poor, andJapanese government bonds and other bonds,

the stock lending market was not as developed as

equity repo transactions, general stock lending, andin Europe or the United States. In order to resolve

retail loans secured by securities companies.

these issues, margin transactions were established

In 1998, following the introduction of trusts foralong with loans for margin transactions, whichcash segregated as deposits for customers, weconstitute the funds and stocks required byestablished JSF Trust and Banking, which, sincesecurities companies for such transactions. A

then has made custodial trusts the pillar of its

securities finance company is a company thatbusiness, and has expanded the scope of its

specializes in providing loans for margintransactions to include crypto assets and foreigntransactions and is licensed by the Prime Minister of

exchange (forex) transactions.

Japan. The loans for margin transactions businessIn this way, the JSF Group responds to thehas been JSF’s core business since the Company’s

diverse needs of the securities and financial markets

founding and has served as infrastructure for thethrough a business portfolio including a security

country’s securities and financial markets.

financing business centered on loans for margin

Starting from the public business of loans fortransactions and a trust banking business.

Q. What are your thoughts on the role JSF should play as a securities financecompany, its corporate philosophy, and the Vision for JSF in the Future?
Based on the Company’s original foundation andinfrastructure for the securities and financial markets,

subsequent development, we set forth our corporate

it is necessary to maintain reliable businessphilosophy as follows: “As an institution specializing

management and a high level of financial soundness.

in securities finance, JSF has a mission to contribute

The second is that as a company listed on theto the development of the securities market by

Prime Market (a new market classification) of theproactively meeting the diverse needs of the securities

Tokyo Stock Exchange, we must aim to achieve

and financial sectors and to enhance the long-termsustainable growth and increase corporate valueinterests of users, while always maintaining a keenover the medium to long term based on a strong

awareness of its public role.”

governance system.

I believe there are two points to be madeWe are in a unique position as a listed company

regarding the Vision for JSF in the Future that wethat plays a public role, but we will strive to bothare aiming for based on this corporate philosophy.

maintain sound management and increase

The first is that in order to play a public role ascorporate value over the medium to long term.

Japan Securities Finance Co., Ltd. Integrated Report 2022

5About the JSF GroupInterview with the President

Q. Please tell us about the thinking behind the medium-term management policy formulated
and announced in November 2021, and future initiatives based on this policy.
In November 2021, we formulated and announced

margin transactions, in areas that use bonds andthe new medium-term management policy based

stocks. Here, our strategy is to become the mainon our corporate philosophy and Vision for JSF in

player in niche market areas by leveraging JSF’s

the Future. The policy sets forth the medium-term

strengths, such as its high credit rating, neutrality

management goals of attaining an ROE of 4%

that comes from not belonging to any corporate

during the term of the current mid-term
management plan (FY2020–FY2022), and of 5%group, and the agility of a relatively small enterprise.

during the term of the next plan (FY2023–FY2025).

management of the Group. JSF’s subsidiary, JSF

To formulate the ROE target, we estimated theTrust and Banking, has adopted a strategy similar toCompany’s cost of equity capital to be around 4.5%

that of the Company’s security finance business.

using objective data and multiple calculation

Responding flexibly to customer needs in uniquemethods. Accordingly, we set a target of 5% for theand niche areas has enabled it to acquire a large

term of the next plan to exceed this figure. The

share of the custodial trust market, including

initiatives under the current mid-term management

preservation trusts for cash segregated as deposits

plan are steadily starting to show in earnings andfor customers. As a result, JSF Trust and Banking’s

ROE trends, so we intend to accelerate andprofits are trending upward. We are working tostrengthen them. We have established the following

improve the profitability of the entire Group,

three pillars as specific measures to achieve our

including Nihon Building, another JSF subsidiary.

medium-term management goals.

The second is reinforcing consolidated

The third is improving operational efficiency. We

The first is strengthening the securities financewill further improve operational efficiency bybusiness centered on loans for margin transactions.

reviewing business processes such as system

In addition to striving to improve the stable

operation and RPA.*

operation and convenience of this business, we will
effectively utilize the Company’s expertise in
securities and fund transactions to proactively meet
diverse security financing needs other than loans for

Through the above measures, we aim to achieve
our ROE targets while steadily accumulating earnings.
* RPA (Robotic process automation): Automation of routine tasks byusing software robots.

Q. Please tell us more about strengthening the securities finance business centered on loans for
margin transactions, the first pillar for achieving the medium-term management goals.

6

The loans for margin transactions business is where

for stocks by improving the convenience of loans

the Company has its origins as infrastructure for thefor margin transactions and addressing transaction

securities and financial markets. It is one of our coreneeds in various ways.

businesses, accounting for about 30% of gross profit.

As for securities finance business other than loans

The Company has continuously worked to increase

for margin transactions, in recent years we have been

the number of loanable stock issues and strengthenincreasing our transaction balance by actively

the procurement of stock to be used for stock

responding to the rising demand for repo transactions

lending. In addition, for participants in loans for(with a focus on securities (property)) against themargin transactions we provide JSF Net as the

backdrop of collateral transactions and institutional

system infrastructure used for transactions, and weinvestors’ securities investment needs and the rising

are working to improve it. Going forward, we will

demand for multi-currency international

continue to support standardized margin transactionstransactions. We plan to accelerate and strengthen

Japan Securities Finance Co., Ltd. Integrated Report 2022

these efforts by increasing the number of businessmarket fluctuations and are relatively volatile, I

clients, including through further sophistication andbelieve that strengthening the securities financeinternationalization of trading methods.

business will lead to a stronger earnings base forSince earnings from the loans for margintransactions business are susceptible to stock

the Company, and is also important from theperspective of stable management of such loans.

Q. As a securities finance company, JSF is unique in Japan’s financial sector.
Please tell us about the Company’s characteristics and business portfolio.
As a securities finance company, JSF serves asusing actual objective data and multiple calculation

infrastructure for the securities and financial markets.

methods. As infrastructure for the securities market,

It has three specific characteristics.

we are subject to various restrictions in terms of

The first is being licensed as market infrastructure

financial soundness and business scope imposed byunder the Financial Instruments and Exchange Act

laws and regulations, standards for participation inof Japan, and being required to be financially soundsecurities and fund settlement systems, amongso as to enable it to supply securities companies withothers. Therefore, I believe that our cost of capitalthe funds and stock necessary for margin transactions.

is considerably lower than the general level due to

The second relates to the imposition of
restrictions on so-called concurrent business,meaning that, from a legal standpoint, its foremost

our characteristic low business strategy risk andhigh financial and earnings stability.
Based on these characteristics, our businessobligation is to fulfill market infrastructure functions

portfolio is centered on the securities financesuch as providing loans for margin transactions.

business with the loans for margin transaction

Other business is legally permitted only to thebusiness, a licensed business, at its core. However,extent that it does not hinder the stable execution

since this core business is greatly affected by marketof the loans for margin transactions business.

fluctuations, we will continue making efforts to

Finally, as a key player in the market infrastructure,

diversify our revenue sources. In addition, our basic

JSF uses clearing institutions for securities settlements,

policy is to work to achieve management goals

as well as the central bank system for fundwhile staying conscious of the importance of further

settlements, to ensure the reliability of settlements.

improving capital efficiency in each business. Based

The operators of these settlement systems expect

on this approach, the JSF Group’s business portfolio

the Company to be financially sound.

consists of the securities financing businessAs already mentioned, we estimated theCompany’s cost of equity capital to be around 4.5%

centered on loans for margin transactions, securities
investment, trust banking and real estate leasing.

Japan Securities Finance Co., Ltd. Integrated Report 2022

7

About the JSF GroupInterview with the President

Q. What is your approach to shareholder returns?
Our management goal is to achieve an ROE of 5%,

on a cumulative basis from FY2021 throughwhich exceeds the cost of equity capital, by FY2025.

FY2025 including dividend payments and flexible

However, we think that we do not need to accumulateshare repurchases. With regard to dividends,

any more capital for the time being in order toour aim is ambitious: to pay annual dividends

achieve this goal. Based on this view, for shareholder

of at least ¥30 per share from FY2021 throughreturns we are aiming for a total payout ratio of 100%

FY2025 (achieving the ROE target of 5%).

Q. What initiatives are you taking for corporate governance?
In 2019, JSF transitioned to a Company with athe Board of Directors conducted a review of various

oversight and execution, with the Board of Directors

aspects of the board, including its composition, andresponsible for making management policy decisions

concluded that there was a need to structure aand overseeing execution, and executive officers

board with multiple layers of complementary skills

responsible for executing management plans. In

in light of matters including changes in the financial

addition, the chairpersons of the Board of Directors,

and economic environment, and recognized thethe Nomination Committee, the Remuneration

importance of balancing the number of supervisors

Committee and the Audit Committee are all outsideand executives, and diversifying board members indirectors. I believe that for corporate Japan this isterms of age and gender.

an advanced governance system.

Based on these thoughts, in June 2022 theFurthermore, with changes to JSF’s operating

number of directors was increased by two, bringing

environment in recent years, such as revisions to thethe total number of directors to seven, of whom five

Corporate Governance Code, the transition to new

are outside directors and two inside directors.

market segments by the Tokyo Stock Exchange, andWith regard to the appointment of executive

further progress in internationalization and digital

officers, after deliberation by the Nominationtransformation, and given that we are about toCommittee, the Board of Directors conducted a

begin formulating and implementing our next

review, identifying the qualities required of executive

mid-term management plan based on the medium-

officers and making specific appointments.

term management policy, we are implementing
various initiatives related to corporate governance.

8

After deliberation by the Nomination Committee,

Nominating Committee, etc. system, thus separating

Japan Securities Finance Co., Ltd. Integrated Report 2022

Furthermore, we established the Corporate
Governance Office with improved functions as thesecretariat of the Board of Directors for more

I intend to continue expeditiously addressing

effective governance and stronger support for thediverse issues in order to achieve the level ofBoard of Directors.

governance expected of a listed company.

Q. What about initiatives for sustainability?
The development of infrastructure that forms theinformation related to climate change in line withfoundation of socio-economic activities is a key

the recommendations of the Task Force on Climate-element in realizing a sustainable society, and is also

related Financial Disclosures (TCFD).

one of the Sustainable Development Goals. The JSF

Regarding social (S) initiatives, we understandGroup provides a variety of services, including thethat enhancing our functions as infrastructure forloans for margin transactions business, as a part ofthe securities and financial markets is necessary forthe infrastructure of Japan’s securities and financial

the realization of a sustainable society, so we will

markets, and works to improve the liquidity of thosebuild a system for stable business operations undermarkets and improve convenience for market

any circumstances. Moreover, to respond to changes

participants. Through these activities, we aim toin the operating environment of the securities andplay a part in initiatives to realize a sustainablefinancial markets, we respect diverse viewpoints

society, including supporting market participantsand values and are striving to ensure the diversity of

who are engaged in similar initiatives.

our core human resources. In addition, we are engaged

Because it is responsible for the infrastructure of

in initiatives such as promoting financial and economic

the securities and financial markets, the Group believes

education and academic research, contributing to

it is important to build a system that provides stableoverseas securities and financial market infrastructure,operations regardless of circumstances. To this end,

and realizing diverse work styles for employees.

we must not only respond to disasters in a narrow

As for governance (G) initiatives, in order tosense, but also ensure the stability and high reliability

strengthen corporate governance we have adopted

of our business base. In addition, we believe thatthe system of a Company with a Nominating Committee,

there are issues in which the Group can also contributeetc., and have established a dedicated department

to sustainability by utilizing the know-how and otherto expeditiously address various corporate governanceresources that it has cultivated over the years.

issues. In addition, we are conducting initiatives for

As specific initiatives for the environment (E), we

risk management, BCP and compliance.

will promote reduction of environmental impact inWith constant awareness of our social responsibilities

ways such as improving Company equipment withas a securities finance company, we will work in various

energy savings and environmental impact in mind

ways to achieve sustainable growth and increase

and making various in-house operations paperless.

corporate value, including through sound businessWe are also working to enhance the disclosure ofpractices that establish unwavering social trust.

Q. To sum up, do you have a message for readers of this report and stakeholders?
We are now moving toward realization of the Visionbusiness and to develop efficient business operations,

for JSF in the Future described in our medium-term

I aim to push for results that will lead to achievement

management policy. FY2022 is the final year of theof our management target for ROE of 5% by FY2025.

Sixth Mid-term Management Plan. As we continue to

We will continue to increase corporate value as

accelerate the positive trend of existing initiatives

a distinctive and unique financial institution, therefore

to expand and strengthen the securities and financeI ask for your ongoing understanding and support.

Japan Securities Finance Co., Ltd. Integrated Report 2022

9About the JSF Group

History of the Group
70 years of involvement in the development of Japan’s securities market
Established in 1950 as an institution specializing in securities finance, JSF has provided infrastructure functions forJapan’s securities market for more than 70 years through its core loans for margin transactions business. In addition,
we have developed various services related to securities finance by keeping abreast with the evolution in customer
needs resulting from changing conditions in the securities and financial markets.

1950–1965

1965–1980

1980–1995

History of Japan’s Securities Market
Postwar period of higheconomic growth

Economic turbulence with successive
booms and busts

1951∙ Margin transaction system established

1965–1970∙ Postwar boom continues

1954–1961∙ Postwar boom

1966
∙ Long-term government bonds issued for the firsttime after World War II, leading to significant
expansion of the public and corporate bond market
1968∙ Transition of securities companies tolicense system
1971∙“
 Nixon Shock” resulting from suspension of
the gold standard for foreign exchange
and implementation of surcharges on imports by
the United States
1973∙F irst oil crisis

Securities market progresses rapidly
1985∙ Conclusion of the Plaza Accord aimed atdepreciating the strong U.S. dollar
1986–1991∙ Japanese asset price bubble
1987∙ Global decline in stock prices starting with
the Black Monday crash of the New York
Stock Exchange
1989∙ The Nikkei Stock Average hits a record high of¥38,915 at the peak of the bubble
1991∙ Decline in stock prices and the collapse of the
bubble triggered by tension in the Middle Eastcaused by the Iraqi invasion of Kuwait in 1990

1979
∙S
 econd oil crisis due to the Iranian Revolution

History of JSF

Launching JSF andestablishing its foundation

Supporting the securities market during
Japan’s period of high economic growthwith institutional financing

1950∙ Launched operations as a specialized securities
finance institution

1968∙ L aunched bond financing business to facilitatebond underwriting and circulation

1951∙ Launched margin loan business with theestablishment of a margin transaction system

1977∙ L aunched general stock loan business forlending stock to securities companies to covershortfalls caused by delays in obtaining delivery
stock for trading, etc.

1955
∙ Established branch offices by acquiring entire
business operations of securities financecompanies in Hokkaido, Niigata, and Fukuoka∙C ompletion of head office building1956∙ Granted securities finance license under arevision of the Securities and Exchange Act

10Japan Securities Finance Co., Ltd. Integrated Report 2022

Playing a role as a stable source ofas the bursting of the economic bu
the securities and financial trading1985∙ Launched secured loans using a revolving credit
line format that accepts securities deposited bycustomers at securities companies as collateral1987∙ Launched trading via JSF Online System after
developing a network with securities companies
1989∙ Launched bond borrowing and lendingtransaction brokerage business with securities
companies and financial institutions as customers∙ First commercial paper (CP) issued as afinancial institution

1995–2013

2013–

Globalization of securities and financial markets
1997∙ Yamaichi Securities Co., Ltd. and Sanyo
Securities Co., Ltd. cease operations
1998∙ Implementation of the revised Securities andExchange Act (current Financial Instruments andExchange Act)∙ Implementation of the “Japanese Big Bang”
financial system reforms, including liberalizationof stock brokerage commissions and theapproval of negotiable margin transactions
2000∙ Dot-com bubble bursts in the United States
2001∙ Bank of Japan introduces quantitativeeasing policy

Toward the realization of a sustainable
society and economy

2008∙G lobal recession due to the collapse of
Lehman Brothers triggered by the subprime
mortgage crisis

2013∙ Establishment of the Japan Exchange Group, Inc. throughthe market and management integration of the Tokyo Stock
Exchange and Osaka Stock Exchange

2011∙T he Japanese economy suffers a slowdown due
to the power shortage caused by the Great East
Japan Earthquake and subsequent nuclear power
plant disaster2016∙B ank of Japan adopts negative interest-rate policy
2018∙ Japanese government bond settlement cycle is shortened to
T+1 (transaction date plus one day)2012
∙ The Liberal Democratic Party wins a big victoryin the House of Representatives election, andthe economic policies of then-Prime Minister
Abe (“Abenomics”) cause the yen to depreciateand stock prices to rise2019
∙ Stock settlement cycle is shortened to T+2 (transaction dateplus two days)
2020∙ Stagnation of the global economy due to the
COVID-19 pandemic∙ The Dow Jones Industrial Average of the New
York Stock Exchange plummets following the
9/11 terrorist attacks

2022∙ Restructuring of the Tokyo Stock Exchange market segments

funds and securities even during periods of market stagnation suchubble and global financial instability, and responding to the reform ofsystem1996∙ Launched bond repo transactions
1998∙ Established JSF Trust and Banking Co., Ltd.
2003
∙ Launched securities-backed “COM-STOCK
LOANS” through the internet

2004∙ L aunched loans for margin transactions businessfor the JASDAQ market∙R enewed JSF Online System and launchedtrading via JSFNET
2005∙ Launched loans to securities companies required
for negotiable margin transactions

Taking on new challenges for the
future of the securities market

2013∙ Merged with Osaka Securities Finance Co., Ltd.
2019∙T ransitioned to a Company with a Nominating Committee, etc.
∙ Launched loans for margin transactions business for
proprietary trading systems (PTS)2020∙ Investment in an Indonesian securities finance company∙ Start of the Sixth Mid-Term Management Plan
(FY2020–FY2022)
2022∙ Moved from the Tokyo Stock Exchange First Section to thePrime Market∙ Launched fund administration services

Japan Securities Finance Co., Ltd. Integrated Report 202211About the JSF GroupAt a Glance
JSF Group’s Business
The JSF Group is a corporate group that operates in sync with the securities and financial markets. The Group
comprises Japan Securities Finance, which responds to the diverse needs of financial institutions and investors as aprovider of securities market infrastructure, JSF Trust and Banking, which deploys highly distinctive trust services,and Nihon Building, which provides favorable office environments for Group companies and other companies.

Nihon Building Co., Ltd.

JSF Trust and Banking Co., Ltd.

Trust banking business
Providing various trust services forthe development of the securities
finance market

Real estate leasing business2.8%¥0.8 billion

Providing favorable office environments forGroup companies and other companies

9.1%¥2.7 billion
FY2021
Consolidated operating
revenue

30.1billion

¥

88.1%
¥26.5 billion
Securities finance business
Lending funds and securities tofinancial institutions, mainly loans for
margin transactions

Japan Securities Finance Co., Ltd. (JSF)12Japan Securities Finance Co., Ltd. Integrated Report 2022

Loans for Margin
Transactions BusinessStable Credit Ratings

R&I, JCR

S&P

AA– A

Only one in Japan
JSF is the only securities finance company inOver the years, we have secured high credit

Japan that has been licensed to conduct a

ratings, including an AA rating from twoloans for margin transactions business underJapanese rating agencies and an A rating

the Financial Instruments and Exchange Act.

from foreign rating agencies.

Business Partners

Network with domestic
and overseas financial
institutions
We are building business relationships withdomestic and overseas financial institutions
and institutional investors such as securities
companies, banks and insurance companies.
We also provide financial services for generalbusinesses and individual investors.

Shareholder Returns

97.6%(FY2021)

We are aiming for a total payout ratio of 100%on a cumulative basis from FY2021 throughFY2025 (achieving the ROE target of 5%)
through dividend payments and flexible
implementation of share buy-backs.

Characteristics of a Securities Finance Company• Role as an Administrator of Loans for Margin Transactions
A securities finance company serves in an institutional role of accepting loan applications from securities companies,
and therefore must maintain a strong financial base and a high credit rating to ensure it has the fund-raisingcapabilities necessary for lending funds and securities.

• Restrictions as a Company Licensed under the Financial Instruments and Exchange Act
Aside from the loans for margin transactions business, a securities finance company is legally permitted to operate
other businesses only to the extent that they do not impair the operation of the loans for margin transactions
business and the risk of such businesses is small. Other restrictions include those on M&A.

• Business Operation through Participation in Settlement Systems
Delivery of securities, including loans for margin transactions, is legally permitted at clearing houses, and settlementof funds is conducted through the central bank system. Therefore, in order to remain eligible to participate in these
settlement systems, it is necessary to maintain a shareholders’ equity ratio above a certain level.

Japan Securities Finance Co., Ltd. Integrated Report 202213

About the JSF Group

Value Creation Process
External environment/Business environment

Corporate Philosophy• Population decline/aging• Globalization• Progress of digitalization• Changes in the investment stanceAs an institution specializing in securities finance, JSF has aof institutional investors/Growing
number of individual investors• Restructuring of market segments/
Corporate Governance Code/
Stewardship Codemission to contribute to the development of the securities
market by proactively meeting the diverse needs of the
securities and financial sectors and to enhance the long-term
interests of users, while always maintaining a keen awarenessof its public role.

Management CapitalBusiness Model

Financial Capital

Japan’s only company that handles loans for
margin transactions and securities financing tomeet the needs of investors• High degree of financial soundness
External credit ratings
R&I:AA – JCR:AA – S&P: A	
Shareholders’ equity ratio (based on FIEA)
348% (March 31, 2022)

Securities Finance BusinessIntellectual Capital• Risk management expertise accumulated
over many years• Ability to build securities finance services• Stable and highly productive operational
systemLoans for Margin
Transactions

Securities
Investment

Securities
Financing

Licensedbusiness

Other

Human Capital• Talent that can build risk management

and securities finance services
Number of employees: 264 (consolidated)

Social and Relationship Capital

Trust Banking
Business

Real Estate Leasing
Business• Long track record of operating thesecurities finance business• Network of domestic and overseas

financial institutions and institutional
investors such as securities
companies, banks andinsurance companies• Business operations throughparticipation in the settlement
systems of central banks andclearing houses

14

Japan Securities Finance Co., Ltd. Integrated Report 2022

Management Foundation
Risk Appetite Framework (RAF)
Cyber Security

Business Continuity Plan (BCP)

Corporate GovernanceVision for JSF in the Future
Maintain strong financial soundness while functioning as
securities market infrastructure
Achieve sustainable growth and medium- to long-term
enhancement of corporate value as expected of a listed company

Mid-Term Management Plan/Material Issues

Value Provided

The Sixth
Mid-Term
Management
Plan• Enhance the loans for margin transactions business as partof securities market infrastructure• Expand and enhance the securities finance business• Develop and realize new business iversify securities investment as an efficient use of capital•D• Strengthen the business management structure• S trengthen our competitive base through efficient business operation• Facilitate diverse work styles and make JSF more dynamic

Contributing tomarket liquidity

Material Issues

E

Environmental• Reduce environmental impact

S

Social• P romote academic research activities andfinancial and economic education activities• P romote diversity and develop human resources• R espect human rights and prohibit discrimination• E nhance functions as infrastructure forJapan’s securities and financial markets
 ontribute to overseas securities and•Cfinancial market infrastructureG

Governance• S trive to enhance governance as a Company
with a Nominating Committee, etc.
• Implement the risk appetite framework (RAF)• S tably operate business that is not affectedby disasters, etc. (BCP) perate business based on a high awareness•Oof compliance

Highly resilient, stablebusiness operations

Responding to clientneeds in response tochanges in the securities
and financial markets

Japan Securities Finance Co., Ltd. Integrated Report 202215

About the JSF Group

Business Model
Securities Finance BusinessSee page 28 for details.

Operating the loans for margin transactions business, which is one of
the infrastructure functions of the securities market, and developing
securities financing to meet customer needs
Loans for Margin Transactions Business
The loans for margin transactions business contributes to the smooth circulation of stocks and the formation of appropriate
prices. We lend securities companies the funds and stock certificates necessary for margin transactions.

Margin Transactions

Loans for Margin Transactions

In margin transactions, an investor pledges a certain amountof security deposit (brokerage margin) to a securities
company as collateral (1), borrows the funds required forpurchase or the stock required for sale from the securities
company (2), and buys or sells shares. Under this system, it
is possible to buy stocks with an amount exceeding theamount of funds on hand and sell stock certificates thatare not held, adding depth to transactions and contributing
to the smooth circulation of stocks and the formation of
appropriate prices.
There are two types of margin transactions: standardized
margin transactions and negotiable margin transactions.
In standardized margin transactions, the premium charges
and repayment deferral deadline are stipulated by the stock
exchange, and the securities company can borrow thestocks to be sold and the funds to be purchased from asecurities finance company (loans for margin transactions).
In negotiable margin transactions, the term terms can be
freely determined between the customer and the securities
company, but the securities company cannot use loans for
margin transactions to settle negotiable margin transactions.

Loans for margin transactions are a financing scheme inwhich a securities finance company lends funds and stock
certificates necessary for standardized margin transactions
to securities companies that participate in trading on a stock
exchange. These margin loans are conducted through clearing
facilities such as a stock exchange.
This business may only be carried out by a securities
finance company licensed by the Prime Minister. JSF
conducts the loans for margin transactions business on eachstock exchange market (Tokyo, Nagoya, Sapporo, Fukuoka)
and on proprietary trading systems (PTS).
JSF receives a loan application (3) and collateral for themargin transaction (4) for each stock issue from the securities
companies. To execute the loan (5), JSF, in place of the
securities company, delivers the loaned funds or stocks tothe clearing facilities of the stock exchange (6) and in return,the stock purchased (collateral stock for loan) or proceedsfrom the sale (collateral money for stock loans) is received
by JSF (7) and then the collateral for each is appropriated.

Structure of Margin Transactions and Margin Loans
Standardized Margin Transaction

Loan for Margin Transaction

Receipt of loan application (3)Securities
company

Deposit of brokerage margin (1)Deposit of collateral for margin transaction (4)Lending of funds for purchasing stock or
lending of stock for selling of stock (5)Lending of funds for purchasing stock or
lending of stock for selling of stock (2)
(6)

(7)

Receipt of purchased stock orsales proceeds

Stock Exchange Clearing
Facilities (JSCC)

16

Japan Securities Finance Co., Ltd. Integrated Report 2022

JSF

Customer

Placement of trade consignment orderSecurities Financing
Consisting of five business areas, securities financing is the generic term we use for the business of lending securities and thebusiness of lending of funds backed by securities. We are promoting securities financing as one of our growth engines, andare also working to expand our services by increasing the number of business partners we work with, including foreign financial
institutions, and by diversifying securities handled to include
Transactions in which
Transactions backed byforeign stocks and foreign government bonds.
securities are lentsecurities, etc.

Loans to Financial Instrument Companies
We are responding to the diversification of financing
methods of securities companies through transactions suchas those in which stocks are used as collateral when lending
funds to securities companies (general loans), and those inwhich cash is deposited in exchange for borrowing stock
held by a securities company (equity repo transactions).

Bond Lending
Bond lending is the business of matching (brokering) various
financial institutions’ lending needs and borrowing needs,
mainly for government bond repo and gensaki transactions(transactions in which bonds are exchanged for cash).

General Stock Lending
General stock lending is the business of procuring stockfrom institutional investors and others, and lending it tosecurities companies that mainly require it for trading, thus
contributing to the stability of the settlement system.

Trust Banking Business•• General stock lending Bond lending• Loans to financial
instrument companies•• Loans for negotiable margin transactions Loans to retail

Loans for Negotiable Margin Transactions
While margin loans provide funds and stocks necessary forthe settlement of standardized margin transactions, thebusiness of loans for negotiable margin transactions
involves lending funds to securities companies to enable
them to purchase stocks in negotiable margin transactions.

Loans to Retail
These are transactions that involve lending funds toindividual investors and others, using stock as collateral.
The main service in this business is COM-STOCK loans(securities-backed loans that can be transacted online). We
make effective use of our assets to help meet the financial
needs of our customers.

See page 32 for details.

Providing services such as segregated management of customer assets
required by securities companies, based on a management philosophy ofcontributing to the development of the securities market
Trusts for Cash Segregated as Deposits

Other Customer Asset Preservation Trusts

Under the Financial Instruments and Exchange Act,securities companies are obliged to manage customer
assets separately. Since its establishment, the trust banking
business has been a focus based on JSF Trust and Banking’s
management philosophy of contributing to the securities
market as a trust bank in the JSF Group closely connectedwith the securities industry. The number of customers isamong the highest in the industry in Japan, with many
securities companies using the service.

Segregated management of customer assets is required invarious fields outside the securities industry. Utilizing theexpertise cultivated in trusts for cash segregated as deposits
for customers, we offer a wide range of products which areavailable to customers across industries, such as foreignexchange margin trusts, contract for difference (CFD)/
overseas futures margin trusts, crypto asset-related trusts,
crowdfunding payment trusts, specified joint real estate
venture trusts and performance security deposit trusts.

ABL Trusts (Loans for Trust Accounts)

Securities Trusts

We function as a segregated portfolio company (SPC) fortrusts when an asset-backed loan (ABL) is arranged as aninvestment product for institutional investors by a securities
company acting as an arranger. Since we started handling
this service in 2009, a wide variety of investment products
have been created through arrangements by multiple
arrangers, and are used by many institutional investors.

We provide securities management trusts and investment
trusts to customers, mainly financial institutions and generalbusinesses that hold securities. These trusts are used to savelabor and reduce costs related to the management and custodyof customers’ stocks and other holdings, and to improve
investment performance through stock lending operations.

Real Estate Leasing BusinessSee page 33 for details.

Japan Securities Finance Co., Ltd. Integrated Report 2022

17

Our Vision

Medium-Term Management Policy
Under the Sixth Mid-Term Management Plan formulated in March 2020, we have been working to steadily increase
our earning power under the assumption that we will maintain the high degree of financial soundness required ofus as a key player in the securities market infrastructure.
During that time, the Corporate Governance Code was revised in June 2021, and the Tokyo Stock Exchange
restructured its market segments in April 2022. As a publicly listed company, we recognize that the current
situation calls for us to ensure greater commitment and transparency to achieve sustainable growth and enhance
corporate value over the medium to long term based on a sophisticated governance system.
We see this transformation for listed companies as an opportunity to accelerate our current efforts toward
management reform. To deepen our dialogue with the capital market and meet the expectations of shareholders
and investors, we have formulated the medium-term management policy.

FY2023–FY2025
FY2020–FY2022

The next mid-term management plan

The Sixth Mid-Term Management Plan

ROE 5%

ROE 4%
Medium-Term Management Goals• Assumed maintenance of the high degree of financial soundness required to maintain
Thinking

market infrastructure functionality• Adding ROE, which is widely used as an indicator of profitability and capital efficiency,
to management goals• ROE target set above cost of equity capital (recognized as around 4.5%)

Estimated Cost of Equity Capital

Approach to the Business Portfolio

We recognize our cost of equity capital to be considerablyWith strong awareness of the public role it plays as securities

lower than the general level, due to our characteristicallymarket infrastructure, the JSF Group will actively respond to

low-risk business strategy and high financial and earnings

diverse needs in the securities and finance sectors bystability, given that financial securities companies are by theirproviding a variety of related services, focusing on securities

nature subject to financial soundness standards andand financing with the licensed business of loans for margin

restrictions on the scope of their operations as part of thetransactions at the core.

securities market infrastructure, including those imposed by

In addition, given that loans for margin transactions services

laws and regulations and standards for participation inare substantially affected by market fluctuations and othersecurities and payment systems.

factors, the JSF Group will continue working to diversify earnings

Specifically, we have used various methods to estimate
the cost of equity capital, and as a result of repeatedsources and to achieve management goals in each businessarea while maintaining awareness of improving capital efficiency.

discussions by the Board of Directors, we recognize that theUsing this approach, the JSF Group will endeavor toCompany’s cost of equity capital is around 4.5%. The ROE

achieve the Vision for JSF in the Future through a businesstarget for the next mid-term management plan has been set

portfolio consisting of the securities finance businessat a level above this cost of equity capital (5% by FY2025).

(securities financing centered on loans for margin transactions,securities investment business), the trust banking businessand the real estate leasing business.

18

Japan Securities Finance Co., Ltd. Integrated Report 2022

Guided by its corporate philosophy, JSF will strive to maintain strong
financial soundness, achieve the sustainable growth expected of a

Vision for JSF

listed company, and enhance its corporate value over the medium toin the Future

long term, while firmly embracing the public roles expected of it as asecurities finance company serving as securities market infrastructure.

Achieve sustainablegrowth and mediumto long-term
enhancement ofcorporate value as
expected of a listedcompany

Maintain strong
financial soundness
while functioning as
securities market
infrastructure

ROE > Capital Cost
ROE Target
Achieve 5% ROE by FY2025

Sustained
MeasuresShareholder Returns Policy

corporate value• Strengthen the securities financebusiness centered on loans for
margin transactions• Reinforce consolidated

enhancement of

100% total payout ratio fromFY2021 to FY2025 (cumulative)

Group management• Improve operational efficiency

Japan Securities Finance Co., Ltd. Integrated Report 2022

19

Our Vision

Medium-Term Management Policy

StrategyStrengthen the Securities Finance BusinessCentered on Loans for Margin Transactions

Reinforce Consolidated Group Management• Make further use of Group resources to improve• Initiatives such as improving the operational stability andoverall profitability

convenience of the loans for margin transactions business,steadily increasing the number of loanable stock issues, andImprove Operational Efficiency

strengthening the dissemination of information related to• Review business processes and other areas to promote

standardized margin transactions and margin loans

further improvements in operational efficiency• Use of the financial and securities transaction expertise• Maintain awareness of sustainability issues, promotecultivated thus far to handle diverse transactions in abusiness operations with low environmental impact andproactive manner and increase the number of businessdiverse employee work styles

partners and applicable securities

Shareholder Returns
FY2022 (Forecast)

To ensure the operational stability and financial soundness
required of us as a key player in the securities market

Dividend(Forecast)

Share
Buy-backs¥32.0(+¥2.0 YoY)

3.2 million shares(3.5% of total
shares issued andoutstanding)¥3 billion

infrastructure, we will enhance corporate value while
maintaining solid shareholders’ equity. At the same time,
we intend to increase returns to shareholders based oncomprehensive consideration of the earnings environment,+

investment plans and other factors.

Total Payout
Ratio

=

103.4%

Shareholder Returns Policy
We are aiming for a cumulative total payout ratio of 100% through dividend payments and flexible share buy-backs in
the FY2021–FY2025 period (achieving the ROE target of 5%).
We aim to pay annual dividends per share of no less than ¥30.0 during that period.

FY2017FY2018FY2019FY2020

FY2021

FY2022(Forecast*)¥4.2 billion¥3.7 billion¥3.5 billion¥3.9 billion¥5.1 billion¥5.6 billion

Dividends per
Share

¥26.0

¥22.0

¥22.0

¥26.0

¥30.0

¥32.0

Dividend Payout
Ratio

58.8%

55.0%

57.2%

60.1%

53.0%

49.2%

Share Buy-backAmount¥0.9 billion¥1.2 billion¥0.5 billion—¥2.3 billion¥3.0 billion

79.3%

87.8%

71.0%

60.1%

97.6%

103.4%

ProfitTotal Payout Ratio* Announced on May 10, 2022

20

Japan Securities Finance Co., Ltd. Integrated Report 2022

The Sixth Mid-Term Management Plan
Management Goals
Given that the loans for margin transactions business, JSF’s core business, is greatly affected by market fluctuations,
we will strengthen its base by increasing the number of loanable stock issues, and stabilize our functions as securities
market infrastructure by diversifying revenue sources and steadily increasing basic profit (ordinary profit estimatedbased on the assumed profit of loans for margin transactions).

Strategy

Enhance the loans for margintransactions business as part of securities
market infrastructure
Develop and establish new business

Diversify securities investment for
efficient use of capital

Facilitate diverse work styles and makeJSF more dynamic

Expand and enhance thesecurities finance business

Strengthen thebusiness management structure

Strengthen our competitive basethrough efficient business operations

Framework to integrate management goals and strategy with risk management

Use of the Risk Appetite Framework (RAF)

StrategyStrengthen the Loans for Margin Transactions
Business as Part of Securities Market Infrastructure
We aim for operational stability and increased profitability in
our loans for margin transactions business by appropriately
responding to changes in the stock market´s operating
environment. In addition, we will carefully identify trends
among market participants, steadily increase the number ofloanable stock issues, promote the use of loans for margintransactions, step up the dissemination of information relating
to margin transactions and loans for margin transactions, andexpand our investor base.

Expand and Enhance the Securities Finance BusinessWe aim to effectively use the financial and securities transaction
expertise we have cultivated thus far to proactively handle
diverse transactions with domestic and overseas financial
instruments businesses and increase the number of business
partners and applicable securities to enhance and expand our
securities finance business, increasing opportunities for profit.

Develop and Establish New BusinessWe will leverage our history, background and characteristics
as a securities finance company, and take a long-term perspective
in developing and establishing new businesses in collaboration
with Group companies and domestic and foreign partners.

Diversify Securities Investment for Efficient Use of Capital
We will secure stable revenues by responding to changes inthe external environment with agile revisions to our portfolio,
based on appropriate risk controls. In addition, we will expand
foreign currency funding methods to increase management offoreign currency-denominated securities such as foreign
government bonds, and to support business developmentusing foreign currencies.

Strengthen the Business Management Structure
We will proactively meet our social obligations, and reaffirm
that compliance is a management prerequisite for achieving
our corporate philosophy.
To establish unwavering public trust in JSF, we aim toensure the effectiveness of our internal auditing and further
enhance our risk management in response to the increasingly
diverse and complex risks associated with the finance business.
We will further strengthen our business continuity system
to enable us to carry out our securities market infrastructure
functions even in the event of a major disaster.

Strengthen Our Competitive Base through Efficient
Business Operations
Given the increase in transaction volume and complexity ofbusiness, we will review our business processes and actively
promote the use of digital technologies such as robotic
process automation (RPA) to build an efficient business
operation structure and strengthen our competitive base.

Facilitate Diverse Work Styles and Make JSF
More Dynamic
Amid changes and diversification of work, such as work-stylereform and delayed retirement, we will review our employment
systems to establish a rewarding and employee-friendly working
environment, thereby improving individual productivity andincreasing JSF’s vitality.

Japan Securities Finance Co., Ltd. Integrated Report 2022

21

Our Vision

Message from the Executive Officer in Charge ofCorporate Planning
Aiming to be a company thatearns the trust of all
stakeholders

Senior Managing Executive Officer,
Executive Officer in charge of Corporate Planning

Yutaka Okada

FY2021 Consolidated Financial Results

22

In FY2021, the business performance of companies in JapanThe growth engine of the Group, the securities financerecovered from the stagnation caused by the impact of thebusiness, drove the increase in profits. In particular, bond

COIVD-19 pandemic, and the recovery trend strengthened.

lending (repo transactions and gensaki transactions for the

However, stock market movement remained stuck in a narrow

purchase and resale of Japanese government bonds andrange due to the impact of circumstances overseas, including

other bonds) and equity repo transactions performed strongly,

concerns about default on debts by the Evergrande Group ofsetting a new record-high balance by actively responding to

China, the implementation of tapering by the Federal Reserve

the market’s growing need for investment and procurement of(phasing out quantitative easing) in the United States andsecurities. In addition, at our subsidiary JSF Trust and Banking,soaring crude oil prices due to the situation in Ukraine.

trust fees reached a record high as the trust balance of custodial

Under these circumstances, consolidated results fortrust services centered on preservation trusts such as cash

FY2021 included operating profit of ¥6,235 million, a 30.5%

segregated as deposits for customers and crypto-asset-

increase year on year, ordinary profit of ¥7,164 million, a

related trusts, as well as asset-backed loan trusts, continued

28.9% increase, and profit of ¥5,174 million, a 30.3% increase,

to increase. On the other hand, the loans for margin

for an increase of about 30% for all three levels of income.

transactions business, which is greatly affected by stock

Japan Securities Finance Co., Ltd. Integrated Report 2022

market conditions, was sluggish, especially stock lending.
In this way, we were able to achieve solid results in our
securities finance business, centered on bond lending andequity repo transactions, which I believe is not only a result ofefforts on the sales side, but also of the increased efficiencyof business operations resulting from reviewing businessprocesses, utilizing RPA and promoting telework amid theincrease in transactions and growing complexity of operations.

Outlook for FY2022
In the loans for margin transactions business, we will steadilyfinancial institutions in Japan and overseas, and increase

promote measures such as increasing the number of loanablebusiness partners and applicable securities to further expand

stock issues and stepping up the dissemination of information

the business.
We aim to achieve ROE of 4% for FY2022, which together

related to margin transactions and loans for margintransactions. In the securities finance business, we aim towith further promotion of the trust business at JSF Trust andutilize our financial and securities transaction expertise to

Banking is one of the milestones of our medium-term

proactively expand our handling of diverse transactions withmanagement policy.

About Shareholder Returns
We will comprehensively consider the earnings environment

buy-backs in the market totaling ¥2.3 billion for a total payout

and investment plans as we strive to return profits to ourratio of 97.6%.

shareholders while maintaining financial soundness.

See page 20 for details.

In FY2022, we are aiming for a total payout ratio of 100%In FY2021, based on our shareholder return policy, wethrough dividends and the flexible implementation of sharepaid annual dividends of ¥30.0 per share, an increase of ¥4.0

buy-backs in accordance with our shareholder return policy.

compared with the previous fiscal year, and carried out share

Shareholder Returns
FY2021

FY2022 (Forecast)

Annual¥30.0(+¥4.0 vs. FY2020)¥32.0(+¥2.0 vs. FY2021)

Interim

¥15.0

¥16.0

Year-end

¥15.0

¥16.0

Dividend payout ratio

53.0%

49.2%

Aggregate no. of shares
to be repurchased¥2.3 billion
2.80 million¥3.0 billion
3.2 million

Result¥2.3 billion
2.48 million—

Dividends per share

Share buy-backs

Repurchase period
Total payout ratio

December 21, 2021 to March 11,
2022
97.6%

May 11, 2022 to March 31, 2023
103.4%

Japan Securities Finance Co., Ltd. Integrated Report 2022

23

Our Vision

Message from the Executive Officer in Charge of Corporate PlanningFeatures of the Consolidated Balance Sheet
The loans for margin transactions business, securities financeIn addition, in the security finance business, bond repo

and securities investments are the pillars of the Company’s

and gensaki transactions are brokerage transactions thatearnings and features of its balance sheet.

match the needs of lenders and borrowers. As a result, theFunds lending transactions are recorded under assets asbalance sheet is expanded in both assets (collateral money

loans while the collateral for those loans is off-balance-sheet.

for securities borrowed) and liabilities (collateral money

In securities lending transactions, while the securities lent arereceived for securities lent), but financial soundness is ensured

off-balance-sheet, collateral deposits received in connection

as both are secured transactions.

with such lending are recorded under liabilities as collateralmoney received for securities lent.

Road to Achieving the Management Goals
The Company aims to ensure the financial soundness required

business scope imposed by laws and regulations, standardsof a company that is a key part of Japan’s securities market

for participation in securities and fund settlement systems,

infrastructure while achieving the sustainable growthamong others, as a key part of Japan’s securities market

expected of a listed company and increasing corporate value

infrastructure. Therefore, I believe that our cost of equity

over the medium to long term. To make these management

capital is considerably lower than the general level due to ourpolicies clear, we are aiming for ROE of 4% during the term of

characteristic low business strategy risk and high financial andthe current mid-term management plan (FY2020–FY2022),

earnings stability. Based on these characteristics, we are

and 5% during the term of the next plan (FY2023–FY2025).

going to take a steady and stable approach to achieving ROE

To formulate the ROE target, we estimated the Company’s
cost of equity capital to be around 4.5% using objective dataof 5% by FY2025.
ROE has steadily increased in recent years, reaching 3.79%

and multiple calculation methods. Accordingly, we set ain FY2021 due to ongoing efforts under the mid-termtarget of 5% for the term of the next plan to exceed thismanagement plan. I believe that we have built a foothold for

figure. Characteristic of a securities finance company, we areachieving our medium-term management policy targets of 4%

subject to restrictions in terms of financial soundness andfor FY2022 and 5% for FY2025.

To Our Stakeholders
In FY2021, despite the impact of the COVID-19 pandemic

In addition to business and financial issues such as

able to build earnings centered on the securities financeenhancing profitability and improving capital efficiency, frombusiness, which is crucial to enhancing profitability. Results

the perspective of sustainability I will work to gain a broad

surpassed the estimates we made at the beginning of theunderstanding of non-financial information centered on ESG

fiscal year. In addition, due to a dividend increase and sharefactors and expand disclosure.

buy-backs, we were able to return profits to shareholders at a
total payout ratio of close to 100%.
I would like to express my heartfelt gratitude to ourshareholders, investors, business partners and other24

stakeholders, whose support has made this possible.

and the situation overseas on market conditions, we wereJapan Securities Finance Co., Ltd. Integrated Report 2022

Company officers and employees will continue to work
together for sustainable growth in corporate value so that JSF
achieves wide recognition from society as a valuable presence.

ESG Initiatives as the Executive Officer in Charge of Sustainability

Lecture on Financial and Securities Markets and Industry-Academia Alliance to the
Graduate School of Engineering, University of Tokyo
Distributed ledger technology (blockchain) has drawn increasing attention in recent years, and discussions
about its applicability in the securities field are progressing. Since June 2021, JSF has been conducting
empirical research jointly with the University of Tokyo on the applicability of blockchain technology, with afocus on the Company’s main business area, securities lending.
On January 17, 2022, as JSF's Managing Executive Officer at the time, I delivered a lecture regarding thisempirical research to students of the Graduate School of Engineering at the University of Tokyo on the topic“Financial and Securities Markets and Industry-Academia Alliance—Blockchain Case Studies.” All students in
attendance were keenly aware of recent trends in finance and securities, as well as the latest technologies suchas blockchain, and industry-academia collaboration. Lively discussion ensued, not only on current issues, butalso on the future of the securities finance industry and how it should ideally evolve.

Financial and Securities Markets andIndustry-Academia Alliance—Blockchain Case Studies
Lecture materials from Tanaka Laboratory,
Graduate School of Engineering, University of Tokyo
January 17, 2022
Yutaka Okada
Managing Executive Officer
Japan Securities Finance Co., Ltd.

Cooperative Relationships with Indonesia’s Securities Market Infrastructure
In Indonesia, the government’s policy objectives are to strengthen the financial services sector to contribute tomedium- to long-term growth and to stabilize the financial system as a basis for sustainable economic
development. In the securities sector, one measure for achieving an efficient, highly liquid and stable securities
market is to enhance the efficiency of securities transactions and settlements using securities finance. A project
to establish and operate a securities finance company in Indonesia was launched in 2014, and in December
2016, PT Pendanaan Efek Indonesia (PEI) was established with investments by three companies, including theIndonesia Stock Exchange.
As part of the infrastructure of the Japanese securities market, JSF has been actively supporting this projectsince its beginning, and has acquired a 10% stake in PEI (about ¥400 million). Going forward, we will further
utilize the knowledge we have accumulated in the securities finance business to support PEI and Indonesia
Stock Exchange Group in their business development and market infrastructure improvements, and continue tostrengthen cooperative relationships with all parties involved as we contribute to the sustainable developmentof Indonesia’s economy as well as its financial and securities markets.

Japan Securities Finance Co., Ltd. Integrated Report 2022

25

Our Vision

Financial and Non-Financial Highlights
Financial Highlights
Operating Revenue

Operating Profit

営業収益

営業利益

(Millions of yen)

(Millions of yen)

35,0007,000

30,00025,00029,101
26,33330,924 30,138

6,235

6,000
5,000

24,321

4,777
3,881

3,981

4,129

(FY)

2017

2018

2019

 rofit Attributable to Owners of Parent
P
and ROE

Net Assets

20,0004,000

15,0003,000

10,000

2,000

5,000

1,000

0

0
2017

2018

2019

2020

2021

(Millions of yen)

(%)

8,000

3.79

4

2020

2021

(FY)

(Millions of yen)

150,000

143,811
6,000

3.03

2.98
2.65

4,000

4,225

3,765

2.66

3,556

3

3,971

135,1662

126,687
120,000

0

0

0

2019

2020

2021

(FY)

Profit attributable to owners of parent (Left axis)
ROE (Right axis)

26

130,000

1

2018

137,996

5,174

2,000

2017

140,793140,000

Japan Securities Finance Co., Ltd. Integrated Report 2022

2017

2018

2019

2020

2021

(FY)

Non-Financial Highlights
Loanable Stock Issues

Average Outstanding Balance ofMargin Loans and Stock Loans(No. of issues)(Billions of yen)

3,000

400.0

2,500

2,426

2,479

2,522

2,572

366.1
350.1

2,661
300.0

300.6

283.1

284.2
261.6

2,000
1,500

333.9

219.9

200.0

224.6

175.5

1,000
100.0
500
0

0
2017

2018

2019

2020

2021

(FY)

2017

2018

2019

2020

2021

(FY)

Average outstanding balance of margin loans
Average outstanding balance of stock loans irectors and Ratio of Outside Directors
Dto Total Board of Directors(No. of directors)

71

8

60

60

60

(%)

70.0

Employees (Non-consolidated,
including seconded employees)(No. of employees)

300

7

256

252

251

247

241

77

78

79

77

78

179

174

172

170

163

(FY)

2018

2019

2020

2021

2022 (As of April 1)

No. of outside directors (Left axis)
No. of inside directors (Left axis)
Ratio of outside directors to total Board of Directors (Right axis)

Male employees

6

4

2
5

5

5

2

2

2

3

3

200
35.0

5

2

52.5

100
17.5

3

0

0
2019

2020

2021

2022

0

Female employees

Japan Securities Finance Co., Ltd. Integrated Report 2022

27

Strategy by Business
Loans for Margin
Transactions
23.0%

Securities Investment
and Others 19.1%

Securities Finance Business

Operating Revenue

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

26,586 million

Number of employees 207
Securities Financing
57.9%

Business Description and Policy
JSF was established in 1950 as an institution specializing in securities finance that
lends the funds and securities needed for the securities market. As the only securities
finance company in Japan, its mission is to contribute to the development of the
securities market. Our securities finance business comprises operations such as theloans for margin transactions business, securities financing, and the securities
investment business for government bonds. The legally licensed loans for margintransactions business is our core business, and serves as securities market infrastructure.
In addition, we leverage our expertise in handling securities and funds to expand ourbusiness mainly through securities financing such as repo transactions and gensaki
transactions for Japanese government bonds and other bonds, equity repo transactions,Shigeki Kushidageneral stock lending and loans to retail secured by securities companies.

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

Business Environment and Recognized Issues
The loans for margin transactions business is characterized bywidening range of market needs, including the increase involatile 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.

advancement and diversification of offerings based on the

Operating Revenue

JSF Business Overview
Funds
Standardized
MarginTransactions
Business

Securities

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

SubsidiaryBusinesses

Bond lending

Securities
Companies

Loans for negotiablemargin transactions
Loans to retail30,000Investors

Securities Financing
Loans to financial
instruments companies(Millions of yen)

Borrower

Financial
Institutions

General stock lending

25,00020,00022,4903,281

15,0005,955

LenderMoney Market, etc.

20,971
3,586

4,016
8,849

27,5503,820

13,2539,661
201812,517

11,35920192020

Loans for margin transactions
Securities financing
Securities investment and others

28Japan Securities Finance Co., Ltd. Integrated Report 2022

5,076
15,3910
201726,586

12,3697,724

10,0005,000

Institutional
Investors, Securities
Companies, etc.

25,383

6,118
2021

(FY)

Loans for Margin Transactions Business

Strengths and Opportunities
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
after a standardized margin transaction sale and purchase is made. The loans for margin transactions business requires alicense 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
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.

FY2021 Initiatives

Operating Revenue(Loans for Margin Transactions Business)*

In FY2021, the margin loan balance increased year on(Millions of yen)

14,000year, recovering in line with the recovery of thestandardized margin buying balance. On the other hand,

13,253

12,517

12,000the balance of stock loans for margin transactions was
significantly lower than in the previous fiscal year, due toa slump in the standardized margin transaction sellingbalance.

11,35910,000

9,661

8,000

* The graph on the right includes data for operating revenue on an actual
basis, excluding premium charges, which do not affect profits.

6,000

6,118

5,303
3,943

4,000

4,262

4,146

3,285

2,000
0
2017

2018

Loans for margin transactions

Margin Loan Balance and Standardized
Margin Transaction Buying Balance(Trillions of yen)

2.5
2.0
1.5
1.0
0.5
0
2017

2018

2019

2020

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

2021

2020

2021

(FY)

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

1.0

100

45

0.9

90

40

0.8

80

35

0.7

70

30

0.6

60

25

0.5

50

20

0.4

40

15

0.3

30

10

0.2

20

5

0.1

10

0

0

50

3.0

2019

Excluding premium charges

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 2022

29

Strategy by Business

Securities Financing

Strengths and Opportunities
Consisting of five business areas, securities financing is the generic term we use for the lending of funds backed by
securities and the lending of securities other than in the loans for margin transactions business.
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.
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).

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
such as those targeting foreign stocks and those secured by government bonds. We will continue to flexibly respondto customer needs, diversify the collateral we accept and the currencies we handle to improve the commercial
appeal of our products and improve transaction convenience.

• Bond Lending
The balance of bond lending transactions remains at a record high, due to an increase in the balance of loans toforeign 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.

• 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, andwill 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 Retail
The 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
online) 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

Highlights

International Finance Awards
At the International Finance Awards 2021, JSF received awards in
two categories relating to work in Japan—Most Innovative Securities
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 banking
and brokerage. This is the first time JSF has received these awards.

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
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
issued using blockchain technology) and collateral are exchanged virtually between limited parties. We are
examining the possibility of (1) enabling the near-simultaneous real-time transfer of securities and collateraldenominated in foreign currencies, which normally involves time differences, (2) obtaining benefits fromincreasing both system availability and the efficiency of administrative processing, and (3) utilizing various
assets, including illiquid assets, as collateral backed by these advantages.

Overview of Empirical Research

Tokenized collateral pledge

Tokenized securities loan

CompanyA

Simultaneous fulfilment

Company
B

Daily mark-to-market andcollateral transfers

Japan Securities Finance Co., Ltd. Integrated Report 2022

31

Strategy by Business
Other
0.4%

Trust Banking Business

Trust Fees
44.4%

Ordinary Profit

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

Number of employees 41

2,962 million

Fund Management
Revenue 55.2%

Business Description and Policy
JSF Trust and Banking Co., Ltd. was established in 1998 amid financial system reforms
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 andBanking provides trust services to meet needs that get more diverse by the year andcontribute broadly to the development of Japan’s financial market.

Business Policy
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 Oritate
President
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
in cooperation with our parent company, JSF.

Business Environment andRecognized Issues
Since its founding, JSF Trust and Banking has been engaged

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 market

and crypto asset exchange traders.

functions and investor convenience.

We will continue to develop asset preservation trust
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.

32

Strengths and Opportunities

Japan Securities Finance Co., Ltd. Integrated Report 2022

Balance of Trust Assets

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

(Millions of yen)

3,500

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

2,500

765

1,500

1,000

1,000

500

500

0
2019

2020

2021

2022
(As of March 31)

1,415

1,416

794

817

848

2017

2018

2019

Trust fees

Fund management revenue

Real Estate Leasing BusinessNihon Building Co., Ltd.
Net assets ¥8.2 billion

2,813
210

705

1,443

0
2018

2,562
330

2,000

1,500

2,969

1,509

2,962
11
1,635

1,094

1,316

2020

2021

(FY)

Other

Other
0.1%
Management
Fees 19.5%

Operating Revenue

1,286 million¥
Number of employees 16

Rental Revenue from
Leased Real Estate
80.4%

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 with
providing suitable, comfortable office space to tenants and customers, especiallymembers of the Group. In addition to working for the Group, such as managing the
JSF head office building, and steadily promoting the leasing business for buildings
owned by the Group in Nihonbashi-kayabacho, Nihon Building will continue toimprove its services in cooperation with Group companies while responding tochanges in the business environment, including redevelopment under way in the
Nihonbashi 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
300
0
(FY)

Nihon Building No. 3

Japan Securities Finance Co., Ltd. Integrated Report 2022

33

Management Foundation Supporting Corporate Value

Message from an Outside Director
We will work to further enhance andstrengthen corporate governance toimprove corporate value.
Naotaka Obata
Outside Director
Chairperson of the Board
Nomination Committee Chairperson
Remuneration Committee Chairperson

Roles to Be Fulfilled as an Outside Director andChairperson of the Board
I was appointed as an outside director in 2019, when Japan
Securities Finance (“JSF”) transitioned to a “Company with aNominating Committee, etc.” structure. For the past three
years, I have served as chairperson of the Board of Directors,
as well as chairperson of both the Nomination Committee
and the Remuneration Committee. A Company with aNominating Committee, etc. is designed to clearly separate
supervision and execution of management. In this structure,
the role of the Board of Directors is to determine basic
medium- to long-term management policies and to supervise
executive officers to ensure that they are executing businessappropriately based on those policies.
As chairperson of the Board of Directors of JSF, I havealways had a mindset of maximizing its effectiveness as aso-called “monitoring board.” I feel that the diverse
knowledge of board members, who are mainly outside
directors, has helped deepen and broaden discussions atboard meetings.
In supervising the execution of business by the president
and other executive officers, outside directors must
sometimes give harsh opinions, and at other times encourage
management to take on new challenges.
When deliberating on important management mattersand overseeing business execution, outside directors are
expected to act from an objective standpoint with anoutsider’s point of view. At the same time, we must constantly
bear in mind JSF’s corporate philosophy of contributing to
the development of the securities market while always
maintaining a keen awareness of its public role.
In FY2022, the focus of the Board of Directors will be on
deliberating and deciding the next mid-term management
plan based on the medium-term management policy
formulated in 2021. As chairperson, I intend to continue
leading those discussions.

Working to Improve the Effectiveness of theBoard of Directors
Three years have passed since JSF transitioned to a Company
with a Nominating Committee, etc. structure. During that time,
we have been working in cooperation with the secretariat of34

Japan Securities Finance Co., Ltd. Integrated Report 2022

the Board of Directors to enhance the effectiveness of theboard as a monitoring board by creating an environment thatencourages lively discussions at board meetings. Initiatives
include enhancing training to acquire knowledge about theCompany’s operations, holding regular meetings for outside
directors to enable them to share information with one
another, and creating opportunities for outside directors anddepartment heads to exchange opinions.
I believe that mutual understanding of each other’s
knowledge and expertise and a shared awareness of businessexecution issues will enable outside directors to speak frankly
at board meetings, thereby deepening discussion. Moreover,to facilitate such rich discussion, it is essential to provide afoundation of information and support for directors. To that
end, the Corporate Governance Office was established toserve as secretariat of the Board of Directors. I feel this hasenhanced support for the board.
We conduct annual evaluations of the effectiveness of theBoard of Directors, identifying issues related to the operationof the Board of Directors, and working in cooperation withthe secretariat of the board to make improvements. I am
happy to say that we have received many candid and forwardlooking proposals from directors on various issues, such as
expanding opportunities for outside directors to exchange
opinions with one another.

Enhancing and Strengthening Corporate Governanceto Improve Corporate Value
With changes in JSF’s operating environment in FY2021, suchas revisions to the Corporate Governance Code and thetransition to new market segments by the Tokyo Stock
Exchange, the Company formulated its medium-term
management policy in November 2021.
The Corporate Governance Code includes three newrequirements: enhanced Board of Directors’ functions,diversity in core personnel, and response to issues regarding
sustainability.
In order to further enhance the functions of the Board of
Directors, in 2022 the Company took steps to structure aboard with multiple layers of complementary skills by
appointing two new outside directors whose backgrounds
and expertise differ from those of existing board members.
To ensure diversity of core personnel and address issues

regarding sustainability, the Company has been promoting
the recruitment of female talent and mid-career hires under apolicy of developing and retaining diverse human resources.
Meanwhile, it has been steadily working on the formulation of
ESG-conscious management strategies and the developmentof governance systems, including a system for the disclosureof climate change information, based on therecommendations of the Task Force on Climate-related
Financial Disclosures (TCFD).
As an outside director, I will do my utmost to contributeto the achievement of the Company’s management goals set
forth in the medium-term management policy and therealization of its vision for the future by expeditiously
addressing diverse issues in order to achieve the level ofgovernance expected of a listed company.

As Nomination Committee Chairperson
The Nomination Committee decides on director candidates,
prepares succession plans for the representative executive
officer and president, decides on candidates for the positionof executive officer, and considers policies regarding theappointment and dismissal of individuals in these management
positions. In FY2021, we discussed how to approach various
Board of Directors’ issues, such as its composition, as well as
how to approach the appointment of executive officers.
First, with regard to the composition and other aspects of
the Board of Directors, since the 2019 transition to a Company
with a Nominating Committee, etc., JSF has maintained asystem of five directors, including three outside directors.
Under this system, I believe that the Board of Directors has
been appropriately formulating management policies andsupervising the execution of business. It has also been
evaluated and confirmed to be effective. However, duringthat time there have been remarkable changes in the
Company’s internal and external environment, such as
Corporate Governance Code revisions and the Tokyo Stock
Exchange’s transition to new market classifications, as well as
further progress of digitalization and internationalization. The
Company is also at the stage of formulating and implementing
its next mid-term management plan based on its latest
medium-term management policy. We therefore examinedthe composition and other aspects of the Board of Directors
from the perspective of further enhancing its functions. We
concluded that the Board of Directors was currently made up
of directors with the necessary skills and that the board was
effectively performing its function of supervising businessexecution. However, given the importance of having a board
with multiple layers of complementary skills to respond tomatters including changes in the environment, as well as theneed to balance the number of supervisors and executives,
and to diversify the board in terms of age and gender, theCompany decided at its June 2022 general meeting ofshareholders to add two new outside directors.
When deciding on new director candidates, the Nomination
Committee first confirmed the skill matrix, discussed andformulated a preliminary list of candidates, and interviewed
each candidate on the list with a focus on their experience,and their awareness of issues required of an outside director.
Based on the results of the interviews, the final candidates
were selected after an evaluation of whether they could be
expected to make an adequate contribution to the Company
as a director.
The committee also comprehensively examined theapproach to appointing executive officers from the perspectiveof building an execution system for promoting the mid-term
management plan. Based on the public role and special
characteristics of the securities finance business, the Company
formerly sought executive officer candidates with qualities
such as the ability to fully recognize the Company’s publicrole in the execution of business and extensive knowledge ofthe overall finance and securities markets, but we have newly
broadened the qualities required to include having aninternational outlook, a high degree of knowledge andexperience in business management and risk management,
and a high degree of knowledge and experience in financeand accounting.
By organizing our approach in this way, we can selectspecific candidates based on their character from a preliminary
list of qualified candidates from within the Company, the public
sector, and the securities and financial sectors. This process,which includes discussions at Board of Directors meetings andprior briefings, enables Nomination Committee members todeepen their understanding of the qualities and character of
each executive officer. In addition, we communicate withmanagerial-level individuals other than officers through various
opportunities such as business briefings, and strive to identify
their capabilities. In this way, Nomination Committee members
work both inside and outside the committee to collect information
for the selection of candidates. As the leader among theexecutive officers who possess these qualities, and the person
responsible for management, the representative executive
officer and president is required to have the ability to oversee
business execution and improve corporate value, and otherqualities such as high ethical standards as the representativeof a company that plays a public role. Furthermore, thecommittee regularly arranges opportunities for interviews anddiscussions with candidates to help create a mental picture
while gathering information to make decisions on selection.

As Remuneration Committee Chairperson
The Remuneration Committee decides on the remunerationof directors and executive officers, and policies regarding the
remuneration of officers and other matters. In its officer
remuneration system, the Company has been working tofurther link executive officer remuneration to performance,and has revised bonuses for executive officers to reflect thedegree of progress and achievement of the management
goals in the mid-term management plan. In FY2021, the firstyear after this revision, we worked to manage the systemappropriately. Going forward, we will consider revising officer
remuneration based on the new mid-term management plan,
which is aimed at achieving the management goals set out inour medium-term management policy. Moreover, in recent
years companies have been expected to actively address
sustainability issues, and there have been moves to reflect theresults of such efforts in officer remuneration. I would like theRemuneration Committee to discuss officer remunerationfrom this perspective as well.

Board of Directors Initiatives and Policies
Going Forward
Going forward, as the Company’s management begins to stepup efforts to implement the medium-term management policy,
I would like the Board of Directors to contribute to theCompany’s development by conducting appropriate
supervision based on the launch of the mid-term management
plan and the monitoring of its progress through free andopen discussion among directors with various backgrounds.

Japan Securities Finance Co., Ltd. Integrated Report 2022

35

Management Foundation Supporting Corporate Value

Corporate Governance
Basic Concept
As an institution specializing in securities finance, JSF has a
mission to contribute to the development of the securities
market by proactively meeting the diverse needs of the
securities and financial sectors and to enhance the long-term
interests of users, while always maintaining a keen awarenessof its public role. Based on this thinking, the Company
aims to gain the firm trust of society through soundbusiness operations.

Under this corporate philosophy, the Company has
adopted the Company with a Nominating Committee, etc.
structure under the Companies Act, based on which it strives
to clarify the separation of supervision and execution ofbusiness operations, further strengthen supervision by having
mainly outside directors to ensure sound management, andachieve prompt business execution that responds quickly tochanges in the business environment.

Corporate Governance System
Management Decision-Making
General Meeting of Shareholders

Board of Directors (7 members)
Accounting Auditor

Nomination Committee (4 members)
Remuneration Committee (5 members)
Survey and report, etc.

Audit Committee (4 members)
Inside Director

Entrustment andsupervision ofbusiness execution

Audit

Cooperation
Cooperation

Corporate Governance OfficeInternal audit

Audit
Department

Risk Management Committee

Audit

ReportBusiness Execution

Representative Executive
Officer & PresidentManagement Committee

Outside Director

Secretariat

Compliance Committee

Executive Officers

Compliance Department

ReportManagement administration and report, etc.

Risk Management Department

Mutual checks

Business Departments

External Reporting Contact Desk

Cooperation

Consult andreportJSF Group Companies
Note: Entities in area enclosed by dashed outlines are subject to internal audit.

Overview of the Board of Directors and Status of Initiatives
JSF has strengthened the supervisory function of the Board of Directors as a Company with a Nominating Committee, etc., basedon which it has separated supervision and execution. Excluding matters to be resolved by the Board of Directors, such as those
designated by laws and regulations and the Articles of Incorporation, decisions on business execution are, in principle, delegatedto executive officers, thereby building an effective and efficient governance system that enables the Company to respond quickly
to changes in its operating environment. The Board of Directors is responsible for determining basic management policies and forsupervising the execution of business by executive officers. As a specific example, under this system the chairpersons of theBoard of Directors and the three statutory committees, who are all outside directors, engage in extensive study and discussion
from various angles in formulating the mid-term management plan. In addition, in order to appropriately supervise the executionof business, the Company strives to enhance the provision of information to directors, in ways such as reviewing report content
and holding business briefings.

36

Japan Securities Finance Co., Ltd. Integrated Report 2022

Composition of the Board of Directors
The Board of Directors comprises a variety of directors with diverse expertise, experience and other characteristics, based on askill matrix formulated by the Company. To the extent designated in the Articles of Incorporation, JSF secures the appropriate
number of members to maximize the effectiveness and efficiency of the board’s functions. In addition, multiple outside directors
independent from the Company and possessing abundant experience and expert knowledge of business management and othermatters have been appointed to the board to ensure appropriate business operations while enabling objective and neutral
management supervision from external viewpoints.
The Board of Directors currently comprises seven members (including five outside directors), with an outside director serving
as chairperson. At the general meeting of shareholders held in June 2022, the number of outside directors was increased fromthree to five, taking into consideration factors such as balancing the number of people engaged in oversight and execution,
diversification in terms of age and gender, and the need for multifaceted skills in light of changes in the operating environment,such as the revisions to the Corporate Governance Code, the transition to new market segments by the Tokyo Stock Exchange,
and further progress in internationalization and digital transformation.

Overview of the Board of Directors (As of June 23, 2022)
Organization Form

Company with a Nominating
Committee, etc.

Chairperson of the Board

Outside director

Maximum Number of
Directors as Stipulated in the
Articles of Incorporation

8

Number of Directors

7

Number of Outside Directors(Independent Directors)

5 (5)Non-Executive Directors

Independent Outside
Directors

6 7

5 5

85.7%

100%

Initiatives in FY2021
In light of changes in JSF’s operating environment in FY2021,
such as the revisions to the Corporate Governance Code andthe shift to new market segments by the Tokyo Stock Exchange,
the Company announced its medium-term management policy
in November 2021 after discussing the Vision for JSF in the
Future, medium-term management goals, strategies for achieving
those goals, and shareholder returns. Of particular note, theCompany decided to use ROE as an indicator for managementtargets. Having estimated the cost of equity capital to bearound 4.5%, the Company set an ROE target of 5% for the
next mid-term management plan to exceed this figure, to beachieved by FY2025. The Company also deliberated andannounced a basic policy for its business portfolio based on
the fundamental nature of the Group’s business and the
purpose of the Corporate Governance Code.
Moreover, as an initiative for corporate governance, theBoard of Directors worked to further enhance its role bydeliberating and studying its composition, as well as thequalities required of executive officers. In addition, the Company
established a Corporate Governance Office with improved
functions as the secretariat of the Board of Directors.
JSF has clarified its basic policy for sustainability
promotion and ESG-related initiatives as follows: “The JSF
Group provides a variety of services, including the loans for
margin transactions business, as a part of the infrastructure ofJapan’s securities market, and works to improve the liquidityof the country’s securities and financial markets as well as theconvenience for market participants. Through these activities,
we aim to play a part in initiatives to realize a sustainable
society, including supporting market participants who are
engaged in similar initiatives.”
Main Agenda for FY2021
Corporate Governance• Formulation of the medium-term management policy• Formulation of a business portfolio policy• Examination of sustainability issues (formulation of basic thinking,identification of material issues, etc.)• Disclosure of climate-related financial information based on
TCFD recommendations• Formulation of an approach to the composition and other aspects of
the Board of Directors and appointment of executive officers• Consideration of response to the new market segments of the Tokyo
Stock Exchange (transition to Prime Market)• Evaluation of the effectiveness of the Board of Directors
Risk Management• Status of risk appetite indicators and risk management• Implementation status of internal audits
Capital and Financial Policy• Examination of shareholder returns policy• Evaluation of cross-shareholdings• Status of dialogue with investors
Mid-Term Management Plan
• Progress of the mid-term management plan

Japan Securities Finance Co., Ltd. Integrated Report 2022

37

Management Foundation Supporting Corporate Value

Corporate Governance

Overview of Each Statutory Committee and Status of Initiatives
Nomination Committee
To ensure that the Board of Directors can adequately
determine management policies and supervise execution, theNomination Committee deliberates and decides on generalmatters related to the appointment and dismissal of theCompany’s management team (directors, executive officers
and corporate officers) such as the composition of the Boardof Directors, including the skill matrix, determination of
director candidates, consideration of succession plans,qualifications required of executive officers and corporate
officers, the policy for their appointment and dismissal, anddetermination of specific candidates. The committee currently
consists of four directors (including three outside directors),
and is chaired by an outside director.
Main Agenda for FY2021
 onsideration of and deliberation on the skill matrix for directors,C
the composition and other aspects of the Board of Directors• Consideration of and deliberation on the approach to theappointment of executive officers• Nomination of director, executive officer and corporate officer
candidates for FY2022•

Remuneration Committee
The Remuneration Committee deliberates and decides on
general matters related to amounts of remuneration for senior
management (directors, executive officers and corporate
officers) for the steady implementation of the medium-term
management policy and management plans based on thispolicy. These matters include making sure the remuneration
system is consistent with the implementation of the
management policy and related plans, deciding on
remuneration for individual members of senior management,

and the policy for determination thereof. The committee
currently comprises five directors (including four outside
directors), and is chaired by an outside director.
Main Agenda for FY2021
 etermination of FY2021 remuneration amounts for individualD
directors and executive officers• Future officer remuneration based on the formulation of the mediumterm management policy•

Audit Committee
In addition to carrying out tasks such as auditing theexecution of duties of directors and executive officers andpreparing audit reports, the Audit Committee deliberates anddetermines the content of proposals (including those onelection and dismissal of the accounting auditor) to besubmitted to the general meeting of shareholders.

The committee currently comprises four directors (including
three outside directors), and is chaired by an outside director.
Main Agenda for FY2021
 usiness operation status, risk management, compliance,Binternal auditing• Reports from the accounting auditor (audit plans, major audit
matters, etc.)•

Director Expertise (Skill Matrix), Attendance at Board of Directors and Other Meetings
Area of Expertise
Name
NaotakaObata

Outside

100%
11/11

100%
8/8

100%
5/5

—

Shoko
SuginoOutside

100%
11/11

100%
8/8

100%
5/5

100%
11/11

Shuya
IimuraOutside

100%
11/11

—

—

100%
11/11

Kensuke
Futagoishi

Outside—Takayoshi
Yamakawa

Outside——Inside

100%
11/11

100%
8/8

100%
5/5

—

Inside

100%
9/9 2

—

—

100%
9/9 2

Shigeki Kushida(Representative Executive
Officer & President)

Hiroshi
Asakura: Chairperson,

38

FY2021 Meeting AttendanceInternal
Finance,Financial
Outside/ Corporate
International Legal affairs,
control, risk
securities,
affairs,
Inside management
affairs
complianceeconomics
accounting management

Japan Securities Finance Co., Ltd. Integrated Report 2022

: Member

ESG

Board ofDirectors

Nomination Remuneration
Audit
Committee Committee Committee

1

1. Appointed in June 2022

1

—

1

1

2. Appointed in June 2021

Evaluation of the Effectiveness of the Board of Directors
In FY2021, based on an evaluation by each of the directors,

Responding to this feedback, in FY2021 the Company

the Board of Directors analyzed and evaluated matters related

provided multiple opportunities for outside directors toto its effectiveness including the composition and operationexchange opinions and established the Corporateof the Board of Directors, the support system for directors andGovernance Office. This office serves as a dedicatedthe directors’ personal efforts, as well as an evaluation of thesecretariat to strengthen support for the Board of Directors

three statutory committees, namely, the Nomination Committee,

and the statutory committees in ways such as providing

the Remuneration Committee and the Audit Committee.

directors with appropriate information on corporate

For the analysis and evaluation, a questionnaire wasadministered to all directors. The Company has chosen to
receive recommendations from an external organization
regarding the content of the questionnaire and, in principle,
to send responses directly to that organization. The board’s
analysis and evaluation is based on the external organization’sreport of the aggregated results and an opinion exchange
meeting, including with the outside directors, held prior toadministration of the questionnaire.
(1) Overall Evaluation

governance and on execution of Company business. These
initiatives were judged to be appropriate.
(3) Issues Raised in FY2022
The Company concluded that the effectiveness of the Boardof Directors has been ensured. However, given that the
number of directors was increased in FY2021, efforts willcontinue to further improve the effectiveness of the Board of
Directors, including by enhancing the provision of informationand training and by improving the functions of the secretariat.
In FY2022, the Board of Directors will focus on consideration

The questionnaire responses and other findings confirmedof the next mid-term management plan toward the realizationthat the composition, operation, support system and otherof the medium-term management policy announced in November

aspects of the Board of Directors are all appropriate.

2021. Accordingly, the Company will work to enhance board

The statutory committees were also confirmed to be

discussions through a proper understanding of the progress

operating appropriately.

of the current mid-term management plan, which is the premise

Based on these findings, the Company judged that theeffectiveness of its Board of Directors has been ensured.
(2) Initiatives in FY2021 to Address Issues Raised in FY2020
The FY2020 evaluation yielded feedback that we should increase
opportunities for directors to exchange opinions in order tofurther enhance discussions at Board of Directors meetings.
Another issue recognized by participants in the evaluation was
the need to strengthen support for the Board of Directors andof discussions, and by providing accurate information on
trends inside and outside the Company. In addition, sincevarious considerations regarding nomination and remuneration
will take place in relation to the formulation of the next
mid-term management plan, the Company will work to further
improve the effectiveness of the statutory committees.
The Company will work to address these issues to further
improve the effectiveness of the Board of Directors.

statutory committees in order to improve their effectiveness.

Policy on the Composition of the Board of Directors and Appointment of
Executive Officers
Composition and Other Aspects of the Board of Directors
The situation in the securities and financial markets affecting the Company is undergoing major changes due to factors such as
the progress of globalization and digitalization, as well as the prolonged COVID-19 pandemic. In addition, revisions to the
Corporate Governance Code and the transition by the Tokyo Stock Exchange to the Prime Market necessitate the establishmentof a more advanced governance system. As a listed company, JSF is expected to further enhance profitability and address newissues such as sustainability.
In light of issues related to this situation both inside and outside the Company, the Nomination Committee and the Board of
Directors deliberated and reviewed the composition and other aspects of the board from the perspective of further enhancing theroles of the Board of Directors in regard to determining basic management policies and carrying out supervisory functions. Theirconclusions were as follows.

• As of the end of FY2021, the Company’s Board of Directors comprises directors with the necessary skillsets, and is effectively
performing its function of supervising execution.

Japan Securities Finance Co., Ltd. Integrated Report 2022

39

Management Foundation Supporting Corporate Value

Corporate Governance• It is appropriate to appoint directors who have multiple layers of skills, given the Company’s steady growth in recent years
centered on the securities finance business, progress in the diversification and sophistication of operations, the need to respondto changes in the operating environment such as further progress in globalization and digital transformation, and the desirabilityof having a system that allows members with diverse backgrounds to engage in multifaceted consideration.

• It is also important to balance the number of people engaged in oversight and execution, and to diversify in terms of age and gender.

• B ased on these conclusions, the number of directors was increased by two at the general meeting of shareholders held in June 2022.
• To enable speedy decision-making, and taking the size of the Company into account, the upper limit on the number of directors
based on the skill matrix was revised to allow a certain amount of leeway relative to the actual number of directors.

Qualities Required of Executive Officers
In light of the public role and special characteristics of securities finance services such as loans for margin transactions, theCompany believes that in addition to the generally required knowledge and leadership in areas such as corporate governance,
legal affairs and finance, executive officers should have the following qualities.

• The ability to fully recognize JSF’s public role in the execution of business• Extensive knowledge of the overall securities and finance markets• Well versed in the Financial Instruments and Exchange Act and other various laws and regulations• Knowledge and experience involving JSF’s highly specialized business• The internationality required in the advance of JSF’s business• A high degree of knowledge and experience in business management and risk management• A high degree of knowledge and experience in finance and accounting• Ability to flexibly respond to the various changes affecting JSF in the securities and finance sectors

Officer Remuneration System
Policy for Determining the Amount of Remuneration for Officers and the Calculation Method Thereof
Details of Policy and Determination Method
Remuneration for Company officers shall be based on systems and standards in accordance with the respective roles andexpected functions of directors and executive officers, in order to achieve sustained growth and enhancement of corporate value
over the medium to long term based on the corporate philosophy and management principles. Specifically, individual amounts ofremuneration shall be determined by the Remuneration Committee based on the following policy decided on by the committee.

Directors• With a view to having supervisory functions carried out appropriately, directors shall receive only fixed monthly remuneration(base remuneration). Performance-linked remuneration shall not be provided to directors.

• Remuneration for individual directors shall be determined in accordance with the responsibilities of each director, such aswhether that person is serving in a full-time or part-time capacity or as chairperson.

• Directors concurrently serving as executive officers shall not receive remuneration as directors.
Executive Officers• With a view to enhancing correlation with the Company’s business performance and share value, remuneration for executive
officers shall comprise fixed monthly remuneration (base remuneration), performance-linked officer bonuses and share-based
remuneration.

• Fixed monthly remuneration (base remuneration) shall be determined in accordance with each executive officer’s position.
• To clarify the responsibilities of management, officer bonuses shall be determined after the end of each fiscal year, in
accordance with the degree of achievement of management goals under the mid-term management plan and businessperformance for the fiscal year, and are paid within three months after being decided.

• As for share-based remuneration, a Board Benefit Trust (BBT) scheme shall be used to award each executive officer points,
which are determined based on correlation with the Company’s medium- to long-term business performance. Upon retirementfrom office, executive officers are issued Company shares corresponding to the number of points they have accumulated.

40

Japan Securities Finance Co., Ltd. Integrated Report 2022

Overview of the Officer Remuneration System
Proportion of Total
Remuneration Paid

Fixed or Variable
Remuneration

65%

Fixed

Basic

Payment Standards
Position

Chairperson

President

Vice
President

Senior Managing
Executive Officer

Managing Executive
Officer

Basic profit*<YoY change>

Bonus

20%

Performancelinked

Base calculation
amount according
to position

Linked to short-term
performance

Number of loanable stock issues
Performancelinked coefficient<YoY change>
Consolidated profit<YoY change>

Sharebased

15%

Linked to medium- tolong-term performance• Determination of points according to position• Points are added if the standard value exceeds the average value of consolidated ordinary

profit for the past three years, and subtracted if the standard value falls below the average.

* Basic profit is defined as ordinary profit estimated based on the assumed gross operating profit of the loans for margin transactions business (average over the past
three years) and the gross operating profit of businesses other than loans for margin transactions business. The loans for margin transactions business, which is our
main business, is susceptible to market fluctuations, and earnings fluctuate significantly.

Total Amount of Remuneration by Officer Classification
Officer Classification

Total Amount of
Remuneration Paid
(Thousands of yen)

Total Amount of Remuneration Paid by Type of Remuneration (Thousands of yen)
Basic

Number of
Eligible Officers

Non-monetary

Bonus(Share-based)

Director(Excluding outside directors)

8,400

8,400

—

—

2

Outside Director

46,56046,560——3

Executive Officer

298,873

194,160

75,25029,463

6

1. Directors concurrently serving as executive officers shall not receive remuneration as directors.
2. Performance indicators for performance-linked remuneration (bonuses) are the number of loanable stock issues, basic profit and consolidated profit, which in FY2021
were 2,661 stock issues, ¥8,454 million and ¥5,174 million, respectively.
3. The business performance index for calculating performance-linked share-based remuneration is consolidated ordinary profit (3-year average), which in FY2021 was¥5,872 million.

Policy on Cross-Shareholdings
The Company has been reducing cross-shareholdings. Between March 2018 and March 2022, it reduced shares of listed issues
held by 91% on a market value basis, and shares of total issues held including listed and unlisted issues by 78%.

Basic Policy(1) In order to contribute to sustainable growth and an increase in corporate value over the medium to long term, JSF strategicallyholds other companies’ shares it deems necessary for purposes such as strengthening business relationships.
(2) W ith respect to cross-shareholdings, the Company examines the status of dividends and valuation gains and losses, the statusof transactions with investee companies, the history and the effects of the shareholdings, and based on this examination,
reduces the number of shares in shareholdings for which cross-holding is not necessary.
March 31, 2022
Number of Issues

Carrying Amount

Percentage ofTotal Assets

Percentage of
Net Assets

Listed Shares2¥1,057 million

0.007%

0.766%

Unlisted Shares

7¥1,759 million

0.012%

1.275%

Japan Securities Finance Co., Ltd. Integrated Report 2022

41

Management Foundation Supporting Corporate Value

Officers(As of June 23, 2022)

Directors

Director, Chairperson of the Board

Director

Director

Director

Naotaka Obata

Shoko Sugino

Shuya Iimura

Kensuke Futagoishi

Apr. 1968	Joined The Mitsubishi Bank, Ltd.

Apr. 1973	Registered as an attorney
Joined Fujibayashi Law Office

Apr. 1987	Joined Tokyo Stock Exchange(TSE)

Apr. 1977	Joined The Sanwa Bank, Limited(currently MUFJ Bank, Limited)

Apr. 1994	Partner Attorney at Fujibayashi
Law Office (current position)

Jul. 2001	Chief of Public Relations Office ofGeneral Affairs Department, TSE

Apr. 1997	Professor for The Legal Training
and Research Institute of Japan

Jun. 2010	Director of Derivatives
Department, TSE
Mar. 2014	Director of Market Planning
Department, Osaka Exchange
Apr. 2016	Human Resources Department,
Japan Exchange Group
Jun. 2016	Audit & Supervisory Board
Member of Japan Securities
Finance Co., Ltd.

Apr. 2001	General Manager, Retail Banking
Planning Division, UFJ Holdings,
Inc. (currently Mitsubishi UFJ
Financial Group, Inc.)
Jan. 2002	General Manager, Gotanda Corporate
Sales Department and BranchManager, Gotanda Branch, UFJ Bank
Limited (currently MUFJ Bank, Ltd.)
Oct. 2003	Joined IY Bank Co., Ltd. (currently
Seven Bank, Ltd.)
Jun. 2004	Director of IY Bank Co., Ltd.
(currently Seven Bank, Ltd.)
Jun. 2006	Director, Executive Officer ofSeven Bank, Ltd.
Nov. 2007	Director, Managing Executive
Officer of Seven Bank, Ltd.
Jun. 2009	Director, Senior Managing Executive
Officer of Seven Bank, Ltd.
Jun. 2010	President and Representative
Director of Seven Bank, Ltd.
Jun. 2018	Chairman and Representative
Director of Seven Bank, Ltd.
Jun. 2022	Executive Advisor of Seven Bank,
Ltd. (current position)
Director of Japan Securities Finance	Co., Ltd. (current position)

May 1999	Managing Executive Officer of The
Bank of Tokyo-Mitsubishi, Ltd.
Jan. 2004	Senior Managing Executive
Officer of The Bank of TokyoMitsubishi, Ltd.
Jun. 2004	Deputy President of The Bank ofTokyo-Mitsubishi, Ltd.

Apr. 2000	Tokyo Family Court Conciliation
Committee Member

Jun. 2005	President and CEO of Diamond
Lease Company Limited

Jul. 2005	Environment Dispute
Coordination Commission
MemberMar. 2007	Audit & Supervisory Board
Member of Kitoku Shinryo Co.,
Ltd. (current position)
Jun. 2018	Audit & Supervisory Board
Member of Takeei Corporation(current position)

Apr. 2007	President and CEO of Mitsubishi
UFJ Lease & Finance Company
Limited (currently Mitsubishi HC
Capital Inc.)
Jun. 2010	Chairman of Mitsubishi UFJ Lease& Finance Company Limited
Jun. 2012	Executive Advisor to the Board,
Mitsubishi UFJ Lease & Finance
Company Limited
Apr. 2013	Board member of Japan Pension
ServiceJun. 2018	Special Advisor, Mitsubishi UFJ
Lease & Finance Company
Limited (currently Mitsubishi HC
Capital Inc.) (current position)
Jun. 2019	Director, Chairperson of theBoard of Japan Securities FinanceCo., Ltd. (current position)

Jun. 2019	Director of Japan Securities
Finance Co., Ltd.
(current position)
Significant concurrent positions
Partner Attorney at Fujibayashi Law Office

Aug. 2018	Audit & Supervisory Board
Member of Intellex Co., Ltd.
(current position)
Jun. 2019	Director of Japan Securities
Finance Co., Ltd.
(current position)
Significant concurrent positions
Audit & Supervisory Board Member ofIntellex Co., Ltd.

Audit & Supervisory Board Member of
Kitoku Shinryo Co., Ltd.
Audit & Supervisory Board Member ofTakeei Corporation
Outside Director of Janome Corporation

Director

Director

Director

Takayoshi Yamakawa

Shigeki Kushida

Hiroshi Asakura

May 2008	Deputy Director-General of Personnel
and Corporate Affairs Department(Personnel Management), Bank ofJapan (BOJ)
Mar. 2009	Director-General of Personnel andCorporate Affairs Department, BOJ
Jun. 2010	Director-General of Monetary
Affairs Department, BOJ
May 2011	General Manager of Nagoya
Branch, BOJ
Mar. 2013	Executive Director of BOJ
Apr. 2017	Senior Advisor of American
Family Life Assurance Company(currently Aflac Japan Ltd.)May 2019	Advisor of Japan Securities
Finance Co., Ltd.
Jun. 2019	Director, Representative Executive
Officer & President of Japan Securities
Finance Co., Ltd. (current position)

Apr. 1978	Joined Japan Securities FinanceCo., Ltd.
Jun. 2002	General Manager of Planning
Department
Jun. 2005	General Manager of Margin Loan
Department
Jun. 2006	Corporate Officer & General
Manager of Margin Loan
Department
Feb. 2008	Corporate Officer & General
Manager of Loan Department
Jun. 2009	Managing Director
Jun. 2013	Senior Managing Director(retired in June 2016)
Jun. 2016	President of Nihon Building Co.,
Ltd. (retired in June 2021)
Jun. 2021	Director of Japan Securities
Finance Co., Ltd. (current position)

Apr. 1991	Joined Yokogawa Hewlett
Packard Co.
Oct. 1995	Joined The Boston Consulting
Group
Jan. 1997	Project Manager of The Boston
Consulting GroupMay 1999	Principal of The Boston
Consulting Group
Jun. 2000	Founder (co-established),
Director and CTO of Dream
Incubator Inc.
Jun. 2005	Vice Representative Director ofDream Incubator Inc.
Jun. 2006	Representative Director & CEO
of Dream Incubator Inc.
(retired June 2020)
Jul. 2020	Representative Partner ofBusiness Producer LLC(current position)

Jan. 2021	Outside Director of BitStar, Inc.
(current position)
Apr. 2021	Outside Director of
Baseconnect Inc.
(current position)
Jun. 2021	Outside Director of Akatsuki
Securities, Inc.
(current position)
Jun. 2022	Director of Japan Securities
Finance Co., Ltd.
(current position)
Significant concurrent positions
Representative Partner of Business
Producer LLC
Outside Director of Akatsuki Securities,
Inc.
Outside Director of FP Corporation

Jun. 2022	Director of JSF Trust & Banking
Co., Ltd. (current position)
Significant concurrent positions

42

Japan Securities Finance Co., Ltd. Integrated Report 2022

Director of Denso Corporation

Executive Officers

Chairperson

Eizo Kobayashi

Representative Executive Officer& President

Shigeki Kushida

Executive Vice President

Senior Managing Executive Officer

Shunichiro Higuchi

Yutaka Okada

Responsible for Internal Audit
Department, ComplianceDepartment

Responsible for Corporate
Governance Office, Business
Development Department, Treasury
Department, International Relations

Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

Masaru Sekiguchi

Morikuni Shimoyamada

Shinichi Sugiyama

Responsible for Risk Management
Department, Human Resources
Department, Corporate Planning
Department, Group Companies
Relations

Responsible for Margin Loan
Department, Institutional Sales
Department, Retail Business
Department

Responsible for Settlement &Custody Department, Information
System Planning Department,
Osaka Branch

General Manager of Osaka Branch

General Manager of Human
Resources Department

General Manager of Business
Development Department

Wataru Sato

Yuji Yoshimoto

Corporate Officers
General Manager of ComplianceDepartment

Yutaka Osonoi

Jun Akabane

General Manager of Risk
Management Department

Ken Toda

Japan Securities Finance Co., Ltd. Integrated Report 2022

43

Management Foundation Supporting Corporate ValueESG Initiatives
Initiatives and Basic Approach to Sustainability
The development of infrastructure that forms the foundation

important to build a system that provides stable operationsof socio-economic activities is a key element in realizing aregardless of circumstances. To this end, we must not only

sustainable society, and it is also one of the Sustainable

respond to disasters in a narrow sense, but also ensure theDevelopment Goals (SDGs: Goal 9). The JSF Group provides

stability and high reliability of our business base. In addition,a variety of services, including loans for the margin trading

we believe that there are issues toward which the Group canbusiness, as a part of the infrastructure of Japan’s securities

also contribute by utilizing the know-how and other resourcesmarket, and works to improve the liquidity of the domestic

that it has cultivated over the years. Based on thissecurities and financial markets, as well as convenience forperspective, we are currently aware of the following material

market participants. Through these activities, we aim toissues. Our Group recognizes the roles expected of it incontribute to initiatives to realize a sustainable society,addressing these material issues and will advance various

including supporting market participants who are engaged ininitiatives while flexibly responding to future changes in thesimilar initiatives.

social environment.

Because it is responsible for the infrastructure of the
securities and financial markets, the Group believes it isMaterial Issues That We Recognize
Classification

E

Item

E: Environmental S: Social G: Governance
IssuesClimate change• Promote reduction in environmental impact

Education• Promote financial and economic• Promote academic research activities

Human resources• Promote diversity• Develop and secure human resources and create

Human rights• Respect for human rights, non-discrimination• Prohibit all types of harassment

Capital market• Enhance functions as infrastructure for Japan’s• Contribute to overseas securities and financial

Corporate Governance• Continuously improve corporate governanceBusiness continuity
plan (BCP)• Stably operate business that is not affected by disasters, etc.

Compliance• Operate business based on a high awareness of compliance

Risk management• Implement the Risk Appetite Framework (RAF)

education activities

a pleasant workplaceSand diversity

securities and financial markets

market infrastructureG

44

Japan Securities Finance Co., Ltd. Integrated Report 2022

Specific Initiatives Related to Material Issues
Classification

E

IssuesReduce environmental impact

E: Environmental S: Social G: GovernanceInitiatives• Improve Company facilities to conserve electricity, and be conscious of environmental impact• Promote paperless operations in all areas of the Company• Hold a lecture on “Financial and Securities Markets and Industry-Academia Alliance—

Promote financial and economic

S

education activities

Promote academic research activities
Contribute to overseas securities andfinancial market infrastructure
Realize diverse work styles for
employees

Blockchain Case Studies” at the Graduate School of Engineering at the University of TokyoSee page 25 for details.
• Hold various seminars on margin transactions• Hold seminars for investors and training for securities company employees, etc.

• Conduct joint empirical research with the University of Tokyo (Securities Lending andLending Transactions Utilizing Distributed Ledger Technology)

See page 31 for details.

• Provide technical assistance and investment in securities finance in Indonesia

See page 25 for details.

• Provide support for childbirth, childcare and caregiving- Introduce Company-wide teleworking- Understand employee engagement• Strive to enhance governance as a Company with a Nominating Committee, etc.
Enhance corporate governanceG- Ensure that the majority of directors are independent outside directors- Ensure that the chairpersons of the Board of Directors and the three statutory
committees are independent outside directors• Establish a dedicated department to address various corporate governance issues
with a sense of urgency

Implement risk management• Implement RAF and establish a system to integrate business management and

Implement BCP• Continue to strengthen the BCP system and cyber security system to ensure stable

Compliance• Prepare manuals and establish Compliance Enhancement Monthrisk managementbusiness operations as a part of the infrastructure of securities and financial markets

Dialogue with Stakeholders
We are promoting the following initiatives in order to gain and maintain the support and trust of our stakeholders.

• Hold financial results briefings for analysts and institutional investors (May and November 2021) and
Shareholders
and Investors

individual interviews• Conduct shareholder surveys and share survey responses with the Board of Directors• Introduction of hybrid shareholder meetings that enable both online and in-person participation(Live streaming of general meetings for shareholders unable to attend due to remote location or other reasons)

Employees
Business
Partners andOthersSociety• Hold dialogue sessions between top management and employees to share value(Online meetings for all employees, and regular small group dialogue sessions with voluntary participation)• Conduct employee surveys and DI* surveys to understand employee attitudes and opinions• Interviews and participation in international conferences• Hold various seminars on margin transactions for securities company employees• Support international cooperation and securities market development, and engage in academic research on
securities and financial markets• Donations for disaster relief* Diffusion Index: An index based on employee surveys that measures employee job satisfaction, changes in workplace conditions and other conditions

Japan Securities Finance Co., Ltd. Integrated Report 2022

45

Management Foundation Supporting Corporate Value

Addressing Climate Change and Environmental Protection(Initiatives Based on the TCFD Recommendations)
In addition to engaging in initiatives aimed at bringing about a sustainable global environment through its business activities, JSF
is working to improve disclosure of climate change information in accordance with the TCFD* recommendations.
* Task Force on Climate-related Financial Disclosures: Established by the Financial Stability Board (FSB) in 2015 at the request of the G20 for the purpose of financial
stability. The final report on frameworks for disclosure of climate-related risks and opportunities (TCFD recommendations) published in 2017 calls on companies toassess the risks and opportunities of climate change, reflect them in their business strategy and risk management, understand their financial impact, and disclose
this information.

Governance• To drive Group-wide climate-related efforts, the Board of Directors approved the ”Basic Stance on Sustainability,” in which it
recognizes climate change as a material issue for its business.

• The Management Committee (chaired by the representative executive officer & president) deliberates and decides onsustainability initiatives, including those concerning climate-related issues, and the Board of Directors oversees the progress onthese initiatives.

• Specific sustainability initiatives, including those concerning climate-related issues, are detailed in the action plan for the mid-term
management plan, and they are carried out across the organization under the oversight of the Corporate Governance Office.

Strategy• As a company responsible for Japan’s securities and financial market infrastructure, JSF recognizes the importance of building
systems that operate reliably regardless of conditions. Therefore, we believe that realizing a sustainable global environment is
crucial for the continuation of our business activities, and that climate change is a material issue for our business.

• After identifying the risks and opportunities of climate change that could impact our business activities, we qualitatively analyze
those impacts and verify the resilience of our management strategy.

• In responding to the transformation into a carbon-free society, we support the efforts of the securities and financial markets
participants that are grappling with climate-related issues by improving our financial services and the commercial appeal of our
products. At the same time, we are aiming to enhance our own corporate value.
Recognized Risks• Climate change risks are divided into two categories for identification and recognition purposes. These are “transition risks,”
which are risks arising from the process of transitioning to a lower-carbon economy to address climate change, and “physicalrisks,” which are risks of losses arising directly from climate change.

• For recognized risks, assumptions have been made about the type of damage (direct or indirect), the scale of the risk (large,
medium or small), and the time frame (short- to medium- to long-term).

• JSF believes that the increase in its credit costs will be limited because most of its lending comprises securities-backed loans
to securities firms and banks.
Type of Risk

Transition
Risks

46

Description

DamageScale

Time Frame

Higher operating costs due to taxation changes related to climate change, such as
stricter regulation and carbon taxes

DirectSmall

Medium- tolong-term

Decline in securities financing balance due to factors such as worsening economic
conditions, weak financial and securities markets and declining demand for funding
due to the effects of global warming

Indirect Medium

Medium- tolong-term

Decline in share prices due to stakeholder criticism of JSF’s response to global
warming and inadequate disclosure

DirectMedium- tolong-term

Japan Securities Finance Co., Ltd. Integrated Report 2022

Small

Type of Risk

Description

DamageScale

Time Frame

Direct Medium

Short- tolong-term

Higher credit costs as a result of damage to counterparty businesslocations due to major storm and flood damage

Indirect

Small

Short- tolong-term

Business relocation costs incurred due to rising sea levels

Direct Medium

Long-term

Damage to owned real estate and facilities due to major storm and flood
damage, with damage to facilities affecting business continuity
Acute
risks
Physical
Risks

Chronic
risks

Drop in prices of securities held as a result of worsening financial andsecurities markets due to the effects of extreme weather events

Higher credit costs as a result of damage to counterparty business location
Indirectdue to rising sea levels

Small

Long-term

Note: Short-term, medium-term and long-term time frames are assumed to be 3 years or less, 3–10 years and 10 years or longer, respectively.

Recognized Opportunities• JSF anticipates and recognizes the following opportunities associated with tackling climate-related issues.
• Our initiatives with respect to these climate-related issues are incorporated into the action plan for the mid-term management
plan, and we are monitoring the progress of their implementation.
Opportunity
Resourceefficient Energy
SourcesMarkets for
Products andServices

Description

Time Frame• Propelling resource and energy savings• Utilizing renewable energy

Short- tolong-term• Offering financial services that support the transition to a carbon-free society• Contributing to an environmentally sustainable society through investments in green bonds andother instruments• Increased demand for funding due to the expanding market for ESG investment• Gaining the trust of counterparties and capital markets as a result of appropriate initiatives andShort- tolong-term

disclosure in response to climate-related issues

Resilience• Ensuring business continuity in securities market infrastructure such as lending and borrowing
transactions by building a resilient BCP system

Short- tolong-term

Scenario Analysis• A qualitative analysis of the impact of climate on the JSF Group, based on two scenarios, is presented below. Under the 2°C
scenario, global warming is curbed due to strict countermeasures, while under the 4°C scenario, global warming continues toprogress in the absence of drastic measures.
2°C Scenario1

4°C Scenario2• Greenhouse gas emissions are curtailed through• Without drastic policy measures, greenhouse gas• There are advances in low-carbon technologies• Sudden storm and flood damage occurs more• Sudden storm and flood damage occurs at a

• Chronic changes, such as rising sea levels, have apolicy measures

Assumptions

emissions continue to increase at the current rate

and they are widely adopted

frequently and is larger in scale

similar scale and frequency as at present

significant impact on economic activity• Demand increases for funding in the financial andOpportunities

securities markets due to growing ESG investment• Need increases for financial products and services
related to environmental protection• Demand increases for funding in connection
with investment in infrastructure fordisaster preparedness

1. 2°C Scenario: International Energy Agency (IEA) 2°C Scenario (2DS)
2. 4°C Scenario: Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway (RCP) 8.5

Japan Securities Finance Co., Ltd. Integrated Report 2022

47

Management Foundation Supporting Corporate Value

2°C Scenario1

4°C Scenario2• Stakeholders criticize JSF’s response to global
Transitionrisks

warming, causing its share price to decline• Equipment costs rise as a result of measures to

cut greenhouse gas emissions and enhance BCP• Sudden extreme weather events are similar to

Risks
Physicalrisks

those at present, and no major financial impact is
expected• There is no irreversible climate change, such as

rising sea levels, and no major financial impact is
expected• Securities financing balances decline as the

economy and financial markets deteriorate due tothe effects of global warming• There is damage to owned real estate and facilities
due to major storms and flooding, affecting
business continuity (assumes limited increase incredit costs in conjunction with damage tocounterparty financial institutions)• Relocation expenses arise from damage to owned
real estate due to rising sea levels

1. 2°C Scenario: International Energy Agency (IEA) 2°C Scenario (2DS)
2. 4°C Scenario: Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway (RCP) 8.5

Risk Management• JSF recognizes that climate change not only poses the risk of a significant impact on the global environment, but it could also
affect our financial position in the future.

• Because these climate change risks could cause or amplify financial risks (credit risk and market risk, for example), we manage
the risks associated with climate change within an integrated risk management framework.

Metrics and Targets• We are working to save resources and energy by promoting telework, using web conferencing both inside and outside
the Company, introducing an electronic decision-making system and a paperless meeting system, and digitalizing
document storage.

• The JSF Group’s CO2 emissions (combined Scope 1 and Scope 2 emissions3) are shown below. The Group is working to further
reduce CO2 emissions.
(t-CO2)CO2 emissions

FY2018FY2019FY2020

FY2021

868

853

809

770

3. Scope 1: Direct emissions (use of gas, gasoline, etc.); Scope 2: Indirect emissions (use of electric power)

48

Japan Securities Finance Co., Ltd. Integrated Report 2022

Diversity and Inclusion

Human Resource Development
JSF believes that it is important to respect diverse perspectives

We need to respond to changes in the businessand values in order to flexibly respond to changes in theenvironment and to address the demands and maintain theoperating environment of the securities and financial markets.

trust of stakeholders. To do so, we are working to improve

That is why we support further growth and active participation

productivity through human resource development. Initiativesof our diverse employees while leveraging their individual

include establishing various highly flexible training systems,

characteristics. In order to provide a work environment wheresuch as a support system that enables employees toall employees can actively participate over the long term withindependently develop their abilities and improve their skills

peace of mind and a sense of purpose, we will step up(for example, at a language school or graduate school, or

initiatives such as promoting health and productivity

through an overseas trainee assignment program).

management and providing flexible work styles.

Promoting Active Participation of Female Employees
In order to step up the active participation of female employees, we have set our target ratio for female graduate hires to total
new graduate hires at 40% or higher. In recent years, we have maintained this ratio at 50% or higher. In addition, we provide
career development support such as various training opportunities so that female employees can take on leadership roles at an
early stage of their careers. We also fully leverage the abilities and individuality of all of our employees by maintaining anenvironment in which they can balance active participation in work with childcare and nursing care. Through such measures, weplan to increase the ratio of women in managerial positions.

Employees

Managerial Positions

(No.)

300

30.1

31.0

31.5

31.2

32.4 33.0
27.5

250
200

77

79

78

77

78

150
100

(%)

179

174

2018
Male (Left axis)

2019

22.0

120

16.5

90

11.0

60

170

163

2020

2021

2022 (April 1)

0
Female (Left axis)

2.9

180
150

172

50

(No.)

5.5

30

0.0

0

Ratio of female employees (Right axis)

2.1
2
94

2.2

2.2

3.0

(%)

2.5

2.1

2.0

2

2

3

90

90

93

100

2019

2020

2021

2022 (April 1)

2

1.5
1.0
0.5
0.0

2018
Male (Left axis)

Female (Left axis)

Ratio of female employees (Right axis)

New Graduate Hires
(No.)

8

80

66.7
6

2
0

60.0 60

60.0

50.0
2

4

3

2

2018
Male (Left axis)

2

1
2019

40.0

3

40
20

2
2

(%)

2020

Female (Left axis)

3
2021

2

0

2022 (April 1)

Ratio of female employees (Right axis)

Japan Securities Finance Co., Ltd. Integrated Report 2022

49

Management Foundation Supporting Corporate Value

Promoting Active Participation of Mid-Career Hires
In aiming for sustainable growth and improved corporate value, we will flexibly recruit talent from a wide range of industries inaccordance with business development. This will include people who can supply diversified financial services, people who canhelp us enter new fields and people with specialized expertise, all regardless of nationality. We also support employees hired
mid-career so that they can maximize their abilities in the workplace. We provide them with opportunities to acquire knowledge
both in their specialized fields and in our main business areas.

Supporting Work-Life Balance
We have established various systems to support childcare and nursing care, as well as a framework for disseminating information
about changes in Company systems due to revisions of laws and regulations and other matters, and for addressing employee
requests by providing individual consultations. Together, these systems help employees balance work with childcare and nursing
care. For employees who wish to take a leave of absence to care for young children or another family member, we hold individualinterviews to get a grasp of their concerns, anxieties and needs, and create a plan that will facilitate their return to work.

Childcare and Nursing Care Support System• Childcare and nursing care leave of absence • Child and adult nursing care leave • Reduced working hours • Exemption fromovertime work • Childbirth support leave • Subsidies for babysitting expenses • Creation of support plan and implementation of
measures for returning to work after taking childcare leave • Support for returning to work and for continuing work • Distributing
pamphlets and raising awareness within the Company regarding in-house systems related to nursing care
FY2018FY2019FY2020

FY2021

Female Employees
Number taking childcare leave (half-day, hourly)

10

10

8

13

Number taking a childcare leave of absence

3

6

8

6

taking a childcare leave of absence

100%

100%

100%

100%

Number on reduced working hours system (childcare)

10

9

10

13

Number taking childcare leave (half-day, hourly)

14

15

11

12

Number taking special leave (childbirth support leave)

7

10

6

7

100%

100%

100%

89%

Rate of female employees returning to work after

Male Employees

Rate of male employees taking special leave (childbirth
support leave)

50

Japan Securities Finance Co., Ltd. Integrated Report 2022

Promoting Work-Life Balance
We believe that the mental and physical health of ouremployees is an important foundation of management. We
are therefore working to establish a safe and healthy work
environment.
Detailed analysis of stress caused by the work
environment enables early identification of employees whoare having issues and individual follow-ups to help improvetheir situations.
We are striving to achieve both improved productivity
and happiness for our employees at home and at work by

Rate of Paid Leave Taken
(%)

100
80

74.4

76.6

2018

2019

66.4

68.9

2020

2021

60
40
20

creating an environment in which all employees can choose
flexible work styles. We support work styles that match0

individual circumstances such as marriage, childcare and(FY)nursing care, and encourage employees to minimize overtime
work and take leave at an appropriate frequency andduration.
We consider the rate of paid leave taken and the numberof overtime hours worked to be important indicators of
employees’ work situation and pay attention to any changes,
as we use this information as a basis for making decisions
when planning policy.
Furthermore, by developing a telework environment, wehave enabled efficient and flexible working styles that are not
restricted by time or location. This has helped lighten theOvertime Hours Worked(Monthly Average per Employee)(Hours)

14.7

15
12

11.1

9

11.2
9.7

burden on employees raising children or taking care of otherfamily members. Telework is used by all employees, with theaverage annual implementation rate remaining between 50%
and 59%.

6
3
0
2018

2019

2020

2021

(FY)

Japan Securities Finance Co., Ltd. Integrated Report 2022

51

Management Foundation Supporting Corporate Value

Risk Appetite Framework
Positioning
The JSF Group has made the risk appetite framework (RAF)

The main purpose of the Company’s RAF is to maintain

part of its corporate governance framework, defining it as “athe high degree of financial soundness required of a securities

framework that, based on the JSF Group’s social role andfinance company licensed under the Financial Instruments

management philosophy, clarifies the types and amounts ofand Exchange Act, and of a company responsible for therisks that should be willingly taken (risk appetite) and theinfrastructure functions of Japan’s securities market, whilerisks to be avoided2 in order to achieve the mid-term

achieving medium- to long-term corporate value as expected

management plan within the scope of the Group’s financialof a listed company. To this end, the RAF improves thestrength, and integrates business management and risk

transparency of the review and decision-making process for

management.”

establishing the Company’s overall risk-taking policy,

1

1. Risks to be taken: Risks associated with revenue-generating activities
2. Risks to be avoided: Unacceptable risks such as conduct risk

including capital allocation and strengthening of profitability.
Furthermore, the RAF optimizes allocation of management
resources and strengthens monitoring.

Operation
In the operation of the RAF, the Board of Directors establishes

In the execution of business management, we set morea risk management policy for overall management based on

detailed targets and decide plans for each business as wethe social role that JSF should play as infrastructure for Japan’s

promote the mid-term management plan, keeping in mind

securities market and its medium- to long-term vision for thethe risk management policy, risk appetite and risk appetite

future. At the same time, the board determines the basic items

indicators decided by the Board of Directors.

of the RAF, such as risk appetite and the risk appetite indicators

The Board of Directors works to improve and strengthenthat specifically reflect its components, in conformance withthe effectiveness of the RAF on an ongoing basis by

the mid-term management plan. Risk appetite is set from amonitoring risk appetite and risk appetite indicators as itwide range of perspectives, including management stability

supervises the status of business execution. If risk appetiteand financial soundness, as well as the social responsibility ofindicators deviate from set levels, the board analyzes theserving as infrastructure for and contributing to Japan’s

causes and formulates and implements countermeasures.

securities market.

Fostering and Instilling a Risk Culture and Risk GovernanceIn order to play a public role as part of the infrastructure of

Conduct for Officers and Employees and the risk management

Japan’s securities market, we take risks with a keen awarenesspolicy, and serves as the operational foundation of the RAF.

of maintaining financial soundness and ensuring that concurrent

In addition, risk governance is further strengthened throughbusinesses such as securities finance do not affect the stable

the cyclical effect of continuously raising awareness of risk

operation of our licensed loans for margin transactions business.

culture through the operation of the RAF, which further fosters

In addition, through regular training and interviews we strive

and instills this culture.

to stay apprised of the status of employees’ compliancegovernance, which constitutes part of our corporate

conduct risk.

governance, and aim to achieve sustainable growth and

The risk culture fostered by JSF’s identity is firmly instilled
throughout the Company through adherence to the Code of52

We will continue to increase the sophistication of our risk

awareness and the work environment, and take care to reduce

Japan Securities Finance Co., Ltd. Integrated Report 2022

increase our corporate value over the medium to long term.

Risk Appetite Framework

Business characteristics (licensed business,
concurrent businesses), risk characteristics

Social/public role

RAF overview

Risk culture

RAF operation structure
Corporate philosophy/Management strategy
Supervision

Board ofDirectors

Business management

Risk management
Integrated
management

Mid-termmanagement plan

Risk management policy
Type and amount of risks to
be taken (Risk appetite)

Execution

Management
Committee

Risk appetite indicators

Improvement

Risk Management
Committee
Corporate Planning
Department
Risk Management
Department

Monitoring

Management ofshareholders’ equity ratio

Analysis/Reporting
Integrated risk
management

Integrated Risk Management System
Board of Directors
President
Management
Level

Management Committee

ALM Committee

Executive officers
in charge of eachdepartment

Executive Officer
in charge of Audit
Department

Risk Management
Committee

Supervising
Department

Risk Management
Department

Risks

Liquidity risk

Market risk

Credit risk

System risk

Processing risk

Managing
Departments

Treasury Department

Risk Management
Department

Risk Management
Department

Information
Systems Planning
Department

Each Department

Auditing Department

Meetings

Executive Officer in chargeof Information System
Planning Department

Internal Audit Department

Executive Officer in chargeof Risk Management
Department

Executive Officer in chargeof Treasury Department

Japan Securities Finance Co., Ltd. Integrated Report 2022

53

Management Foundation Supporting Corporate Value

Risk Management
Basic Concept
We broadly classify assumed risks for management as credit risk, market risk, liquidity risk, processing risk and system risk. For
credit risk and market risk, we strive to secure profits while quantitatively identifying risks and using integrated risk management
to keep them within levels that match our financial strength. For liquidity risk, processing risk and system risk, we strive to prevent
their manifestation by implementing appropriate management according to risk characteristics.

Integrated Risk Management
We use integrated risk management to quantify various risks

the Management Committee following deliberation by thewith unified methodology and to keep the total amount of

Risk Management Committee at its regular annual meeting.

risk within the bounds of management strength.
For credit risk and market risk, we allocate risk capital toEach risk operation department keeps the risks within thebounds of the risk capital allocated to them. The Risk

each risk category within the bounds of our equity capital,

Management Department, which is independent of the riskthen quantify risks using the Value at Risk (VaR) method tooperation departments, quantifies the risks, monitors the

keep the calculated volume of each risk within the bounds ofstatus of risk operations, and reports its findings to thethe risk capital allocated to it.

board members.

To measure operational risk, which comprises processing

In the event that a risk may exceed the allocated amountrisk and system risk, we use basic methods and set theof risk capital, the Risk Management Committee holds annecessary risk capital amounts accordingly.

extraordinary meeting to deliberate how to respond and thenAmounts of risk capital to be allocated are determined byconsults with the Management Committee.

Credit Risk Management
Credit risk is the risk of loss due to a decrease or loss in value

each client. Business operation departments keep saidof assets resulting from credit events such as deterioration inamounts within these limits. In addition, business operation

the financial condition of a counterparty. We work to sustain

departments implement rigorous assessments of the assets

and improve the soundness of assets by strictly managing

for which they hold jurisdiction.

overall credit risk.
More precisely, the Risk Management Department

Additionally, as a general rule we assure collateralequivalent to the amount of each loan transaction. By marking

assesses credit risk according to in-house ratings, quantifying

relevant collateral to the market on a daily basis, we limit theand managing this risk using these ratings. As a supplementary

possibility of impaired loans. In the event of borrower

measure, we also implement stress tests. For credit control,

bankruptcy, we take steps including selling securities held as

the Risk Management Department screens client companies

collateral to promptly collect receivables.

and loan proposals and sets limits on transaction amounts forMarket Risk Management
Market risk is the risk of loss caused by fluctuations in the

manages market risks, and supplements quantification byvalue of assets held due to fluctuations in various market risk

implementing stress tests. Furthermore, to validate thefactors such as interest rates, prices of securities andreliability of the market risk quantification model we haveexchange rates.

adopted, we also implement back testing to compare

The Risk Management Department quantifies and54

Japan Securities Finance Co., Ltd. Integrated Report 2022

calculated VaR with portfolio-fixed virtual profit and loss.

Liquidity Risk Management
Liquidity risk is the risk of loss caused by failure to raiselarge amounts of funds. There is also a system for reportingnecessary funds or by procurement of funds with unusually

the status of daily cash flow to Company management.

high interest rates, or the risk of loss caused by a halt of

Furthermore, to be prepared for unforeseeable circumstances,transactions due to market disruptions or by forced

measures are taken to supplement liquidity, such as holding atransactions at unusually unfavorable prices.

certain amount of highly liquid government bonds.

The Treasury Department has jurisdiction over the

In addition, at its quarterly meetings the ALM Committee

management of liquidity risks. As such, it strives to diversify

develops cash flow projections based on forecasts of loans

procurement methods and secure stable suppliers. To

outstanding, deliberates policies for asset liability

manage cash flow, it formulates cash flow projections to grasp

management, such as revenue management for assets andthe amount that can be procured and the liquidity of assets

liabilities of the Company as a whole, and reports on thesewhile paying attention to concentrated settlement dates formatters to the Management Committee.

Processing Risk Management
Processing risk is risk of loss in processing due to negligence,

procedures through regulations, manuals and training. In

accidents or fraud by officers or employees.

addition, to prevent accidents and improve the business

Each department has jurisdiction over the management ofprocessing risks. To lessen processing risks, officers andprocessing system, each department implements its own
voluntary inspections on a regular basis.

employees are familiarized with proper operational

System Risk Management
System risk is risk of loss due to system defects such as

and operation, clear operational procedures and a monitoring

failures or malfunction of computer systems, or tosystem have been put in place. In addition, to protect theunauthorized use of computer systems.

Company’s own information assets (its information and

The Systems Planning Department has jurisdiction over

information systems), necessary regulations have been

management of system risks. To ensure stable operation of

established and officers and employees have been

our computer systems, the department takes measures tofamiliarized with the handling of such assets. Furthermore,prevent system failures, such as duplicating networks andmeasures to minimize the effects of system failures include

equipment. For the system’s safe and effective development

providing various manuals and drills.

Initiatives for BCP

Basic Concept for BCP
As a securities finance company with a social mission topartners and related external organizations. The Company

continue operations that serve as infrastructure for thehas positioned the loans for margin transactions, generalsecurities market, such as loans for margin transactions,credit financing and fund/securities settlement businesses

for the handling of a possible disaster event such as a

as operations to be continued on a priority basis. We havelarge-scale earthquake JSF has established a businessestablished a policy assuming the respective cases ofcontinuity plan (BCP) system so that operations can be(i) injury (or threat of injury) to officers and employees,

continued or resumed as soon as possible in order toand damage to buildings etc., (ii) damage to theminimize the impact of the disaster on our businessCompany’s main centers, and (iii) insufficient personnel.

Japan Securities Finance Co., Ltd. Integrated Report 2022

55

Management Foundation Supporting Corporate Value

Compliance
Compliance System
We believe that it is important to comply with all laws,

regarding honest and fair conduct based on high ethicalregulations and rules in conducting business as a company

standards, the Compliance Department works to thoroughly

and in one’s daily life (as a private citizen), and to carry out

implement and promote Company-wide compliance activities.

honest and fair corporate activities in line with social norms.

Activities include holding meetings for compliance officers to

We have therefore made compliance the basic premise of ourcommunicate and share information with those in charge inmanagement and the foundation of all of our operations, andeach department, and compliance management meetings tohave established a compliance system to ensure complianceshare awareness with senior management.
In addition, the Company plays a central role in promoting

throughout the Company.
Specifically, we have established a Compliance Committee,

the establishment and strengthening of the overall compliancechaired by the executive officer in charge of the Compliancesystem for the JSF Group, in ways such as holding the Group

Department, to deliberate on important matters related tocompliance liaison meetings and Group compliance officercompliance, such as formulating a compliance program andliaison meetings to promote mutual understanding andconsidering measures to be taken when compliance-related

information sharing among Group companies.

issues arise. In addition to educating officers and employees

Compliance System

Board of Directors
Management Committee
Compliance Committee(Chairperson: Executive officer in charge ofCompliance Department)

ReportReportCompliance Department
ReportCompliance personnel

External Reporting Desk
Consult/ Report

Consult/ Report

Consulting and reporting personnel (Managers and employees)

56Japan Securities Finance Co., Ltd. Integrated Report 2022

Consult/ ReportFormulating Conduct Guidelines and Compliance Program
In addition to formulating and disseminating the JSF Business

related to compliance promotion from the perspectives ofConduct Guidelines and the accompanying Complianceunderstanding compliance risks and the status of legal

Manual, the Company is working to instill compliancecompliance (such as the establishment of systems related toawareness by having all officers and employees carry alaws and regulations and self-inspections using checklists),“compliance self-check card” at all times.

compliance awareness-raising activities (including training and

In addition, the Board of Directors formulates thetests), and cooperation in and promotion of compliance

Compliance Program as a practical plan for promoting

activities (activities aimed at sharing recognition and awarenesscompliance, and regularly reports on its implementation status.

among Group companies and among officers and employees).

The Compliance Program incorporates specific measures

Establishment of an External Reporting DeskIn addition to the Compliance Committee, the ComplianceThis external consulting and reporting desk guarantees

Department and compliance officers, the Company has

the complete anonymity of any person consulting or reporting

established an external consulting and reporting desk staffedmatters regarding the Company, thereby reducing theby legal advisors to further strengthen the compliance system.

psychological burden on those persons and making consulting
and reporting easier.

Initiatives to Block Relationships with Antisocial Forces
The organization as a whole takes a resolute stance against

appropriate pre-screening and organized crime exclusion

unreasonable demands made by antisocial forces thatclauses in contracts and other documents.

threaten the order and safety of civil society. Our aim is to

The Compliance Department ensures the effectiveness of

eliminate any relationships with antisocial forces by working

efforts to block relationships with antisocial forces in various

closely with external specialized agencies such as the police,

ways, including centrally managing and accumulating

anti-organized crime campaign centers, and attorneys.

information on such groups, building a database, conducting

We are also working to block such relationships throughtraining activities and preparing response manuals.

Initiatives to Protect Customers and Personal Information
Regarding opinions and complaints received from customers,

with laws and regulations and our conflict of interest

we clarify the relevant facts and responsibilities and work to

management policy to ensure that the interests of ourresolve the situation quickly, honestly, fairly and appropriately,

customers are not wrongfully harmed.

with respect for the customer’s position. In the event of a

We take appropriate measures to safely and properly

dispute or similar issue, we respond appropriately inmanage the personal information of our customers to prevent

accordance with the aims of the financial alternative disputeleakage, loss, damage or other issues, and educate andresolution (ADR) system.

properly supervise our employees to that same end. In

In addition, regarding transactions between Company oraddition, when entrusting the handling of personalGroup company businesses and their customers, or between

information and similar data that we have received, weCompany or Group company customers, we carry out ourappropriately supervise the entrusted party.

duties appropriately, taking necessary measures in accordanceJapan Securities Finance Co., Ltd. Integrated Report 2022

57

Corporate Data

11-Year Highlights (Consolidated)

102nd Term

103rd Term

104th Term

105th Term

FY2011FY2012FY2013

FY2014

Operating revenue

20,22917,675

19,566

20,300Operating profit

3,039

1,787

2,568

3,025

Ordinary profit

2,387

2,557

3,119

4,230

779

1,777

6,211

3,520

1,862

4,257

6,978

8,079

Net assets

115,546

118,590

135,227

137,145

Total assets

4,504,856

3,433,456

3,914,388

3,482,601

Net assets per share (Yen)

1,245.83

1,274.67

1,260.43

1,373.93

Profit per share (Yen)

8.41

19.10

60.35

33.94

Shareholders’ equity ratio (%)

2.56

3.45

3.45

3.94

Return on equity (%)

0.68

1.52

4.89

2.59

Price-earnings ratio (Times)

56.89

37.89

9.91

22.36

Cash flows from operating activities(34,252)

106,689(27,055)(58,989)

Cash flows from investing activities

1,274(1,230)(1,078)(1,085)

Cash flows from financing activities(1,310)(1,310)(1,610)(6,207)

Cash and cash equivalents at end of year

10,110114,258

93,06926,787

Dividend payout ratio (%)

166.3

73.3

23.2

44.2

260 (2)258 (2)295 (3)289 (3)

Profit attributable to owners of parent
Comprehensive income

Number of employees (Average number of
temporary workers) (No.)

1. In calculating net assets per share, Company shares held by the Board Benefit Trust (BBT) are included in the treasury stock deducted from the total number ofshares issued and outstanding at the end of the fiscal year. These shares are also included in treasury shares deducted when calculating the average number ofshares during the term when calculating profit per share.
2. The shareholders’ equity ratio is calculated using the following formula.
Shareholders’ equity ratio (%) = Equity capital ÷ (Total liabilities + Net assets) × 100

58

Japan Securities Finance Co., Ltd. Integrated Report 2022

(Millions of yen)
106th Term

107th Term

108th Term

109th Term

110th Term

111th Term

112th Term

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

22,03523,06626,33324,321

29,10130,92430,138

2,558

2,802

3,881

3,981

4,129

4,777

6,235

3,349

3,611

4,685

5,046

4,894

5,558

7,164

2,645

3,078

4,225

3,765

3,556

3,971

5,174

8,410

(469)

6,819

935

(11,571)

10,4997,889

142,030

139,712

143,811140,793

126,687

135,166

137,9963,249,170

4,645,051

4,960,161

5,291,372

9,814,494

12,136,229

14,168,656

1,467.01

1,452.63

1,518.77

1,519.30

1,381.22

1,473.24

1,545.03

26.90

31.90

44.24

40.02

38.47

43.28

56.61

4.37

3.01

2.90

2.66

1.29

1.11

0.97

1.90

2.19

2.98

2.65

2.66

3.03

3.79

16.80

18.55

14.75

14.58

12.81

18.43

16.27

247,148

818,189(290,514)

226,351

275,039

164,459(122,304)(9,959)(7,507)(4,440)(8,652)(4,794)

2,230

4,907

(3,604)(1,902)(2,725)(3,970)(2,557)(2,031)(5,088)260,371

1,069,150

771,469

985,197

1,252,884

1,417,543

1,295,058

59.5

56.4

58.8

55.0

57.2

60.1

53.0

282 (5)281 (5)281 (6)281 (3)272 (3)272 (4)264 (5)

Japan Securities Finance Co., Ltd. Integrated Report 2022

59

Corporate Data

Financial Section

Consolidated Financial Statements ���������������������������������������������������������������������������������������������������������������� 62
Consolidated Balance Sheets ������������������������������������������������������������������������������������������������������������������� 62
Consolidated Statement of Income ��������������������������������������������������������������������������������������������������������� 64
Consolidated Statement of Comprehensive Income �������������������������������������������������������������������������������� 66
Consolidated Statement of Changes in Equity ���������������������������������������������������������������������������������������� 67
Consolidated Statement of Cash Flows ��������������������������������������������������������������������������������������������������� 70
Notes to Consolidated Financial Statements ������������������������������������������������������������������������������������������� 72
Independent Auditor’s Report ��������������������������������������������������������������������������������������������������������������������� 116

60

Japan Securities Finance Co., Ltd. Integrated Report 2022

Disclaimer: This document is a translation of the Japanese original and is an excerpt of the section on
consolidated financial statements. The Japanese original has been disclosed in Japan in accordance with
the Japanese accounting standards and the Financial Instruments and Exchange Act. This document does
not contain or constitute any guarantee and the Company will not compensate any losses and/or damage
stemming from actions taken based on this document. In the event of any discrepancy between theJapanese original and this document, the Japanese original shall prevail.

JAPAN SECURITIES FINANCE CO., LTD. AND CONSOLIDATED SUBSIDIARIES
Consolidated Financial Statements
March 31, 2022

Ⅴ. Accounting
1. Preparation Policy of the Consolidated and Non-consolidated Financial Statements(1) The consolidated financial statements of the Company are prepared in accordance with the “Ordinanceon Terminology, Forms, and Preparation Methods of Consolidated Financial Statements” (Ordinance ofthe Ministry of Finance No. 28 of 1976).
(2) The non-consolidated financial statements of the Company are prepared in accordance with the“Ordinance on Terminology, Forms, and Preparation Methods of Financial Statements (Ordinance ofthe Ministry of Finance No. 59, of 1963).

2. Audit Certification

In accordance with the provisions of Article 193-2 (1) of the Financial Instruments and Exchange Act,the consolidated financial statements and the non-consolidated financial statements for the fiscal andbusiness year (from April 1, 2021 to March 31, 2022) were audited by Crowe Toyo & Co.

3. Special Effort to Ensure the Appropriateness of Consolidated Financial Statements, etc.

The Company is making special effort to ensure the appropriateness of the consolidated financial
statements. Specifically, the Company has been a member of the Financial Accounting Standards
Foundation and participated in training programs conducted by the organizations which determine
accounting standards in order to ensure that the content of accounting standards is properly understood andthat changes in accounting standards can be properly addressed.

Japan Securities Finance Co., Ltd. Integrated Report 2022

61

Corporate Data

1. Consolidated Financial Statements(1) Consolidated Financial Statements(i) Consolidated Balance Sheets
Thousands of
U.S. dollars(Note)
2022

Millions of yen
2022
2021
ASSETS
Current assets
Cash and deposits *1
Call loans
Securities *1,*5
Operating loans *1,*3
Securities purchased under resaleagreements¥

Cash collateral provided for securities
borrowed
Other *1
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land *7
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities *1,*4,*5
Long-term loans receivable from
employees
Bad debts
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

1,299,070―
109,724
891,485¥

1,421,557
2,500
42,967
1,116,353$ 10,642,883―
898,9427,303,669

3,928,146

3,001,856

32,182,093

6,499,422

5,325,571

53,247,767

355,293(133)
13,083,009

255,387(693)
11,165,499

2,910,809(1,096)
107,185,068

9,039(6,762)
2,276
1,478(1,268)
210
3,264
304
6,056
960

8,836
(6,693)
2,142
1,498(1,251)
246
3,264
72
5,727
1,750

74,054(55,406)
18,648
12,113(10,389)
1,723
26,7472,497
49,616
7,869

1,042,496

935,344

8,540,850

―

0

―

95
107
437
―
35,69627,906(95)(107)
1,078,629
963,251
1,085,646
970,729¥ 14,168,656 ¥ 12,136,229

781
3,581
292,450(781)
8,836,882
8,894,369$ 116,079,437

Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.

62Japan Securities Finance Co., Ltd. Integrated Report 2022-2-

Millions of yen
2022
2021
LIABILITIESCurrent liabilities
Call money *1
Short-term borrowings *1
Commercial papers
Securities sold under repurchaseagreements
Cash collateral received for securities lent
Accounts payable - other
Income taxes payable
Provision for bonuses
Provision for bonuses for directors andother officers
Borrowed money from trust account
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Deferred tax liabilities for land revaluation *7
Provision for share awards for directors andother officers
Retirement benefit liability
Asset retirement obligations
Derivatives liabilities
Other
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Revaluation reserve for land *7
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeTotal net assets
Total liabilities and net assets¥

1,858,400
239,210496,000¥

Thousands of
U.S. dollars(Note)
2022

1,706,600
137,594
613,000$ 15,225,299
1,959,773
4,063,575

5,544,898

4,191,808

45,427,648

4,706,496
128
879
466

4,028,703
4,184
990
459

38,558,880
1,049
7,209
3,825

106

118

875

1,031,412
137,457
14,015,456

1,143,462
145,330
11,972,251

8,450,041
1,126,144
114,824,323

4,000
3,011
74

3,000
8,498
74

32,77024,676
607

228

231

1,873

213
55
7,054
563
15,202
14,030,659

123
54
16,212616
28,811
12,001,062

1,752
454
57,793
4,620
124,548
114,948,871

10,0008,878
115,521(4,680)129,719

10,0008,878
113,133(2,407)
129,604

81,92672,742
946,430(38,346)
1,062,753

9,920

22,432

81,272(1,967)168
156(16,978)
168(59)(16,119)
1,376
1,282

8,277

5,562

67,812

137,996
14,168,656

135,166
12,136,229

1,130,565
116,079,437

Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.
Japan Securities Finance Co., Ltd. Integrated Report 2022
-3-

63

Corporate Data(ii) Consolidated Statement of Income and Consolidated Statement of Comprehensive
IncomeConsolidated Statement of Income
Thousands of
U.S. dollars(Note)
2022

Millions of yen
2022
2021
Operating revenue
Interest on loans receivable¥
Interest income on securities purchased under resaleagreements
Interest income on cash collateral provided for
securities borrowed
Securities lending fees
Other operating revenue
Total operating revenue
Operating expenses
Interest expenses
Interest expenses on securities sold under
repurchase agreements
Securities borrowing fees
Other operating expenses
Total operating expenses
Operating gross profit
General and administrative expenses
Remuneration, salaries and allowances
Retirement benefit expenses
Provision for bonuses
Provision for bonuses for directors and otherofficers
Provision for share awards for directors and otherofficers
Depreciation
Provision of allowance for doubtful accounts
Reversal of allowance for doubtful accounts
Other
Total general and administrative expenses *1
Operating profit

64

Japan Securities Finance Co., Ltd. Integrated Report 2022
-4-

¥

2,708

¥

2,247

$

22,190

5,714

4,428

46,817

2,250

2,714

18,435

9,457
10,00630,13813,357
8,175
30,924

77,486
81,982
246,911

747

697

6,123

3,614

2,932

29,6119,357
2,814
16,533
13,604

12,581
1,806
18,01812,906

76,662
23,056
135,453
111,457

3,008
248
466

2,923
452
459

24,651
2,037
3,825

106

118

875

36

63

302

1,195
―
(571)
2,876
7,368
6,235 ¥

1,356
11
―
2,744
8,129
4,777

9,791
―
(4,679)23,56660,37051,087$

Thousands of
U.S. dollars(Note)
2022

Millions of yen
2022
2021
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Commission for purchase of treasury shares
Loss on investments in money held in trust
Loss on investments in investment partnerships
Miscellaneous expenses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets *2
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets *3
Branch office relocation expenses
Total Extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit¥Profit attributable to non-controlling interests
Profit attributable to owners of parent

294
186

¥

258
182

$

2,412
1,528

446

395

3,660

31
959

42
878

257
7,858

0
6
14
4
4
29
7,164

0
―
82
13
1
97
5,558

0
52
122
35
33
245
58,700

40
―
40

―
43
43

330
―
330

¥

41
16
58
7,147
2,071
(98)
1,972
5,174 ¥

―
―
―
5,601
1,853
(222)
1,630
3,971

$

341
136
478
58,553
16,969(808)
16,161
42,392

¥

―
5,174

―
3,971

$

―
42,392¥

Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.

Japan Securities Finance Co., Ltd. Integrated Report 2022
-5-65

Corporate Data

Consolidated Statement of Comprehensive Income

Profit¥Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income *Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

Millions of yen
2022
2021
5,174 ¥
3,971

Thousands of
U.S. dollars(Note)
2022$
42,392(12,534)
15,010
206

2,129
3,330
1,000

(102,693)
122,976
1,689

32

67

269

¥

2,714
7,889

¥

6,527
10,499$22,24264,634

¥

7,889

¥

10,499$64,634

¥

―

¥

―

$

―

Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.

66Japan Securities Finance Co., Ltd. Integrated Report 2022
-6-

(iii) Consolidated Statement of Changes in Equity
Previous Fiscal Year (From April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity
Share capital
Balance at April 1,
2020
Changes arising during
year¥

Cash dividends
Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,¥
2021

Capital surplus

10,000 ¥Retained earnings

11,325 ¥―Total shareholders’equityTreasury shares

111,193 ¥(4,865) ¥127,653(2,031)(2,031)

3,971

3,971
(0)

(0)

(49)

61

12

(2,396)

2,396

―

1,940

2,458

1,951

113,133 ¥(2,407) ¥129,604(2,446)

10,000 ¥8,878 ¥

Accumulated other comprehensive income
Valuationdifference on
Deferred gains oravailable-for-sale losses on hedges
securities
Balance at April 1, 2020 ¥20,277 ¥Revaluation
reserve for land

(20,308) ¥Remeasurements Total accumulated
Total net assetsofotherdefined benefit
comprehensive
plansincome168 ¥(1,102) ¥(965) ¥

126,687

Changes arising during
year
Cash dividends
Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,¥
2021(2,031)
3,971
(0)
12
―
2,154

3,330

―

1,042

6,527

6,527

2,154

3,330

―

1,042

6,527

8,479

22,432 ¥(16,978) ¥168 ¥(59) ¥

5,562 ¥

135,166

Japan Securities Finance Co., Ltd. Integrated Report 2022
-7-

67

Corporate Data

Current Fiscal Year (From April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
Share capital
Balance at April 1,
2021
Cumulative effects ofaccounting changes
Restated balance atApril 1, 2021
Changes arising during
year¥

Capital surplus

10,000 ¥Retained earnings

8,878 ¥

Total shareholders’equityTreasury shares

113,133 ¥(2,407) ¥0
10,0008,878

Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,
¥
2022

0

113,133

Cash dividends

129,604(2,407)

129,605(2,786)(2,786)

5,174

5,174

0

(2,301)(2,301)

28

28

114

―

0

2,387

(2,272)

10,000 ¥8,878 ¥

115,521 ¥(4,680) ¥129,719

Accumulated other comprehensive income
Valuationdifference on
Deferred gains oravailable-for-sale losses on hedges
securities
Balance at April 1, 2021 ¥Cumulative effects ofaccounting changes
Restated balance atApril 1, 2021
Changes arising during
year

22,432 ¥Revaluation
reserve for land

(16,978) ¥Remeasurements Total accumulated
Total net assetsofotherdefined benefit
comprehensive
plansincome168 ¥(59) ¥

5,562 ¥

022,432(16,978)

168

(59)

5,562

Cash dividends
Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,
¥
2022

68

135,166

135,167(2,786)
5,174(2,301)
28(12,512)

15,010

―

216

2,714

2,714

(12,512)

15,010

―

216

2,714

2,829

(1,967) ¥

168 ¥

156 ¥

8,277 ¥

137,996

9,920 ¥

Japan Securities Finance Co., Ltd. Integrated Report 2022
-8-

Current Fiscal Year (From April 1, 2021 to March 31, 2022)(Thousands of U.S. dollars)
Shareholders’ equity
Share capital
Balance at April 1,
2021
Cumulative effects ofaccounting changes
Restated balance atApril 1, 2021
Changes arising during
year$

Capital surplus

81,926 $Retained earnings

72,742 $Treasury shares

926,867 $Total shareholders’equity(19,725) $3
81,92672,742

Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,
$
2022

3

926,870

Cash dividends

1,061,811(19,725)

1,061,814(22,831)(22,831)

42,392

42,3920(18,853)(18,853)

232

232

938

―

0

19,560(18,621)81,926 $72,742 $946,430 $(38,346) $1,062,753

Accumulated other comprehensive income
Valuationdifference on
Deferred gains oravailable-for-sale losses on hedges
securities
Balance at April 1, 2021 $Cumulative effects ofaccounting changes
Restated balance atApril 1, 2021
Changes arising during
year

183,781 $Revaluation
reserve for land

(139,096) $Remeasurements Total accumulated
Total net assetsofotherdefined benefit
comprehensive
plansincome1,376 $

(491) $

45,570 $3
183,781(139,096)

1,376

(491)

45,570Cash dividends
Net income
attributable to ownersof parent
Purchase of treasury
share
Disposal of treasury
share
Cancellation oftreasury share
Net changes otherthan stockholders’equityTotal changes during
the year
Balance at March 31,$
2022

1,107,381

1,107,384(22,831)
42,392(18,853)
232(102,508)

122,976―

1,773

22,242

22,242(102,508)

122,976―

1,773

22,242

23,180(16,119) $1,376 $

1,282 $

67,812 $

1,130,565

81,272 $Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.

Japan Securities Finance Co., Ltd. Integrated Report 2022
-9-69

Corporate Data(iv) Consolidated Statement of Cash Flows
Thousands of
U.S. dollars(Note)
2022

Millions of yen
2022
2021
Cash flows from operating activities
Profit before income taxes¥
Depreciation
Loss (gain) on sale and retirement of non-current
assetsLoss (gain) related to securities
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for
directors and other officers
Increase (decrease) in provision for share awards
for directors and other officers
Increase (decrease) in retirement benefit liability
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using
equity method
Decrease (increase) in operating loans receivable
Net decrease (increase) in call loans
Net decrease (increase) in securities purchased
under resale agreements
Net decrease (increase) in cash collateral provided
for securities borrowed
Net increase (decrease) in call money
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial papers
Net increase (decrease) in securities sold under
repurchase agreements
Net increase (decrease) in cash collateral received
for securities lent
Net increase (decrease) in cash collateral received
for margin transactions
Net increase (decrease) in borrowed money fromtrust accountNet increase (decrease) in long-term borrowings
Purchase of short-term and long-term investment
securities
Proceeds from sale and redemption of short-termand long-term investment securities
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities ¥70

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 10 -

7,147
1,195

¥

5,601
1,356

$

58,553
9,791

(17)

3

(143)

251

30

2,059

(571)

(10)

(4,679)

7

(35)

60

(11)

(2)

(91)

(3)

46

(26)

(346)
(15,866)
4,361(1,316)(14,103)
3,630(2,841)(129,989)
35,735

(446)

(395)

(3,660)224,8672,500(428,673)
72,5001,842,268
20,481(926,289)(254,460)(7,588,803)(1,173,851)(1,447,744)(9,617,001)

151,800
101,616(117,000)

529,804
37,121
247,000

1,243,650
832,508(958,544)

1,353,090

268,394

11,085,450

677,793924,674

5,552,953(15,407)38,908(126,225)(112,050)

273,973(917,992)

1,000(1,000)8,192(466,887)(279,510)(3,825,065)

267,505

163,933

2,191,588(93,766)(129,379)
15,362(4,171)(8,191)
4,074(122,304) ¥16,962
156,689
14,322(3,688)(5,634)2,770
164,459(768,196)(1,059,967)
125,863(34,172)(67,108)
33,380(1,002,005)$

Thousands of
U.S. dollars(Note)
2022

Millions of yen
2022
2021
Cash flows from investing activities
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Dividends paid
Purchase of treasury shares
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period *¥(645) ¥

(706)$

(5,290)

6,296

3,551

51,585

(641)

(133)

(5,252)

48

―

394

(153)
2
4,907

(460)
(20)
2,230

(1,256)21
40,203(2,786)(2,301)0(5,088)(2,031)(0)0(2,031)(22,831)(18,853)
0(41,685)―――(122,485)
1,417,543
1,295,058

164,658
1,252,884
1,417,543(1,003,487)
11,613,499
10,610,012

Note Method of translation of the financial statements is described in “(7) Financial Statement Translation” in “4. Significant
accounting principles”.

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 11 -

71

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022

(Basis of Presentation of the Consolidated Financial Statements)
1. Scope of consolidation
Number of consolidated subsidiaries: 2 companies
All two subsidiaries are consolidated.
Names of consolidated subsidiaries
JSF Trust and Banking Co., Ltd.
Nihon Building Co., Ltd.

2. Application of the equity method
Number of affiliates accounted for by the equity method: 2 companies
Name of the companies
Japan Information Processing Service Co., Ltd.
JSF Information Technology Co., Ltd.
3. Accounting periods of consolidated subsidiaries
The fiscal year end of consolidated subsidiaries is the same as the consolidated fiscal year end.
4. Significant accounting principles(1) Valuation standards and methodology for material assets(i) Securities
Held-to-maturity debt securities:
Stated at amortized cost
Available-for-sale-securities:
Securities other than for which there are no fair value:
Stated at fair value based on the quoted market price at the fiscal year end (with any unrealized
gains or losses being reported directly as a component of shareholders’ equity and the cost of any
securities sold being computed by the moving average method)
Securities for which there are no fair value:
Stated at cost determined by the moving average method(ii) Derivatives
Stated at fair value(2) Depreciation and amortization methods for material depreciable assets(i) Property, plant and equipment
The Company and its subsidiaries provided depreciation principally by the declining-balancemethod based on the estimated useful lives, except for the buildings acquired on or after April 1,
1998 and the equipment attached to buildings and structures acquired on or after April 1, 2016, which
are depreciated based on the straight-line method.
The estimated useful lives are as follows:
Buildings and structures 3-50 years(ii) Intangible assets
Straight-line method is applied.
Software for internal use is amortized by the straight-line method over the estimated useful life (5to 7 years).
(3) Basis of material allowances(i) Allowance for doubtful accounts
Allowance for doubtful accounts is measured at estimated recoverable amounts. For general
receivables, the recoverable amounts are estimated by historical write-off ratio and for individual
receivables such as receivables with default risk, the recoverable amounts are estimated individual
basis.
(ii) Provision for bonuses
Provision for bonuses is measured based on estimated amount of payment for employee bonuses.

72

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 12 -

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022(iii) Provision for bonuses for directors and other officers
Provision for bonuses for directors and other officers is measured based on estimated amount of
payment for directors (including executive officers) bonuses.
(iv) Provision for share awards for directors and other officers
Provision for share awards for directors and other officers is measured based on estimated amountof stock benefit obligation as of the end of the current fiscal year based on internal regulations forthe payment of the Company’s stock.
(4) Accounting treatment for retirement benefits(i) The method of attributing expected retirement benefit
For calculating benefit obligation, the method of attributing expected retirement benefit to periods
up to the end of current fiscal year is the benefit formula basis.
(ii) The method of amortizing actuarial gains and losses
Actuarial gains and losses are amortized using the declining balance method within over averageremaining years of service of the employees (15 years) from the following year in which the gains
or losses are recognized.
Consolidated subsidiaries apply a simplified method to calculate liabilities for retirement benefits
and retirement benefit expenses, using required payment assuming retirement for personal reason at
the end of the fiscal year as retirement benefit obligation.
(5) Significant method of hedge accounting(i) Hedge accounting
In principle, deferral hedge accounting is applied. For Interest rate swaps, if they satisfy therequirements for treatment that incorporates swaps into underlying accounting items, they areaccounted for by incorporating swaps into underlying accounting items.
(ii) Hedge methods and hedged items
Hedge methods Interest rate swaps, foreign exchange contracts, etc.
Hedged items
Securities, investment securities, borrowings, etc.
(iii) Hedge policy
In accordance with the Group's internal rules for risk management, Hedging is used to hedge
against the risk of future fluctuations in interest rates and foreign currency exchange rates, etc.
(iv) Evaluation of hedge effectiveness
The Group compares market fluctuations of hedged items with those of hedge methos andevaluates the effectiveness of hedge based on the amount of fluctuation of both. However, for interest
rate swaps which incorporating swaps into underlying accounting items, the evaluation of theeffectiveness of hedge is omitted.
(Hedge relationships to which "Practical Solution on the Treatment of Hedge Accounting for
Financial Instruments that Reference LIBOR" is applied)
Among the above hedge relationships, the exceptional treatment prescribed in the PITF is applied
to all hedge relationships included in the scope of application of "Practical Solution on the Treatment
of Hedge Accounting for Financial Instruments that Reference LIBOR" (PITF No. 40, March 17,2022). The details of hedging relationships to which the PITF is applied are as follows.
Hedge accounting

Deferral hedge accounting and for interest rate swaps, accounting for byincorporating swaps into underlying accounting items
Hedge methods
Interest rate swaps
Hedged items
Securities, investment securities, borrowings, etc.
Hedging transactions Offsetting market fluctuations or fixing cash flows(6) Cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents as stated in the consolidated statements of cash flows consist of cash in
hand, readily available deposits, and any short-term liquid investments with a maturity not exceeding
three months at the time of purchase whose value is not subject to significant fluctuation risk.

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 13 -

73

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(7) Financial Statement Translation
The translations of the yen amounts into U.S. dollars are included solely for the convenience of thereader, using the prevailing exchange rate as of March 31, 2022, which was ¥122.06 to U.S. $1. Thistranslation should not be construed as a representation that the amounts shown could be converted into
U.S. dollars at such rate.
(Significant Accounting Estimates)
Recoverability of deferred tax assets(1) Deferred tax assets and liabilities in the accompanying consolidated balance sheet as of March 31,
2022 are as follows:
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Deferred tax assets
Deferred tax liabilities
Deferred tax liabilities (Net)¥¥16,595
19,607
3,011

¥
¥

8,696
17,194
8,498$$

135,964
160,641
24,676(2) Information on the nature of significant accounting estimates for identified items
Deferred tax assets before offsetting with deferred tax liabilities are estimated based on the timing
and amount of reversal of future deductible temporary difference in future consolidated financial period.
These estimates may be affected by changes in uncertain economic conditions in the future, and if theactual timing and amount of the reversal of temporary differences differ from the estimates, it may havea significant impact on the amount of deferred tax assets in the consolidated financial statements for thefollowing fiscal year.
(Changes in Accounting Policies)(Application of “Accounting Standards for Revenue Recognition”, etc.)“Accounting Standards for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020, hereinafter
as “Accounting Standards for Revenue Recognition”) have been applied from the beginning of the current
fiscal year. In accordance with the transitional treatment provided for in the proviso to Paragraph 84 of the
Accounting Standard for Revenue Recognition, the cumulative effect of the retrospective application of the
new accounting policy prior to the beginning of the current fiscal year is added to or deducted from retained
earnings at the beginning of the current fiscal year
The impact to the profit and loss for the current fiscal year and retained earnings at the beginning of thecurrent fiscal year is immaterial.
(Application of “Accounting Standards for Fair Value Measurement”, etc.)“Accounting Standard for Fair Value Measurement”（ASBJ Statement No. 30, July 4, 2019, hereinafter
as “Accounting Standard for Fair Value Measurement”) is applied from the beginning of the current fiscal
year and the new accounting policy stipulated by the Accounting Standard for Fair Value Measurement is tobe applied prospectively in accordance with the transitional treatment stipulated in Paragraph 19 of the
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
There is no impact on the consolidated financial statements.
In addition, the breakdown of financial instruments by each fair value level are included in the notes to“Financial Instruments”. However, in accordance with the transitional treatment stipulated in Paragraph 7-4of the “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July4, 2019), no such note for the previous fiscal year is presented.

74

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 14 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Accounting Standards Not Yet Adopted)“Implementation Guidance on Accounting Standard for Fair Value Measurement”（ASBJ Guidance No. 31,
June 17, 2021）(1) Overview“Implementation Guidance on Accounting Standard for Fair Value Measurement”（ASBJ Guidance
No. 31）was revised and issued on June 17, 2021. At the point of issuance on July 4, 2019, it wasconsidered that a certain period of time will be required for discussions with related parties, etc. for the
study on "calculation of the fair value of investment trusts," and a certain amount of study was also
required for notes on the fair value of "investments in partnerships, etc., in which the net amountequivalent to the equity interest recorded in the balance sheet" and therefore it was expected that it would
take approximately one year.
(2) Scheduled date of adoption
This accounting standard will be applied from the beginning of the fiscal year ending March 31, 2023.
(3) Effect of adoption
The amounts of the impact of applying “Implementation Guidance on Accounting Standard for Fair
Value Measurement” are under evaluation at this time.
(Additional Information)(Transactions of Delivering the Company’s Own Stock to Directors through Trust)
The Company has introduced a performance-based share remuneration plan called “Board Benefit Trust(BBT)” in order to further clarify the linkage between remuneration for directors (other than outside directors)
and executive officers (collectively “directors”) and the performance and share value of the Company,
thereby enhancing their awareness of the need to contribute to the efforts to archive improved businessperformance and greater enterprise value in the medium to long term.
1. Outline of the plan
The Plan is a performance-based share remuneration plan under which the Company’s shares will beacquired through a trust using money contributed by the Company and the Company’s shares and themoney equivalent to the market value of the shares will be delivered by the Trust to directors pursuant to
the “Rules for Delivery of Shares to Directors” to be established by the board of directors.
In principle, the Shares, etc. will be delivered when he/she resigns as director.
2. Stock remaining in the trust
In accordance with the “Practical Solution on Transactions of delivering the Company’s Own Stockto Employees etc. through Trust (ASBJ Practical Issue Task Force (PITF) No. 30, March 26, 2015)”, theCompany recorded assets and liabilities of the trust on the Company’s balance sheet as assets andliabilities of the Company. The Company recorded own stocks in the trust as treasury stocks under net
assets at book value in the trust excluding associated costs. The book value of the own stocks was ¥511
million ($4,189 thousand) and the number of the stocks was 1,077 thousand shares as of March 31, 2022,
and ¥539 million and the number of the stocks was 1,137 thousand shares as of March 31, 2021.

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 15 -

12/08/2275

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Notes to the Consolidated Balance Sheets)*1 Assets pledges as collateral and secured debt
Assets pledged as collateral are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Securities
Operating loans
Investment securities¥

86,459526,090
370,156¥

32,918723,947
404,632$

The above assets are pledged as collateral for the following obligations:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Call money
Short-term borrowings¥

250,000
137,200¥

127,000
40,500708,333
4,310,093
3,032,581$

2,048,173
1,124,037

For call money and short-term borrowings, in addition to the assets pledged as collateral above, aportion of the collateral according to 2 and 6 below is also pledged.
In addition, the following items are pledged as collateral for the clearing funds of Japan Securities
Clearing Corporation and JASDEC DVP Clearing Corporation.
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Cash and deposits
Current assets (other)
Investment securities¥

25
230,004
1,222

¥

25
222,264
5,864$

2 Collateralized financial assets with rights of free disposal are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Fair value of theas collateral
Securities lentCollateral provided
On handsecurities

received¥

2,519,083
182,137
358,707
1,978,237¥

2,081,786
186,426
325,0021,570,356

204
1,884,359
10,018$20,638,073
1,492,200
2,938,780
16,207,092*3 Credit line for financial instruments dealers and customers, and undrawn amount related to overdraft
agreements, of the Company and JSF Trust and Banking Co., Ltd. are as follows:
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Total credit line
Drawn amount
Undrawn amount¥¥

957,858
63,680894,178¥¥

849,058
40,890808,168$$

7,847,453
521,710
7,325,725

Since some of these contracts expire without the rights exercised, the undrawn amount itself does notnecessarily affect future cash flows.

76

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 16 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
*4 Items related to affiliated companies are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Investment securities (stocks)

¥

4,595

¥

4,267

$

37,653*5 Balance sheet amount of securities lent under loan for consumption agreement, etc. are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Securities
Investment securities

¥

8,764
424,126¥

6,049
391,987$

71,8063,474,740

6 The fair value of the securities borrowed under loan for consumption agreement, etc. are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
The fair value of the securities borrowed
Securities loaned
Securities pledged as collateral
On hand¥ 10,092,917
9,565,616
478,582
48,717¥8,141,203
7,765,316
296,942
78,944$

82,688,162
78,368,154
3,920,878
399,129*7 The Company revaluated its land at fair value, pursuant to the Law Concerning Land Revaluation (Law
No.34 March 31, 1998) and its amendments (Law No.19 March 31, 2001) (the “Law”), and for net
unrealized gain, tax equivalent is presented as “Deferred tax liabilities for land revaluation” under
LIABILITIES and the amounts net of the tax equivalent is presented as “Revaluation reserve for land”
under NET ASSETS.
Date of revaluation: March 31, 2002
Revaluation method to be prescribed on Article3, paragraph3 of the Law Concerning Land Revaluation:
The revaluation is calculated by making reasonable adjustments to the value calculated by the method
specified and announced by the Commissioner of the National Tax Agency for calculating the value ofland as the basis for calculating the taxable value of land as stipulated in Article 16 of the Land Value
Tax Law based on Article 2, clause 4 of the Enforcement Order for the Law Concerning Revaluation ofLand (Ordinance No. 119 March 31, 1998).

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 17 -

12/08/22

77

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Notes to the Consolidated Statements of Income)*1 Research and development expenses included in general and administrative expenses and manufacturingcosts for the year are as follows:
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
¥

40

¥

―

$

*2 Breakdown of gain on sale of non-current assets are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Tools, furniture and fixtures

¥

40

¥

―

$

*3 Breakdown of loss on retirement of non-current assets are as follows:

78

¥

2
39

¥

―
―

330

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Buildings and structures
Demolition and removal expenses

334

$

16
325

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 18 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Notes to the Consolidated Statements of Comprehensive Income)*1 Reclassification adjustments and tax effects related to other comprehensive income

Valuation difference on available-for-salesecurities:
Arising during the year
Reclassification adjustment
Before tax effect adjustment
Tax effect
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges:
Arising during the year
Reclassification adjustment
Before tax effect adjustment
Tax effect
Deferred gains or losses on hedges
Remeasurements of defined benefit plans:Arising during the year
Reclassification adjustment
Before tax effect adjustment
Tax effectRemeasurements of defined benefit plans
Share of other comprehensive income ofentities accounted for using equity method:
Arising during the year
Reclassification adjustment
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
¥

¥

(18,641)251(18,390)
5,855

¥

2,824
32
2,857
(728)

$

(152,724)
2,059(150,664)
47,971(12,534)

2,129(102,693)

15,362―
15,362(352)
15,010

5,462
(6)
5,455
(2,125)
3,330

125,860―
125,860(2,884)
122,976

319
1
321
(115)
206

1,204
201
1,405
(404)
1,000

2,619
13
2,632
(943)
1,689

25
6

54
13

212
56

32

67

269

2,714

¥

6,527

$

22,242

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 19 -

12/08/22

79

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Notes to the Consolidated Statements of Changes in Net Assets)
Previous fiscal year (From April 1, 2020 to March 31, 2021)
1 Type and number of issued shares and treasury shares
Type of share

Number of shares at the
beginning of the year

Increase(Thousands of shares)

Decrease

Number of shares at theend of the year

Shares outstanding
100,000―
4,000
96,000Common stock (Note 1)
Treasury shares
8,278
574
4,600
4,252
Common stock (Note 2, 3, 4)Notes:
1 Decrease of 4,000 thousands of shares is due to cancellation of treasury shares.
2 Number of shares include shares which are held by the “Board Benefit Trust (BBT)” (592 thousands of shares at the
beginning of the fiscal year and 1,137 thousands of shares at the end of the fiscal year)
3 Increase of 572 thousands of shares is due to purchase by the “Board Benefit Trust (BBT)” and 1 thousands of shares is due
to purchase of shares less than one unit.
4 Decrease of 4,000 thousands of shares is due to cancellation of treasury shares, 572 thousands of shares is due to disposalof treasury shares by third-party allotment to the “Board Benefit Trust (BBT)”, 27 thousands of shares is due to delivery oftreasury shares from the “Board Benefit Trust (BBT)” to respective person and 0 thousands of shares is due to sale oftreasury shares less than one unit.

2 Stock acquisition rights, etc.
No items to report.
3 Dividends(1) Dividends paid(a) Dividends paid during the year ended March 31, 2021
The following was approved by the Board of Directors held on May 18, 2020.
(a)
(b)
(c)
(d)

Note

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,015 million¥11
March 31, 2020
June 2, 2020

Total dividends include dividends of ¥6 million to shares which are owned by “Board Benefit Trust (BBT)”The following was approved by the Board of Directors held on November 11, 2020.

(a)
(b)
(c)
(d)
Note

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,015 million¥11
September 30, 2020
December 4, 2020

Total dividends include dividends of ¥6 million to shares which are owned by “Board Benefit Trust (BBT)”(2) Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year
ended March 31, 2021
The following was approved by the Board of Directors held on May 17, 2021.
(a)
(b)
(c)
(d)

Note

80

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,393 million¥15
March 31, 2021
June 3, 2021

Total dividends include dividends of ¥17 million to shares which are owned by “Board Benefit Trust (BBT)”

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 20 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (From April 1, 2021 to March 31, 2022)
1 Type and number of issued shares and treasury shares
Type of share

Number of shares at the
beginning of the year

(Thousands of shares)

Increase

Decrease

Number of shares at theend of the year

Shares outstanding
96,000――96,000Common stock
Treasury shares
4,252
2,490
59
6,683
Common stock (Note)
Notes:
1 Number of shares include shares which are held by the “Board Benefit Trust (BBT)” (1,137 thousands of shares at the
beginning of the fiscal year and 1,077 thousands of shares at the end of the fiscal year)
2 Increase of 2,489 thousands of shares is due to purchase of treasury shares and 1 thousands of shares is due to purchase ofshares less than one unit.
3 Decrease of 59 thousands of shares is due to delivery of treasury shares from the “Board Benefit Trust (BBT)” to respective
person and 0 thousands of shares is due to sale of treasury shares less than one unit.

2 Stock acquisition rights, etc.
No items to report.
3 Dividends(1) Dividends paid(a) Dividends paid during the year ended March 31, 2022
The following was approved by the Board of Directors held on May 17, 2021.
(a)
(b)
(c)
(d)

Note

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,393 million ($11,416 thousand)¥15 ($ 0.12)
March 31, 2021
June 3, 2021

Total dividends include dividends of ¥17 million ($139 thousand) to shares which are owned by “Board Benefit Trust(BBT)”

The following was approved by the Board of Directors held on November 2, 2021.

(a)
(b)
(c)
(d)
Note

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,393 million ($11,415 thousand)¥15 ($0.12)
September 30, 2021
December 3, 2021

Total dividends include dividends of ¥16 million ($132 thousand) to shares which are owned by “Board Benefit Trust(BBT)”(2) Dividends to be paid after the balance sheet date but the record date for the payment belongs to the year
ended March 31, 2022
The following was approved by the Board of Directors held on May 16, 2022.
(a)
(b)
(c)
(d)

Note

Total dividends
Cash dividends per common share
Record date
Effective date

¥1,356 million ($11,109 thousand)¥15 ($0.12)
March 31, 2022
June 2, 2022

Total dividends include dividends of ¥16 million ($132 thousand) to shares which are owned by “Board Benefit Trust(BBT)”

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 21 -

12/08/22

81Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Note to the Consolidated Statements of Cash Flows)
The reconciliation between year-end balance of cash and cash equivalents and amounts stated in the
consolidated balance sheets
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Cash and deposits
Time deposits with maturities of over threemonthsCertificate of deposits with maturities of overthree months
Cash and cash equivalents

82¥

1,299,070

¥

(10)
¥

(4,002)
1,295,058

1,421,557

$

(10)
¥

(4,003)
1,417,543

10,642,883(81)$(32,789)
10,610,012

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 22 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Financial Instruments)
1. Conditions of Financial instruments(1) Management policy
The Company and a consolidated subsidiary, JSF Trust and Banking Co., Ltd. (“JSFTB”) mainly deal infinancial instruments. The Company is engaged in providing loan services, mainly loans for margintransactions. The loans for margin transaction are loan services which are money lending or stock loan forsettlement of standardized margin transactions. The transaction is strongly effected by security market
condition, therefore, the Company raises money flexibly from short-term finance market, primarily from callmarket. The Company owns securities such as Japanese Government Bonds to manage the funds efficiently.
A consolidated subsidiary, JSFTB is engaged in providing credit services such as loans as banking
business and finance and securities activities. JSFTB invests in highly liquid and safe-and-secure securities
such as government bonds, local government bonds, public corporation bonds and government-backed bonds
as securities investment activities and usually raises money through a trust account.
(2) Financial instruments and risks
Main financial instrument that the Company holds are trade loans receivable, collateral money forsecurities borrowed, short-term investments and investments in securities such as government bonds andequity securities. Collateral money for securities borrowed is the collateral for cash-secured bond lendingtransaction, cash-secured stock lending transaction and securities borrowed of loan on margin transactions.
Main financial instrument that JSFTB holds are loans to government, other credit granting and securities
such as government bonds, local government bonds, public corporation bonds and government-backed
bonds. Trade loans receivable held by the Company and JSFTB are exposed to credit risks that caused fromcounterparties’ default of contract. Securities are exposed to market risks. Regarding raising money such as
call money and short-term borrowings of the Company and JSFTB, the liabilities are exposed to liquidity
risks that caused from turmoil in the financial markets or a credit rating down.
The Company has entered into forward exchange contract for hedging currency exchange risk of bonds
denominated in foreign currency and interest rate swaps for hedging interest rate risk of fixed-rate bonds.
Hedge accounting is applied to the derivatives and the Company regularly monitors the hedge effectiveness
whether the relationship between hedging derivatives and hedged assets are appropriate and the currency
exchange risk and the interest rate risk of hedged items are offset by hedging derivatives.
JSFTB has entered into interest rate swaps for hedging fixed-rate loans, bonds and borrowings as a partof interest risk control (ALM). Hedge accounting is applied to the derivatives held for ALM purpose, andthe Company regularly monitors the hedge effectiveness whether the relationship between hedging
derivatives and hedged assets or liabilities are appropriate.
(3) Financial instruments risk management
The Company places risk management as top priority of management. Basic policy of risk management
is approved at the Board of Directors, and various rules for risk management according to the basic policy
are established for concrete risk management method or system. The Company regularly receives a reportfrom JSFTB concerning its risk management.
(i) Integrated risk management
The Company quantizes the risk by Value at Risk (VaR) approach after allocating risk capital withinequity capital, and controls the quantized risk amount within the allocated risk capital. Each business
operation department controls a risk within the allocated risk capital, risk management department that is
independent from each operational section quantizes the risk, monitors the risk management and reports
to the management.
(ii) Credit risk
The Company manages all of the credit risk strictly to maintain and improve assets quality. The Risk
Management Department evaluates credit risks according to the in-house rating and quantizes andcontrols the credit risk using the default rate by each in-house rating category. Stress tests are also
performed for compensating the quantization control. The Risk Management Department evaluates
customers or loans, and sets up the credit limits, while business operation department monitors the credit
limit. Assets owned by business operation departments are assessed by themselves strictly. The Company
receives collateral securities for each loan and revaluates the securities daily to mitigate the collectability
Japan Securities Finance Co., Ltd. Integrated Report 2022
- 23 -

12/08/22

83Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
issues, and the Company collects the claims quickly through sale of the collaterals when the customer
bankrupts.
(iii) Market risk
The Risk Management Department quantizes and controls market risks, and performs stress tests tocompensate the quantization control. Back-testing which is the test compared calculated VaR andestimated profit or loss by using the fixed portfolio is performed to test the reliability of the Company’smarket risk quantization model.
(iv) Quantitative information of market risk
The Company calculates VaR of short-term investments and investments in securities by using Deltamethod (holding period: 10-240 days (depending on purposes in holding), confidence interval: 99%,
observation period: 1 year). Market risk amount (possible losses) of the Company is ¥6,878 million($56,354 thousand) as of March 31, 2022.
Because VaR is a statistical estimate of market risk amount at a particular probability using past market
movement data, VaR may not capture the risk during radical market movements that are extreme in nature.
(v) Liquidity risk
The Treasury Department of the Company seeks to diversify financing channels and to secure stablefinancing sources. For sound cash flow management, the Company develops cash flow forecast,understands the amount can be raised or future liquidity and also understands dates of a large payment
concentration, the Company has a system to report to the management with daily cash flow status. The
Company tries to hold enough liquidity, for example, to possess a certain amount of government bonds,
makes a contingency plan and builds a company-wide emergency response system against contingencies.
Liquidity stress tests are performed monthly for ascertaining whether consolidated liquidity held by theCompany and JSFTB is adequate. At the “ALM Committee” held in every quarter, the Company develops
cash flow forecast based on estimates of loans outstanding, studies policies for ALM (Asset Liability
Management) such as revenue management for assets and liabilities of the Company and the Company
has a system to report to the management.
(vi) Subsidiary’s risk control system
JSFTB basic policy of risk management is approved at the Board of Directors, and various rules forrisk management according to the basic policy are established for concrete risk management method orsystem, and the Risk Management Department controls the risks totally. The Risk Management
Department measures and monitors the risk quantity, collects and analyzes information and reports therisk condition to the management for maintaining the proper risk management.
JSFTB calculates market risk amount for all market transactions. Interest rate risk amount which is amajor risk variable is calculated by VaR (Delta method; holding period: 1 year, confidence interval: 99%,
observation period: 5 years). JSFTB market risk amount is ¥5,598 million ($45,866 thousand) as ofMarch 31, 2022.
(4) Supplemental explanation regarding fair value of financial instruments
The fair value might differ if different assumptions are used because to measure fair value of financial
instruments, variable factors are considered. In addition, the contract amounts of derivative transactions in
the Notes to “Derivative” are not in themselves indicative of the market risk associated with derivativetransactions.

84

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 24 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
2. Fair value of financial instruments, etc.
Carrying amount in the consolidated balance sheets, fair values and differences are as follows:
Previous fiscal year (As of March 31, 2021)
Millions of yen
2021

Carrying
amount(1) Operating loans¥

Fair value

Differences

1,116,353

Allowance for doubtful accounts *2(92)¥

1,116,260

Total
Derivative transactions *4(2) Securities and investment securities *3
Held-to-maturity securities
Available-for-sale securities¥

1,116,266

¥

6

¥

1,512
954,741
2,072,513¥

1,706
954,741
2,072,715

¥

194
―
201

¥

(11,025)¥(11,025)¥―

Notes:*1 Cash is omitted and deposits, call loans, securities purchased under resale agreements, cash collateral provided for securities
borrowed, call money, short-term borrowings, commercial papers, securities sold under repurchase agreements and cash
collateral received for securities lent are also omitted as most of these are settled in the short term and their fair value
approximates their carrying amount.
*2 General and specific allowance for operating loans is deducted.
*3 The following financial instruments are not included in “(2) Securities and investment securities” because they do not havemarket prices and their fair value is extremely difficult to measure. Carrying amount of those financial instruments are as
follows:
Millions of yen
2021

Unlisted equity securities
Other securities
Investments in affiliates
Unlisted REITs
Investments in investment limited partnership

¥

1,716
4,267
14,571
1,503*4 Net receivables and payables, which were derived from derivative transactions, are presented in net amounts, and any item
for which the total becomes a net liability is indicated in parentheses.

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 25 -

12/08/2285

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (As of March 31, 2022)

Millions of yen
2022
Carrying
amount(1) Operating loans¥

Allowance for doubtful accounts *2

Fair value

Differences

891,485(90)(2) Securities and investment securities *3
Held-to-maturity securities
Available-for-sale securities
Total
Derivative transactions *4¥

891,395¥

891,396

¥

1

¥

1,511
1,142,362
2,035,268¥

1,673
1,142,362
2,035,432

¥

162
―
164

¥

5,686

¥

5,686

¥

―

Thousands of U.S. dollars
2022
Carrying
amount(1) Operating loans$

Allowance for doubtful accounts *2

Fair value

Differences

7,303,669(740)$(2) Securities and investment securities *3
Held-to-maturity securities
Available-for-sale securities
Total
Derivative transactions *4

7,302,928$

7,302,939$

10

12,3809,359,020$ 16,674,330

13,7139,359,020$ 16,675,673

$

1,332
―
1,343

$

$

$

―

46,58546,585

Notes:*1 Cash is omitted and deposits, call loans, securities purchased under resale agreements, cash collateral provided for securities
borrowed, call money, short-term borrowings, commercial papers, securities sold under repurchase agreements and cash
collateral received for securities lent are also omitted as most of these are settled in the short term and their fair value
approximates their carrying amount.
*2 General and specific allowance for operating loans is deducted.
*3 The following financial instruments with no market prices are not included in “(2) Securities and investment securities”.
Carrying amount of those financial instruments are as follows:
Thousands ofMillions of yen
U.S. dollars
2022
2022
Unlisted equity securities
Other securities¥
1,765 $
14,467
Investments in affiliates
4,595
37,653
Investments in investment limited partnership
1,986
16,272*4 Net receivables and payables, which were derived from derivative transactions, are presented in net amounts, and any item
for which the total becomes a net liability is indicated in parentheses.

86Japan Securities Finance Co., Ltd. Integrated Report 2022
- 26 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Note 1. Projected future redemption of monetary claim and securities with maturities after the end of the
fiscal year
Previous fiscal year (As of March 31, 2021)
Millions of yen
Due after
Due after
one yearfive years
through fivethrough ten
years
years

Due within
one year
Cash and deposits
Call loan
Operating loans
Securities purchased under resaleagreements
Cash collateral provided for
securities borrowed
Securities and investments securities
Held-to-maturity securities(Government bonds)
Available-for-sale securities withmaturities
Bond securities
1) Government bonds2) Corporate bonds3) Other
Total¥

1,421,557
2,500
1,075,366

¥

¥

―
―
598

¥

―
―
―

3,001,858―――

5,305,571

20,000

―

―

―

―

―

1,500

6,000
36,909―¥ 10,849,760

64,367259,949
25,469410,173

48,80056,53323,601
129,532

368,000―
4,438
373,938¥

Current fiscal year (As of March 31, 2022)¥

1,299,070
870,912¥¥

Millions of yen
Due after
Due after
one yearfive years
through fivethrough ten
years
years

Due within
one year
Cash and deposits
Operating loans
Securities purchased under resaleagreements
Cash collateral provided for
securities borrowed
Securities and investments securities
Held-to-maturity securities(Government bonds)
Available-for-sale securities withmaturities
Bond securities
1) Government bonds2) Corporate bonds3) OtherTotal――
40,388Due after
ten years¥

3,928,146―
19,916
―

¥

―
656
―

Due after
ten years¥―――

6,349,422

150,000

―

―

―

―

―

1,500

6,000
100,319
3,326¥ 12,557,196

65,767
311,619
57,175604,477

51,40034,27539,709126,040

395,000―
29,511
426,011¥¥¥

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 27 -

12/08/22

87

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Thousands of U.S. dollars
Due after
Due after
one yearfive years
through fivethrough ten
years
years

Due within
one year
Cash and deposits
Operating loans
Securities purchased under resaleagreements
Cash collateral provided for
securities borrowed
Securities and investments securities
Held-to-maturity securities(Government bonds)
Available-for-sale securities withmaturities
Bond securities
1) Government bonds2) Corporate bonds3) Other
Total$

10,642,883 $
7,135,120
32,182,093―
163,171
―

―
5,377
―

$

Due after
ten years―――$

52,018,863

1,228,903

―

―

―

―

―

12,289538,808
2,552,998
468,418
4,952,301

421,104
280,804
325,323
1,032,610

3,236,113―
241,779$ 3,490,181

49,156
821,882
27,248$ 102,877,247 $$Note 2. Repayments schedule of long-term borrowings and other interest-bearing liabilities after the end of
the fiscal year
Previous fiscal year (As of March 31, 2021)

Due within
one yearCall money
Short-term borrowings
Commercial paper
Securities sold under
repurchaseagreements
Cash collateral
received for
securities lentLong-term borrowings
Total

88

Millions of yen
Due after
Due after
two years
three years
throughthroughthree years
four years

Due after
one yearthrough
two years―

137,594
613,000

―
―

―
―

―
―

―
―

―
―

4,191,808

―

―

―

―

―

4,028,703―¥ 10,677,706 ¥

―
―
―

―
―
―

―
―
―

―
―
―

―
3,000
3,000

¥

¥

¥

¥

―

¥

¥

―

Due after
five years

1,706,600 ¥¥―Due after
four years
throughfive years

―

¥

¥

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 28 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (As of March 31, 2022)

Due within
one yearCall money
Short-term borrowings
Commercial paper
Securities sold under
repurchaseagreements
Cash collateral
received for
securities lentLong-term borrowings
Total

Call money
Short-term borrowings
Commercial paper
Securities sold under
repurchaseagreements
Cash collateral
received for
securities lentLong-term borrowings
Total

Millions of yen
Due after
Due after
two years
three years
throughthroughthree years
four years

Due after
one yearthrough
two years―

239,210496,000

―
―

―
―

―
―

―
―

―
―

5,544,898

―

―

―

―

―

4,706,496―¥ 12,845,005 ¥

―
1,000
1,000

―
―
―

―
―
―

―
―
―

―
3,000
3,000

Due within
one year

Due after
one yearthrough
two years

¥

¥

¥

¥

―

¥

¥

Thousands of U.S. dollars
Due after
Due after
two years
three years
throughthroughthree years
four years¥

Due after
four years
throughfive years

1,959,773
4,063,575

―
―

―
―

―
―

―
―

―
―

45,427,648

―

―

―

―

―

38,558,880―$ 105,235,175 $

―
8,192
8,192

―
―
―

―
―
―

―
―
―

―
24,57824,578

$

$

$

$

―

Due after
five years

―

$

―

―

¥

$ 15,225,299 $

$

―

―

Due after
five years

1,858,400 ¥¥―Due after
four years
throughfive years

―

$

$

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 29 -

12/08/22

89Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
3. Breakdown of financial instruments by each fair value level
The fair value of financial instruments is classified into the following three levels, depending on theobservability and materiality of the inputs used to measure fair value.
Level 1: Fair value based on quoted market prices for assets or liabilities that are the subject of thecalculation of such fair value in an active market amongst the inputs to the measurement ofobservable fair value
Level 2: Fair value measured using inputs for the calculation of fair value other than Level 1 inputs
amongst the inputs to the measurement of observable fair value
Level 3: Fair value measured using unobservable inputs for fair value calculations
Fair value is classified at the lowest priority level in the measurement of fair value among the levels towhich each of those inputs belong where multiple inputs are used that have a significant impact on themeasurement of fair value.
(1) Financial instruments that are stated at fair value in the accompanying consolidated balance sheets
Current fiscal year (As of March 31, 2022)
Classification

Millions of yen
Fair value
Level 2
Level 3

Level 1

Total

Securities and investment securities
Available-for-sale securities
Equity securities
Government and local bonds
Corporate bonds
Other
Derivative transactions
Currency-relatedInterest-related
Debt-related
Assets total
Derivative transactions
Currency-relatedInterest-related
Equity securities-related
Liabilities total¥¥

12,022 ¥467,407―
80,764― ¥60,418447,40944,836― ¥―――12,022527,826
447,409125,600――
114
560,308 ¥11
12,736―565,412 ¥

―
―
―
― ¥

11
12,736114
1,125,720

― ¥
―
943
943 ¥

122 ¥
6,111
―
6,233 ¥

― ¥
―
―
― ¥

122
6,111
943
7,176

¥

¥

Note Investment trusts of ¥29,504 million ($241,718 thousand) recorded on the consolidated balance sheets at fair value are
not included in the table above in accordance with Paragraph 26 of the “Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, July 4, 2019).

90

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 30 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022

Classification

Thousands of U.S. dollars
Fair value
Level 2
Level 3

Level 1

Total

Securities and investment securities
Available-for-sale securities
Equity securities
Government and local bonds
Corporate bonds
Other
Derivative transactions
Currency-relatedInterest-related
Debt-related
Assets total
Derivative transactions
Currency-relatedInterest-related
Equity securities-related
Liabilities total

$

$
$

$

98,494 $3,829,326―
661,674― $494,993
3,665,484
367,328― $―――98,494
4,324,319
3,665,484
1,029,003――
936
4,590,432 $93
104,349―
4,632,249 $

―
―
―
― $

93
104,349936
9,222,681

― $
―
7,726
7,726 $

999 $50,067―51,067 $

― $
―
―
― $

999
50,067
7,726
58,793(2) Financial instruments other than that are stated at fair value in the accompanying consolidated balance
sheetsCurrent fiscal year (As of March 31, 2022)
Classification
Operating loans
Securities and investment securities
Held-to-maturity securities
Government and local bonds
Assets total¥¥

Classification
Operating loans
Securities and investment securities
Held-to-maturity securities
Government and local bonds
Assets total$$

Level 1

― ¥

1,673
1,673 ¥

Level 1

― $13,713
13,713 $Millions of yen
Fair value
Level 2
Level 3526,090 ¥
365,306 ¥―526,090 ¥Total
891,396―
365,306 ¥1,673
893,070

Thousands of U.S. dollars
Fair value
Level 2
Level 3
4,310,093 $2,992,846 $Total
7,302,939―
4,310,093 $―2,992,846 $

13,713
7,316,653

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 31 -

12/08/22

91Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Note Explanation of valuation methods and inputs used to calculate fair value
Securities and investment securities
Listed stocks, government bonds, local bonds and corporate bonds are valuated using the quoted
market prices. Fair value of listed stocks and government bonds is classified as level 1 because theseprices involve transactions on active markets. On the other hand, fair value of local and corporate bonds
is classified as level 2 due to infrequent trading in the market and the prices are not considered as quoted
price in an active market.
Operating loans
For loans with variable interest rates, the carrying amounts are used as the fair value because the fairvalue approximates the carrying amounts if the credit conditions of the borrowers have not changed
significantly since the loans were made, as the variable interest rate reflects the market interest rates in ashort period of time. For those with fixed interest rates, the fair value is calculated by discounting thetotal amount of principal and interest by the market interest rate for each category based on the type ofloan, internal rating, and term. The fair value of doubtful receivables is calculated based on the estimatedamount of collection from collateral and guarantees, etc. and the fair value approximates the balance sheet
amount on the end of consolidated fiscal year less the current estimated uncollectable amount, and suchamounts are used as the fair value. Credit risk and other factors are considered in calculating these fairvalues, and if the impact of unobservable inputs is significant, the fair value is classified as Level 3;otherwise, the fair value is classified as Level 2.
Derivative transactions
Bond futures and stock index futures transactions are valued using quoted market prices and areclassified as Level 1 because they are traded in active markets. The fair values of interest rate swaps andforeign exchange contracts are determined using the discounted present value method with observable
inputs such as interest rates and foreign exchange rates, and are classified as Level 2.

92

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 32 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Securities)
1. Held-to-maturity debt securities with market value
Previous fiscal year (As of March 31, 2021)
Type(1) Government
bonds, local bonds,
etc.
Fair value exceeds the(2) Corporate bonds
carrying amount(3) Other
Subtotal(1) Government
bonds, local bonds,
etc.
Fair value not exceed(2) Corporate bonds
the carrying amount(3) Other
Subtotal
Total

Carrying amountMillions of yen
Fair value

Differences¥

1,512 ¥

1,706 ¥

194

¥

―
―
1,512 ¥――
1,706 ¥

―
―
194

¥

― ¥

― ¥

―

¥
¥

―
―
― ¥
1,512 ¥――
― ¥1,706 ¥―――
194

Current fiscal year (As of March 31, 2022)
Type(1) Government
bonds, local bonds,
etc.
Fair value exceeds the(2) Corporate bonds
carrying amount(3) Other
Subtotal(1) Government
bonds, local bonds,
etc.
Fair value not exceed(2) Corporate bonds
the carrying amount(3) Other
Subtotal
Total

Carrying amountMillions of yen
Fair value

Differences¥

1,511 ¥

1,673 ¥

162

¥

―
―
1,511 ¥――
1,673 ¥

―
―
162

¥

― ¥

― ¥

―

¥
¥

―
―
― ¥
1,511 ¥――
― ¥1,673 ¥―――
162

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 33 -

12/08/22

93Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Thousands of U.S. dollars
Carrying amount
Fair value
Differences

Type(1) Government
bonds, local bonds,
etc.
Fair value exceeds the(2) Corporate bonds
carrying amount(3) Other
Subtotal(1) Government
bonds, local bonds,
etc.
Fair value not exceed(2) Corporate bonds
the carrying amount(3) Other
Subtotal
Total

2. Available-for-sale securities with market value
Previous fiscal year (As of March 31, 2021)
Type(1) Equity securities

Carrying amountexceeding acquisition
cost

Carrying amount notexceeding acquisition
cost(2) Bonds
Government
bonds, local
bonds, etc.
Corporate bonds
Other(3) Others
Subtotal(1) Equity securities(2) Bonds
Government
bonds, local
bonds, etc.
Corporate bonds
Other(3) Others
Subtotal
Total$

12,380 $13,713 $

1,332

$

―
―
12,380 $――13,713 $

―
―
1,332

$

― $

― $

―

$
$

―
―
― $
12,380 $――― $13,713 $

―
―
―
1,332

Millions of yen
Carrying amount
Acquisition cost¥
15,018 ¥4,381 ¥

Differences
10,636¥¥¥¥352,041

329,154

22,88662,89736,471
16,318482,747 ¥319 ¥62,811
34,22012,755443,325 ¥
345 ¥

86
2,250
3,562
39,422(25)

158,348

163,642(5,293)292,601

293,014(413)

19,535
1,188
471,993 ¥954,741 ¥

20,194
1,211
478,408 ¥921,733 ¥

(659)
(23)
(6,414)33,007Note Consolidated balance sheet carrying amounts of ¥1,716 million for unlisted equity securities, ¥14,571 million forunlisted REITs and ¥1,503 million for investments in investment limited partnership are not included above because
they do not have market prices and their fair value is extremely difficult to measure.

94

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 34 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (As of March 31, 2022)
Type(1) Equity securities

Carrying amountexceeding acquisition
cost

Carrying amount notexceeding acquisition
cost(2) Bonds
Government
bonds, municipal
bonds, etc.
Corporate bonds
Other(3) Others
Subtotal(1) Equity securities(2) Bonds
Government
bonds, local
bonds, etc.
Corporate bonds
Other(3) Others
Subtotal
Total

Millions of yen¥

Carrying amount
Acquisition cost
11,708 ¥3,890 ¥¥¥¥¥

Differences
7,818

266,390

250,879

15,511

11,73342,943
14,829347,606 ¥313 ¥11,70040,264
10,407317,142 ¥
345 ¥

32
2,679
4,421
30,463(32)

261,435

272,679(11,243)435,675

436,495(819)

82,656
14,674
794,756 ¥
1,142,362 ¥

85,22914,674809,424 ¥
1,126,567 ¥(2,573)(0)(14,668)
15,794Note Consolidated balance sheet carrying amounts of ¥1,765 million ($14,467 thousand) for unlisted equity securities, and¥1,986 million ($16,272 thousand) for investments in investment limited partnership are not included above because
they do not have market prices and their fair value is extremely difficult to measure.

Type(1) Equity securities

Carrying amountexceeding acquisition
cost

Carrying amount notexceeding acquisition
cost

Thousands of U.S. dollars
Carrying amount
Acquisition cost$
95,926 $31,872 $(2) Bonds
Government
bonds, local
bonds, etc.
Corporate bonds
Other(3) Others
Subtotal$(1) Equity securities $(2) Bonds
Government
bonds, local
bonds, etc.
Corporate bonds

Other(3) Others
Subtotal
Total

$
$

Differences
64,0542,182,458

2,055,378

127,080

96,125351,824
121,4932,847,828 $
2,567 $

95,859329,872
85,2682,598,251 $
2,831 $

266
21,95236,224
249,577(264)

2,141,861

2,233,977(92,116)

3,569,359

3,576,070(6,711)

677,178
120,224
6,511,191 $9,359,020 $698,261
120,224
6,631,366 $9,229,617 $(21,082)0(120,174)
129,402

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 35 -

12/08/22

95

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
3. Available-for-sale securities sold during the fiscal year
Previous fiscal year (From April 1, 2020 to March 31, 2021)
Proceeds fromsale(1) Equity securities(2) Bonds
Government bonds, local bonds, etc.
Corporate bonds
Other(3) Others

¥

1,993

¥

―
16,633―
1,492
20,119Millions of yen
Gross realized
gains
¥

739

¥

―
1
―
0
741

Gross realized
losses
¥

―

¥

―
34
―
695
729

Current fiscal year (From April 1, 2021 to March 31, 2022)
Proceeds fromsale(1) Equity securities(2) Bonds
Government bonds, local bonds, etc.
Corporate bonds
Other(3) Others

¥

2,778

¥

7,412
―
7,869
3,832
21,892Millions of yen
Gross realized
gains
¥

1,344

¥

7
―
57
46
1,456

Gross realized
losses
¥

300

¥

2
―
277
1,127
1,707

Thousands of U.S. dollars
Proceeds from
Gross realized
sale
gains
(1) Equity securities(2) Bonds
Government bonds, local bonds, etc.
Corporate bonds
Other(3) Others

96$

22,763$60,727―64,471
31,399179,361$

11,017

$

58
―
470
384
11,930Gross realized
losses
$

2,461

$

16
―
2,276
9,234
13,989Japan Securities Finance Co., Ltd. Integrated Report 2022
- 36 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Derivative Transactions)
1. Derivative transactions for which hedge accounting is not applied
Currency-related
Previous fiscal year (As of March 31, 2021)

Category

Non-market
transactions

Contract
amounts

Nature oftransaction
Forward exchange
contract:
Sell:
U.S. dollars
Euro
Australian dollars
Buy:
U.S. dollars

Millions of yen
2021
Of whichwithinFair value
one year

¥

525
5
52

¥

Non-market
transactions

Category

Non-market
transactions

Contract
amounts

Nature oftransaction
Forward exchange
contract:
Sell:
U.S. dollars
Euro
Australian dollars
Buy:
U.S. dollars¥¥

Contract
amounts$

8,393
11,272
5,250
1,492

$

(12)
(0)
(0)

¥

(12)
(0)
(0)

161

161

Millions of yen
2022
Of whichwithinFair value
one year

Gains orlosses on
valuation

―
―
―

¥

―

182

Nature oftransaction
Forward exchange
contract:
Sell:
U.S. dollars
Euro
Australian dollars
Buy:
U.S. dollars

1,024
1,375
640

¥

―

10,921

Current fiscal year (As of March 31, 2022)

Category―――

Gains orlosses on
valuation

(34)
(61)
(24)

¥

(34)
(61)
(24)

9

9

Thousands of U.S. dollars
2022
Of whichwithinFair value
one year

Gains orlosses on
valuation

―
―
―
―

$

(281)
(504)
(198)
78

$

(281)
(504)
(198)
78

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 37 -

12/08/22

97Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
2. Derivative transactions for which hedge accounting is applied(1) Interest rate derivatives
Previous fiscal year (As of March 31, 2021)
Hedge
accounting
method*1*2Nature of transaction
Interest rate swaps:
Variable rate received for
fixed rate
Interest rate swaps:
Variable rate received
for fixed rate
Variable rate paid
for fixed rate

Hedged items

Millions of yen
2021

Contract or
Of whichnotional
over one year
amounts

Securities andInvestments securities ¥Fair value

720,862 ¥

716,953 ¥(10,559)¥

563,060 ¥

19,869 ¥*3Long-term borrowings ¥3,000 ¥

3,000 ¥

*3

Operating loans

Notes:*1 Deferred hedge accounting is applied.
*2 The difference in amounts to be paid or received on interest rate swaps is recognized over the life of the agreements as an
adjustment to interest expense.
*3 For the assets and liabilities for which interest rate swap contracts are used to hedge the interest rate fluctuations, fair valueof derivative financial instrument is included in fair value of the respective assets and liabilities as hedged items.

Current fiscal year (As of March 31, 2022)
Hedge
accounting
method*1*2Millions of yen
2022

Nature of transaction
Interest rate swaps:
Variable rate received for
fixed rate
Interest rate swaps:
Variable rate received
for fixed rate
Variable rate paid
for fixed rate

Hedged items

Contract or
Of whichnotional
over one year
amounts

Securities andInvestments securities ¥Fair value

825,668 ¥

808,349 ¥

6,625

¥

98,427 ¥19,180 ¥*3Long-term borrowings ¥3,000 ¥

3,000 ¥

*3

Operating loans

Notes:*1 Deferred hedge accounting is applied.
*2 The difference in amounts to be paid or received on interest rate swaps is recognized over the life of the agreements as an
adjustment to interest expense.
*3 For the assets and liabilities for which interest rate swap contracts are used to hedge the interest rate fluctuations, fair valueof derivative financial instrument is included in fair value of the respective assets and liabilities as hedged items.

98

Japan Securities Finance Co., Ltd. Integrated Report 2022
- 38 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022

Hedge
accounting
method*1*2Nature of transaction
Interest rate swaps:
Variable rate received for
fixed rate
Interest rate swaps:
Variable rate received
for fixed rate
Variable rate paid
for fixed rate

Thousands of U.S. dollars
2022
Contract or
Of whichnotional
Fair value
over one year
amounts

Hedged items

Securities andInvestments securities $ 6,764,443 $ 6,622,554 $Operating loans

54,282$806,382 $

157,135 $*3Long-term borrowings $24,578 $

24,578 $*3

Notes:*1 Deferred hedge accounting is applied.
*2 The difference in amounts to be paid or received on interest rate swaps is recognized over the life of the agreements as an
adjustment to interest expense.
*3 For the assets and liabilities for which interest rate swap contracts are used to hedge the interest rate fluctuations, fair valueof derivative financial instrument is included in fair value of the respective assets and liabilities as hedged items.

(2) Bond derivatives
Previous fiscal year (As of March 31, 2021)
No items to report.
Current fiscal year (As of March 31, 2022)
Hedge
accounting
method*1

Nature of transaction
Bond futures:
Sell

Note *1 Deferred hedge accounting is applied.

Hedge
accounting
method*1

Nature of transaction
Bond futures:
Sell

Note *1 Deferred hedge accounting is applied.

Millions of yen
2022

Hedged items

Contract or
Of whichnotional
over one year
amounts

Investments securities ¥Hedged items

3,053 ¥―¥

Fair value
114

Thousands of U.S. dollars
2022
Contract or
Of whichnotional
Fair value
over one year
amounts

Investments securities $25,019 $―$936Japan Securities Finance Co., Ltd. Integrated Report 2022
- 39 -

12/08/22

99

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(3) Stock derivatives
Previous fiscal year (As of March 31, 2021)
Hedge
accounting
method*1Millions of yen
2021

Nature of transaction
Stock index futures:
Sell

Note *1 Deferred hedge accounting is applied.

Hedged items

Contract or
Of whichnotional
over one year
amounts

Investments securities ¥Current fiscal year (As of March 31, 2022)
Hedge
accounting
method*1Note *1 Deferred hedge accounting is applied.

Hedge
accounting
method*1

Hedged items

Note *1 Deferred hedge accounting is applied.

Contract or
Of whichnotional
over one year
amounts

Investments securities ¥Nature of transaction
Stock index futures:
Sell

―¥

(514)

Millions of yen
2022

Nature of transaction
Stock index futures:Sell

15,186 ¥Fair value

Hedged items

8,984 ¥―¥

Fair value(943)

Thousands of U.S. dollars
2022
Contract or
Of whichnotional
Fair value
over one year
amounts

Investments securities $73,603 $―$(7,726)100 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 40 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Retirement Benefits)
1. Outline of retirement benefit plans
The Company has defined benefit plans which consist of a defined benefit corporate pension plan anda lump-sum retirement benefit plan, and a defined contribution pension plan. The Company has
established retirement benefit trust for the defined benefit corporate pension plan and the lump-sum
retirement benefit plan.
Consolidated subsidiaries’ main retirement plan is a defined benefit lump-sum retirement plan and thesimplified method has been adopted for the calculation of retirement benefit liability and retirement
benefit expenses for the plans.
2. Defined benefit plan
(1) Reconciliation of changes in retirement benefit obligation (the following table excludes certain plans
mentioned in (3))
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Retirement benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gains and losses
Benefits paid
Retirement benefit obligation at end of year

¥

¥

9,421
320
28
(213)
(369)
9,187

¥

¥

9,470
331
28
6
(415)
9,421

$

$

77,1872,625
231(1,749)(3,024)75,270(2) Reconciliation of changes in plan assets (the following table excludes certain plans mentioned in (3))

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses
Employer contributions
Benefits paid
Plan assets at end of year

¥

¥

9,482
189
106
119
(273)
9,624

¥

¥

8,209
164
1,210
184
(286)
9,482

$

$

77,687
1,553
869
978
(2,238)78,851(3) Reconciliation of changes in retirement benefit liability whose plans adopted the simplified method

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Retirement benefit liability at beginning of year
Retirement benefit expenses
Benefits paid
Contributions
Retirement benefit liability at end of year

¥

¥

184
51
(22)
(0)
213

¥

¥

179
18
(12)
(0)
184

$

$

1,512
424
(181)
(3)
1,752

Japan Securities Finance Co., Ltd. Integrated Report 2022 101- 41 -

12/08/22

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(4) Reconciliation between retirement benefit obligation and plan assets and liability for retirement benefit
and asset for retirement benefit recognized in consolidated balance sheets
Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Funded retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Net liability and asset recognized in consolidatedbalance sheets
Liability for retirement benefit
Net liability and asset recognized in consolidatedbalance sheets

¥

9,187
(9,624)
(437)
213

¥

9,421
(9,482)
(61)
184

$

75,270(78,851)(3,581)
1,752

¥

¥
¥

123
123
―

$

¥

(223)
213
(437)

$

(1,829)1,752(3,581)

¥

(223)

¥

123

$

(1,829)(5) The components of retirement benefit expenses

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
¥

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains or losses
Retirement benefit expenses calculated by thesimplified method
Retirement benefit expenses

¥

320
28
(189)
1
51
212

¥

¥

331
28
(164)
201
18
416

$

$

(6) Remeasurements of retirement benefit plans before related tax effects

¥
¥

321
321

¥
¥

1,405
1,405

$
$

(7) Accumulated remeasurements of retirement benefit plans before related tax effects

¥
¥

(309)
(309)

¥
¥

11
11

2,632
2,632

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Unamortized actuarial gains or losses
Total

424
1,740

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Actuarial gains or losses
Total

2,625
231
(1,553)13$$(2,537)(2,537)102 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 42 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(8) Plan assets(a) Percentage by major category of plan assets
Debt securities
Equity securities
General account
Other
Total

2022

2021

39.1%
34.3
9.4
17.2
100.0%

40.3%
33.1
9.8
16.8
100.0%

Note Plan assets as of March 31, 2022 and 2021 include the retirement benefit trust contributed for the years ended
March 31, 2022 and 2021 which are 9.4% and 9.6% of total plan assets, respectively.

(b) Determination procedure of long-term expected rate of return on plan assets
In determining long-term expected rate of return on plan assets, the Company considers the current
and projected asset allocation, as well as current and future long-term rate of returns for various
categories of the plan assets.
(9) Basis for calculation of actuarial assumptions
The assumptions used in accounting for the above plans as of March 31, 2022 and 2021 are as
follows:(a) Discount rate(b) Long-term expected rate of return on plan assets(c) Expected salary increase rate

2022

2021

0.5%
2.0%
5.2%

0.3%
2.0%
5.2%

3. Defined contribution plans
For the years ended March 31, 2022 and 2021, the amount to be paid by the Company and its
consolidated subsidiaries to the defined contribution plans was ¥36 million ($296 thousand) and ¥35
million, respectively.

Japan Securities Finance Co., Ltd. Integrated Report 2022 103- 43 -

12/08/22

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Tax Effect Accounting)
1. The principal components of deferred tax assets and deferred tax liabilities are as follows:

Deferred tax assets:
Accrued business tax
Accrued bonuses
Retirement benefit liability
Allowance for doubtful accounts
Deferred losses on hedges
Net unrealized loss on available-for-sale securities
Other
Subtotal
Valuation allowance
Deferred tax assets total
Deferred tax liabilities:
Gain on evaluation of subsidiaries’ assets
Net unrealized gain on other securities
Gain on evaluation of acquired assets by merger
Deferred loss on hedges
Other
Deferred tax liabilities total
Net deferred tax liabilities

Millions of yen
2022
2021
¥

¥

103
143
843
24
10,2595,003
305
16,682(87)
16,595(154)(9,379)(452)(9,390)(229)(19,607)(3,011)

¥

¥

110
141
852
37
10,323
1,667
305
13,438(4,742)
8,696(154)(11,667)(537)(4,750)(84)(17,194)(8,498)

Thousands of
U.S. dollars
2022

$

$

849
1,177
6,911
198
84,05040,9892,501
136,678(713)
135,964(1,269)(76,845)(3,709)(76,936)(1,879)(160,641)
24,676

2. The reconciliation of the statutory tax rate and the effective tax rate when there is a significant difference
2022
Statutory tax rate
Equity in gains of affiliates
Expenses not deductible for tax purposes
Valuation allowance
Income not credited for tax purposes
Elimination of dividend income
Other
Effective tax rate

30.6%
(1.9)
0.5
(1.0)
(6.9)
5.6
0.7
27.6%

2021

*1

Note *1 The reconciliation of the statutory tax rate and the effective tax rate for the year ended March 31, 2021 is not subject
to disclosure because the difference between the rates does not exceed 5% of the statutory tax rate.

(Revenue Recognition)
Information on the revenue recognition is omitted as revenue subject to the “Account Standards for
Revenue Recognition” is immaterial for “Securities finance business”,” Trust banking business” and”
Real estate leasing business” which are conducted by the Group.

104 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 44 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Segment Information)
1. Outline of the reportable segments
The reportable segments of the Group are the business units for which the Group is able to obtainrespective financial information separately in order for the Board of Directors to conduct periodic
investigation to determine distribution of management resources and evaluate their business results.
“Securities finance business” conducted by the Company, “Trust banking business” conducted by JSF
Trust and Banking Co., Ltd., a consolidated subsidiary and “Real estate leasing business” conducted by
Nihon Building Co., Ltd., a consolidated subsidiary, are the Group’s reportable segments.
“Securities finance business” is engaged in providing loan services, government and corporate bondfinancing and general loans, bond lending and stock lending. “Trust banking business” is engaged inproviding trust services such as securities trust and banking services such as deposit or loan. “Real estateleasing business” is mainly engaged in providing services for leasing and managing real estate owned by
the Group.
2. Calculation methods of operating revenue, profit or loss, assets, liabilities and other items for eachreportable segment.
As the methods of accounting treatment for the reported business segments are the same as description
in the “Basis of Presentation of the Consolidated Financial Statements”.
Profits by reportable segments are based on ordinary profit base. Intersegment revenue and transfer
are based on arms-length transactions.
3. Information on operating revenue, profit or loss, assets, liabilities and other items for each reportablesegment
Previous fiscal year (From April 1, 2020 to March 31, 2021)

Revenues:
Revenues to third parties
Intersegment revenues andtransfers
Total
Segment profit
Segment assets
Others:Depreciation andamortization
Interest income
Income taxes

Millions of yen
2021
Real estate
Trust banking
leasing

Securities
finance¥

27,534

¥

16

2,481

¥

143

908

Total
¥

386

30,924546¥¥¥

27,5504,484
10,711,091

¥
¥
¥

2,624
1,254
1,517,947

¥
¥
¥

1,295
715
10,084¥¥¥

31,4706,454
12,239,123

¥

1,196
258
974

¥

58
―
397

¥

101
15
258

¥

1,356
273
1,630

Japan Securities Finance Co., Ltd. Integrated Report 2022 105- 45 -

12/08/22

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (From April 1, 2021 to March 31, 2022)

Revenues:
Revenues to third parties
Intersegment revenues andtransfers
Total
Segment profit
Segment assets
Others:Depreciation andamortization
Interest income
Income taxes

Revenues:
Revenues to third parties
Intersegment revenues andtransfers
Total
Segment profit
Segment assets
Others:Depreciation andamortization
Interest income
Income taxes

Millions of yen
2022
Real estate
Trust banking
leasing

Securities
finance¥

26,558

¥

28

2,737

¥

222

841

Total
¥

445

30,138696¥¥¥

26,586
5,928
12,714,123

¥
¥
¥

2,960
1,385
1,557,744

¥
¥
¥

1,286
707
9,614

¥
¥
¥

30,834
8,021
14,281,482

¥

993
294
1,371

¥

104
―
361

¥

96
16
241

¥

1,194
311
1,974

Thousands of U.S. dollars
2022
Real estate
Trust banking
leasing

Securities
finance$

217,585$230

22,431

$

1,824

6,894

Total
$

3,646

246,911
5,702

$
$
$

217,816
48,573
104,162,902$$$

24,256
11,34812,762,119$$$

10,541
5,794
78,765$$$

252,61365,716
117,003,787

$

8,143
2,412
11,236

$

854
―
2,964

$

791
139
1,979

$

9,789
2,551
16,180106 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 46 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
4. Reconciliation between total amounts of reportable segments and consolidated financial statements

Operating profit
Total segment profit

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
¥

30,834¥

31,470$252,613

Elimination of intersegment transactions

(696)

(546)

(5,702)

Other
Operating profit in consolidated financial
statements

―

―

―

¥

¥

8,021

Elimination of intersegment transactions
Share of profit of entities accounted for using
equity method
Other
Ordinary profit in consolidated financial
statements¥

30,924$¥¥

246,911
Thousands of
U.S. dollars
2022

6,454

$

65,716(1,303)(1,291)(10,675)

446

395

3,660

―

―

―

7,164

¥

5,558

$

14,281,482¥

12,239,123

58,700Thousands of
U.S. dollars
2022

Millions of yen
2022
2021

AssetsTotal segment assets¥

Millions of yen
2022
2021

Ordinary profit
Total segment profit

30,138$117,003,787

Elimination of intersegment credits(91,221)(80,548)(747,352)

Elimination of investments and capital(26,268)(26,268)(215,212)

Other
Total assets in consolidated financial
statements

4,664

3,923

38,215¥

14,168,656¥

12,136,229$

116,079,437

Japan Securities Finance Co., Ltd. Integrated Report 2022 107- 47 -

12/08/22

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Millions of yen

Segment total

Other items
March 31, 2021
Depreciation and amortization
Interest income
Income taxes
March 31, 2022
Depreciation and amortization
Interest income
Income taxes

Amounts in the
consolidated
financialstatements

Adjustments

¥

1,356
273
1,630

¥

0
(15)
0

¥

1,356
258
1,630

¥

1,194
311
1,974

¥

0
(16)
(2)

¥

1,195
294
1,972

Thousands of U.S. dollars

Other items
March 31, 2022
Depreciation and amortization
Interest income
Income taxes

Segment total
$

9,789
2,551
16,180

Amounts in the
consolidated
financialstatements

Adjustments
$

2
(139)
(19)

$

9,791
2,412
16,161[Related information]
Previous fiscal year (From April 1, 2020 to March 31, 2021)
1. Information by products and services
Millions of yen
2021

Operating revenue toexternal customers

Loans formargintransaction¥

11,359Bond lending
¥

9,553

Other
¥

10,011

Total¥

30,924

2. Geographic information(1) Operating revenue
Because revenues from external customers inside Japan are over 90% of operating revenue in the
consolidated statement of income, the geographic information is not disclosed.
(2) Property, plant and equipment
Because there are no property, plant and equipment outside Japan, the geographic information is notdisclosed.
3. Information by major customers
Because no particular customer whose operating revenue is over 10% of operating revenue in the
consolidated statement of income exists, the information by major customers is not disclosed.

108 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 48 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
Current fiscal year (From April 1, 2021 to March 31, 2022)
1. Information by products and services
Millions of yen
2022

Operating revenue toexternal customers

Loans formargintransaction
¥

6,118

Bond lending¥

11,985

Other¥

12,033

Total¥

30,138

Thousands of U.S. dollars
2022

Operating revenue toexternal customers

Loans formargintransaction$

50,127

Bond lending$

98,194

Other$

98,589

Total$

246,911

2. Geographic information(1) Operating revenue
Because revenues from external customers inside Japan are over 90% of operating revenue in the
consolidated statement of income, the geographic information is not disclosed.
(2) Property, plant and equipment
Because there are no property, plant and equipment outside Japan, the geographic information is notdisclosed.
3. Information by major customers
Because no particular customer whose operating revenue is over 10% of operating revenue in the
consolidated statement of income exists, the information by major customers is not disclosed.
[Information of impairment losses on fixed assets by reportable segments]
No items to report.
[Amortization and unamortized balance of goodwill by reportable segments]
No items to report.
[Negative goodwill incurred by reported segments]
No items to report.
[Information of related parties]
1. Business transactions with related parties
No items to report.
2. Note to significant affiliate companies
No items to report.

Japan Securities Finance Co., Ltd. Integrated Report 2022 109- 49 -

12/08/22

Corporate Data

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Per Share Information)
2022¥

Net assets per share
Profit per share

Yen

1,545.03 ¥56.61

U.S. dollars
2022

2021
1,473.24
43.28

$

12.65
0.46

Notes:
1. Diluted profit per share for the previous and current fiscal year are not stated as there are no potential shares that have dilutive
effect.
2. The basis for calculating net assets per share is as follows:

Millions of yen
2022
2021
¥

Total net assets
Amount deducted from total net assets
Net assets applicable to common shareholders¥

137,996 ¥―137,996 ¥

135,166―
135,166

Thousands of
U.S. dollars
2022
$
$

1,130,565―
1,130,565

Number of shares (Thousands)
2022
2021
Number of common shares outstanding

96,00096,000

Number of common treasury shares

6,683

4,252

Number of common shares outstandingon which net assets per share is calculated

89,316

91,747

3. The basis for calculating profit per share is as follows:

Millions of yen
2022
2021
Profit attributable to owners of parent
Profit not attributable to common shareholders
Profit applicable to common shareholders of theparent company

Thousands of
U.S. dollars
2022¥

5,174 ¥
―

3,971
―

$

42,392―¥

5,174 ¥

3,971$

42,392

Number of shares (Thousands)
2022
2021
Weighted average number of common shares

91,401

91,744

4. For calculating “Net assets per share”, the Company’s own stocks which are held by the trust (BBT) (1,137 and 1,077
thousands shares for previous and current fiscal year, respectively) are included in the treasury stocks which are excluded
from the calculation of number of shares outstanding at end of year.
For calculating “Profit per share”, the Company’s own stocks which are held by the trust (BBT) (765 and 1,086 thousands
shares for previous and current fiscal year, respectively) are included in the treasury stocks which are excluded from thecalculation of weighted average number of shares.

110 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 50 -

12/08/22

Notes to Consolidated Financial Statements

Japan Securities Financial Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022
(Subsequent Event)(Acquisition of treasury shares)
The Company’s Board of Directors held on May 10, 2022 has resolved to acquire treasury sharespursuant to the provisions of Article 156 of the Companies Act, as applied by replacing the relevant terms
pursuant to the provisions of Article 165, paragraph (3) of the same Act.
1. Reasons for the acquisition of treasury shares
The Company acquires treasury shares in accordance with Shareholder Return Policy, aim for a total
return ratio of 100% on a cumulative basis from FY2021 through FY2025 by the flexible payment ofdividends and acquisition of treasury shares.
2. Details of matters related to acquisition(1) Class of shares to be acquired
Common shares of the Company(2) Total number of shares to be acquired
Up to 3,200,000 shares (3.5% of the total number of issued shares excluding treasury shares)(3) Total amount of share acquisition costs
UP to ¥3,000 million ($24,578 thousand)(4) Acquisition period
From May 11, 2022 to March 31, 2023

Japan Securities Finance Co., Ltd. Integrated Report 2022 111- 51 -

12/08/22

Corporate Data

Supplementary Information to Consolidated Financial Statements
Japan Securities Financial Co., Ltd. abd Consolidated Subsidiaries
Year ended March 31, 2022(v) Supplementary Statements[Detailed Schedule of Bonds]
No items to report.

[Detailed Schedule of Borrowings]

Classification
Short-term borrowings
Long-term borrowings due within one
year
Lease obligation due within one year

At the beginningof the fiscal year¥
137,594―¥

Repayment
due
―
―

―

―

―

3,000

4,000

0.543 %―――

1,706,600
613,000

1,858,400
496,000(0.011)%0.001 %――

2,597,610――

Long-term borrowings(except for due within one year)
Lease obligation(except for due within one year)
Other interest-bearing liabilities:
Call money (due within one year)
Commercial papers (due within one
year)
Total

Millions of yen
2022
At the end of the
Averagefiscal year
interest rates¥
239,2100.007 %――

2,460,194

¥

―
From
November
2023
To April
2031
―

Note
1 Average interest rates are calculated based on the interest rates at the end of the fiscal year.
2 Cash collateral received for securities lent is excluded from other interest-bearing liabilities.
3 The amounts of long-term borrowings (except for due within one year) due within five years of the end of the fiscal year are
as follows:

Due after one
year throughtwo years
Long-term borrowings

¥

1,000

Millions of yen
2022
Due after two
Due after three
years throughyears throughthreefour years
years
¥
― ¥
―

Due after four
years throughfive years¥―

112 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 52 -

12/08/22

Supplementary Information to Consolidated Financial Statements
Japan Securities Financial Co., Ltd. abd Consolidated Subsidiaries
Year ended March 31, 2022

Classification
Short-term borrowings
Long-term borrowings due within one
year
Lease obligation due within one year

At the beginningof the fiscal year$
1,127,265―$

Repayment
due
―
―

―

―

―

24,57832,7700.543 %―――

13,981,648
5,022,120

15,225,299
4,063,575(0.011)%0.001 %――

21,281,418――

Long-term borrowings(except for due within one year)
Lease obligation(except for due within one year)
Other interest-bearing liabilities:
Call money (due within one year)
Commercial papers (due within one
year)
Total

Thousands of U.S. dollars
2022
At the end of the
Averagefiscal year
interest rates$
1,959,773
0.007 %――

20,155,611

$

―
From
November
2023
To April
2031
―

Note
1 Average interest rates are calculated based on the interest rates at the end of the fiscal year.
2 Cash collateral received for securities lent is excluded from other interest-bearing liabilities.
3 The amounts of long-term borrowings (except for due within one year) due within five years of the end of the fiscal year are
as follows:

Due after one
year throughtwo years
Long-term borrowings

$

8,192

Thousands of U.S. dollars
2022
Due after two
Due after three
years throughyears throughthreefour years
years
$
― $
―

Due after four
years throughfive years$―[Detailed Schedule of Asset Retirement Obligations]Pursuant to Article 92-2 of the Regulations for Consolidated Financial Statements, this information
has been omitted because the balance of asset retirement obligations at the beginning and at the end of the
fiscal year ended March 31, 2022 was less than 1/100th of the balance of liabilities and net assets at the
beginning and at the end of the fiscal year ended March 31, 2022.

Japan Securities Finance Co., Ltd. Integrated Report 2022 113- 53 -

12/08/22

Corporate Data

Supplementary Information to Consolidated Financial Statements
Japan Securities Financial Co., Ltd. abd Consolidated Subsidiaries
Year ended March 31, 2022

(2) Other

Quarterly information for the current fiscal year

Cumulative period
Operating revenue
Profit before income taxes
Profit attributable to owners of parentFirst
quarter
¥
7,406
2,504
1,778

Millions of yen
2022
SecondThird
quarterquarter¥
15,056 ¥22,362
3,875
5,649
2,745
4,032

Fourthquarter¥
30,138
7,147
5,174

Yen
2022

Profit per share (Cumulative period)
Profit per share (Quarterly period)

Cumulative period
Operating revenue
Profit before income taxes
Profit attributable to owners of parent

Profit per share (Cumulative period)
Profit per share (Quarterly period)

First
quarter
¥
19.38
19.38

Secondquarter
¥
29.91
10.53

Third
quarter
¥
43.94
14.03

Fourthquarter
¥
56.61
12.65

First
quarter$
60,67920,515
14,571Thousands of U.S. dollars
2022
SecondThird
quarterquarter$
123,355 $
183,21131,752
46,284
22,48933,038Fourthquarter$
246,91158,55342,392First
quarter
$
0.15
0.15

U.S. dollars
2022
SecondThird
quarterquarter$
0.24 $
0.35
0.08
0.11

Fourthquarter
$
0.46
0.10

114 Japan Securities Finance Co., Ltd. Integrated Report 2022
- 54 -

12/08/22

Japan Securities Finance Co., Ltd. Integrated Report 2022 115

Corporate Data

116 Japan Securities Finance Co., Ltd. Integrated Report 2022

Japan Securities Finance Co., Ltd. Integrated Report 2022 117

Corporate Data

118 Japan Securities Finance Co., Ltd. Integrated Report 2022

Japan Securities Finance Co., Ltd. Integrated Report 2022 119

Corporate Data

120 Japan Securities Finance Co., Ltd. Integrated Report 2022

Japan Securities Finance Co., Ltd. Integrated Report 2022 121

Corporate Data

122 Japan Securities Finance Co., Ltd. Integrated Report 2022

Japan Securities Finance Co., Ltd. Integrated Report 2022 123

Corporate Data

Shareholder and Investor Information
Share Information(As of March 31, 2022)

Shares Held by Shareholder Type(Thousands)

Total number of authorized shares

200,000,000

Treasury stock
5,594 (5.8%)

Total number of issued and outstanding
shares

96,000,000

Foreign investors
36,370 (37.9%)

Number of shareholders

10,441

Financial institutions
24,488 (25.5%)
Securities
companies
6,499 (6.8%)
Individuals
and others
15,228 (15.9%)

Other Japanesecompanies
7,819 (8.1%)

Major Shareholders (Top 10)
Number of shares held(Thousands)

Shareholding ratio(%)

THE SFP VALUE REALIZATION MASTER FUND LTD.

12,674

14.01

The Master Trust Bank of Japan, Ltd. (Trust account)

10,946

12.10

Capital Market Research Institute

4,654

5.14

Custody Bank of Japan, Ltd. (Trust account)

4,228

4.67

Mizuho Bank, Ltd.

3,536

3.91

THE CHASE MANHATTAN BANK, N.A. LONDON SPECIAL OMNIBUS
SECS LENDING ACCOUNT

3,530

3.90

INTERTRUST TRUSTEES (CAYMAN) LIMITED SOLELY IN ITSCAPACITY AS TRUSTEE OF JAPAN-UP

3,109

3.43

STATE STREET CLIENT OMNIBUS ACCOUNT OM44

2,006

2.21

Custody Bank of Japan, Ltd. (Trust account 4)

1,874

2.07

INTERTRUST TRUSTEES CAYMAN LIMITED AS TRUSTEEOF JAPAN-UP UNIT TRUST

1,725

1.90

Note: S hareholding ratios have been calculated based on the total number of issued and outstanding shares excluding treasury stock (5,594 thousand shares).

Share Price
(Yen)

1,100

JSF (Left axis)(Yen)
TOPIX (Right axis) 2,500

900

2,000

700

1,500

500

1,000

300

500
2012

2013

2014

2015

2016

124 Japan Securities Finance Co., Ltd. Integrated Report 2022

2017

2018

2019

2020

2021 (FY)Company Information(As of March 31, 2022)

Company Profile
Name

Japan Securities Finance Co, Ltd.

Representative

Shigeki Kushida, Representative Executive Officer & President

Head office

1-2-10 Nihonbashi-Kayabacho, Chuo-ku, Tokyo 103-0025 Japan

Established

July 1927

Incorporated

February 1950 (Newly launched as a securities finance company)

Capital¥10 billion

Stock listing

Tokyo Stock Exchange Prime Market*

Main business

Securities finance business based on the Financial Instruments and Exchange Act (Loans for margintransactions, public and corporate bond financing and general loans, bond services, and generalstock lending)* In April 2022, following the restructuring of market classifications by the Tokyo Exchange, the Company transitioned to the Prime Market.

WebsiteA range of information about the JSF Group such as a Company profile, news releases, financial information and IR
information is listed on our website. The site can also be viewed with a smartphone.
JSF also provides an e-mail service that notifies registered users of news releases and provides IR updates.

https://www.jsf.co.jp/english/about/
Home Page

Investor Relations

https://www.jsf.co.jp/english/

https://www.jsf.co.jp/english/ir/

E-mail Inquiries

Loans for Margin Transactions

https://www.jsf.co.jp/english/ir/mail/https://www.taisyaku.jp/english/

Japan Securities Finance Co., Ltd. Integrated Report 2022 125

Japan Securities Finance Co., Ltd.
1-2-10 Nihonbashi-Kayabacho, Chuo-ku, Tokyo