Annual Report
2015

proFile
As Japan’s Central Securities Depository (CSD), JASDeC provides
essential settlement infrastructure for capital markets by operating
centralized securities settlement and recording systems.
JASDeC recognizes the public importance of its role as a CSD,
and will contribute to social progress and prosperity by helping to
improve capital market functions through the provision of highly
reliable, convenient, and efficient services.
JASDeC will achieve these goals through continual reform fromthe perspective of users, including investors, issuers, and market
intermediaries, in response to structural and environmental changes
affecting capital markets both in Japan and internationally.

ContentSBASIC polICY

02

ContInuouS eVolutIon

04

CuRRent InItIAtIVeS

06

FutuRe VISIon

08

MAnAGeMent MeSSAGe

10

CoRpoRAte GoVeRnAnCe

14

RISK MAnAGeMent

16

BuSIneSS ContInuItY plAn oF JASDeC

18

SoCIAl ContRIButIon ACtIVItIeS

19

BuSIneSS oVeRVIeW

20

InteRnAtIonAl RelAtIonSHIpS

40

AnAlYSIS oF BuSIneSS peRFoRMAnCe AnD
FInAnCIAl ReSultS

44

ConSolIDAteD FInAnCIAl StAteMentS

46

HIStoRY52

CoRpoRAte DAtA

54

01

essential
InfrastructureforCapital Markets

at a glanCe
FY 2013

FY 2014

Total Account Balance

838 trillion¥

Number of Issues Handled

70,835
Number of Transactions

104.6 million
Number of Transactions per Day

427 thousand

Annual Report 2015¥996

trillion

70,806108.0
439

millionthousand02basiC poliCYCore approaches to
responsive
organizational
management

Four CoreManagement Policies
JASDeC’s business activities are guided by fourbasic policies calling for a user-oriented approach,compliance with global standards, risk andefficiency management, and a commitment topublic responsibilities.

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03

BasIC POlICy

user-Oriented approach
User-focused business operations are ensured through the direct involvementof participants who are also JASDEC shareholders in governance.

Compliance with global standards
As the National CSD, representative provider of securities settlement
infrastructure in Japan, JASDEC remains constantly aware of the world’s bestpractice in relation to settlement systems and aims to provide functions thatcomply with international standards. JASDEC maintains a timely and flexible
approach to improvement of operations and the development of new projects.

Risk and efficiency Management
As a CSD required to centralize operations and expand services, JASDEC iscontinually working to strengthen risk management and cost reduction.

Public Responsibilities
JASDEC recognizes the public role of its services and ensures transparency
in its business activities by actively disclosing information.

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04

Continuous evolution

Bringing improvementof market safety
and efficiency

Ongoing Commitment tosettlement Innovation
throughout its history, JASDeC has worked to
improve safety and efficiency by refining thesettlement system. We will continue to support
Japanese financial markets through our continuingcommitment to innovation in the future.

Annual Report 2015

05

COntInuOus eVOlutIOn

IsO 20022
In January 2014, JASDEC led the world in adopting a Pre-Settlement
Matching System and Book-entry Transfer System based on ISO 20022
standards, the next-generation international standard message format.

DVP (Delivery versus Payment)
DVP settlement mitigates principal risk by linking the delivery of securities
to the payment of funds. In January 2014, JASDEC further enhanced
settlement safety by introducing DVP settlements for stock lendingtransactions to reduce settlement risk relating to stock lending andborrowing transactions.

straight through Processing (stP)
STP assures securities transactions, from trading to settlement, areconducted seamlessly and without manual intervention. JASDEC has
automated most of its operations, and has implemented advanced STP
for institutional investors by providing the Pre-Settlement Matching System(PSMS). Users in Japan and overseas rate JASDEC systems highly.

Dematerialization
JASDEC dematerialized stock certificates in January 2009, and hascompleted the dematerialization of all securities, starting with CP, corporate
bonds, and investment trusts. The fact that Japan has become fully
paperless is an indication that Japanese securities markets have achieved ahigh level of efficiency by international standards.

Annual Report 2015

06

Current initiatives

Raising the standardsof transparency and risk
management

strengthening Business
Fundamentals
to reduce systemic risk following the global financial
crisis, financial authorities have adopted more rigorous
requirements for financial market infrastructures, including
CSDs. JASDeC will continue to adapt to these requirements
as a CSD. especially in relation to the pFMI, JASDeC will
also continue to disclose information and create structures
to maintain and strengthen our risk management.

Annual Report 2015

07

CuRRent InItIatIVes

new Corporate governance
JASDEC is determined to maintain a corporate governance structure
based on international practices. For this reason, JASDEC has shifted to a
corporate structure of the company with nominating committee, etc. This
structure provides a clear demarcation between management supervisionfunctions and executive functions as required under the Companies Act.

new Risk Management Framework
JASDEC has further strengthened its risk management structures byappointing a Chief Risk Officer (CRO) and establishing the Risk Committee,
Integrated Risk Management Council and Risk Management Department.
JASDEC has also amended our Basic Policy on Risk Management to clarify
the risk categories and risk management structures that are managed by the
JASDEC Group.

new It system Infrastructure, enhancing
Business Continuity Plan (BCP)
To strengthen systems infrastructure, JASDEC has newly adopted a
Medium-Term IT Plan that encompasses its basic policy on IT. JASDEC
also reviewed guidelines and procedures for restoring operations after asystem breakdown or other contingencies affecting the JASDEC Group, andreleased more detailed contingency plans for emergency situations which
are shared with participants.

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08

Future vision

Making ready for
tomorrow’s markets andstandards

serving Markets
JASDeC will continue to contribute to the sounddevelopment of capital markets by constantly
focusing not only on the needs of participants, butalso on structural changes and regulatory reforms
both in Japan and overseas.

Annual Report 2015

09

FutuRe VIsIOn

Contributing to Capital Markets in JapanJASDEC takes appropriate steps in response to the introduction of new
systems and financial products in collaboration and cooperation with related
institutions and supervisory authorities. It also works to develop and vitalize
financial and capital markets, and to promote the adoption of international
standards for communications relating to securities settlements in Japan.

enhancing Business Continuity Plan (BCP) to
Cope with a large-scale Disaster
JASDEC will continue to review its business continuity plan (BCP) to ensure
the timely resumption and continuation of business operations even in theevent of a major disaster.

International Cooperation
By sharing information and cooperating with overseas CSDs, JASDEC
gains timely access to information about the latest industry trends. In
addition to using this information to improve our own business operations,
we also contribute to the improvement of securities settlement systems on
a global basis.

Annual Report 2015

10

Management Message

Aiming for seamlessreliability andsteadfast service

Haruhiko Kato
President & CEO

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11

Management Message

As a Central Securities Depository (CSD), JASDEC provides vital
infrastructure for financial and capital markets. We have earned theconfidence of users by administering and providing reliable systems andservices, and by working to improve our business processes and capabilities
with the aim of providing world-class functions based on international bestpractice for securities settlement systems.

Recent Initiatives

will continue to improve management transparency andachieve further improvement in our operating efficiency.

In April 2012, the BIS Committee on Payment andImproving Risk Management Structures

Settlement Systems (CPSS)1 and the International
Organization of Securities Commissions (IOSCO)
announced the Principles for financial market

A review of our administrative organization in June

infrastructures (PFMI). In December 2013, Japan’s

2014 resulted in the integration of risk management

Financial Services Agency published Comprehensive

activities within the JASDEC Group. We took steps to

Guidelines for Supervision of Financial Market

strengthen our risk management organization, including

Infrastructures. We have responded to these and otherthe appointment of a Chief Risk Officer (CRO) to provide

developments by further strengthening our businessthe necessary guidance and supervision, and theinfrastructure, including our organizational structures,

establishment of the Integrated Risk Management Council,

financial management, and human resources. We have

which is responsible for deliberations and decision-making

also taken steps to ensure the consistent application of ouron key aspects of risk management within the JASDEC

operational risk and system risk management structures,Group. The Integrated Risk Management Council also

and to reinforce our business continuity plan.

regularly monitors the risk management situation within
the JASDEC Group and reports to the Board of Directors.

Strengthening Corporate GovernanceWe also established the Risk Management Department topromote and coordinate risk management activities within

We are determined to maintain a corporate governancethe JASDEC Group.

structure that measures up to Japanese and international
standards of excellence. In July 2015, we therefore shiftedto the corporate structure of a company with a nominating

Strengthening IT System Infrastructure andBusiness Continuity Structurecommittee, etc., which provides a clear demarcation
between management supervision functions and executive

We have formulated a medium-term IT plan thatfunctions as required under the Companies Act. We

encompasses our basic policy on IT. One of our action1

 he Committee on Payment and Settlement Systems (CPSS) wasTrenamed as the Committee on Payment and Market Infrastructures (CPMI)
on 1 September, 2014.

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12

Management Message

plans for priority goals identified in the medium-termplay a vital role in our efforts to deal with a wide range

plan calls for a review of selection criteria for outsideof challenges resulting from the globalization of financial

service providers and the reinforcement of systemand capital markets and a global trend toward regulation.

development processes. We took steps to strengthen our

JASDEC is involved in planning and administration activities

system infrastructure, by conducting a study concerning

for the Asia-Pacific Central Securities Depository Groupscheduling of these plans.

(ACG) as an Executive Committee member and convener

We also reviewed our guidelines and proceduresof the Exchange of Information task force. We also

for resuming business operations after a system

participated in discussions at the World Forum of CSDs

breakdown. Based on the results of this review, we further(WFC) concerning issues affecting CSDs, including thestrengthened our business continuity structures throughglobal trend toward tighter regulation of financial markets

measures that include the publication of contingency plans.

and adaptation to the PFMI. In addition, JASDEC served
as a co-chair of Sub-Forum 2 of the ASEAN+3 Bond

International Activities

Market Forum (ABMF) which have been established underthe Asian Bond Markets Initiative (ABMI), which looked

We continued to work proactively in the current fiscal year

at the harmonization and standardization of transaction

to share information and strengthen relationships withprocedures in different countries. Our contributions to thisoverseas CSDs and other organizations. These activities

work included the compilation of a report.

Future Priorities
Under our Basic Management Policy and Medium-Term Business Plan (FY2015–2017), we have identified thefollowing priorities for FY2015.

Ensuring Reliable and Efficient Operations
and Improving Safety and Efficiency AcrossAll Systems

Security and Tax Number (“My Number”) system, theintroduction of integrated taxation on financial income
and gains, as well as amendments to the Companies
Act and the Act on Book-Entry of Corporate Bonds,

While ensuring the reliable operation of our existing

Shares, etc., in preparation for the smooth implementation

systems and services, we will undertake improvements,of the necessary changes. We will also undertake

reviews and other actions as required to keep paceappropriate studies and efficiently implement any

with recent trends and developments. We will alsomeasures necessitated by system changes affecting

carry out studies as required concerning regulatory andrelated infrastructure, such as the Bank of Japan, financial

tax system changes, such as the launch of the Social

instruments exchanges and CCPs.

Annual Report 2015

13

Management Message

Further Reinforcement of
Business Infrastructure

Contributing to the Development of
Financial and Capital Markets in Japan andInternational Activities

We will continue to strengthen our organizational
structures and financial management in response to new

We will support the development and vitalization of financial

requirements, such as supplemental guidance and reports

and capital markets by working in collaboration with otherof PFMI on specific matters. We will also give priority to theinstitutions and supervisory agencies to contribute totraining of our personnel.

initiatives, such as the reduction of the securities settlement

Our efforts to strengthen our system infrastructure will

cycle, based on the government’s growth strategy

focus both on the improvement of our capacity to maintainas contained in the June 2014 revision of the “Japan

reliable operations and management structures based

Revitalization Strategy,” and on initiatives formulated in Julyon our existing system, and also on studies relating to2012 by a study group established to examine approaches

efficiency improvements and other enhancements to be

to bond market revitalization.
We will also continue to work proactively at theimplemented in our next system.

international level, including research on overseas

We recognize the high public importance of the
securities settlement infrastructure provided by JASDEC,

settlement schemes, information sharing with overseas

and we will further strengthen our business continuity plan

CSDs, and participation in the ABMI.

(BCP) to ensure that our services can be maintained, if

JASDEC is determined to administer its various

possible, or restored as quickly as possible, in the event ofservices reliably, while responding to environmental anda disaster, system breakdown or other contingency.

structural change and user needs. We are also committed
to the continual review and improvement of our businesspractices, with the aim of maintaining operations andproviding services at the lowest possible cost. We lookforward to the continuing support and cooperation of our
stakeholders.

Haruhiko Kato, President & CEO

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14

Corporate GovernanceFundamental Approach toward Corporate Governance
JASDEC’s corporate philosophy positions users, including investors, issuers and market intermediaries, as the main
focus of our business operations. Our shares are owned by institutions from the Japanese financial industry, many ofwhich are also participants in our services. We aim to provide user-oriented services, while responding appropriately
to environmental and structural changes affecting financial and capital markets in Japan and overseas, through agovernance structure centered on our participant shareholders, and through frameworks that fully reflect participant
needs. By establishing Advisory Committees made up of stakeholders, especially participants, we ensure that theviews of stakeholders are fully reflected in our business operations and the development of our systems.

Adopting the Structure of a Company with Nominating Committee, etc.
JASDEC is organizationally structured as a company with a nominating committee, etc. This structure provides a clear
demarcation between management supervision functions and executive functions, as required under the Companies
Act, and reflects internationally recommended principles and practices. By making full use of lawfully designatedcommittees and other bodies, on which external directors hold the majority of seats, we ensure the transparency andfairness of decision-making processes and improve the effectiveness of management supervision functions. To ensure
timely and efficient operational management, the board of directors delegate operational decision-making functions to
executive officers.

Corporate Governance Framework

Shareholders’ Meeting

Board of Directors
The majority shall be representative of shareholders or
independent members, while the others representing
executive officers

Supervision

Nominating
Committee

Determining proposals for shareholders meeting regarding
the appointment and dismissal of directors, etc.

Compensation
Committee

Determining the amount of remuneration for individual
directors and executive officers.

Audit
Committee

Auditing execution of duties by directors and executive
officers. Preparing audit reports.

Audit Committee
OfficeExecutive
Board

CEO
Executive Officers

Execution of
Operations

Risk
Committee

Advising the board of directors on comprehensive risk
management activities of JASDEC and its subsidiary.

Advisory
Committees

Advising executive officers on various issues
regarding the execution of operations.

CRO

Integrated Risk
Management Council
Internal Audit OfficeBusiness Groups

Supporting Audit Committee’s activities.

Risk Management
Department

Annual Report 2015

Promoting comprehensive risk
management activities.

15

CORPORATE GOVERNANCE

Management Supervision Structure• Compensation Committee
The Compensation Committee sets policies on the• Board of Directors

determination of the amount of remuneration, etc., for

The Board of Directors determines fundamental

executive officers and directors. The committee also

management policies, including medium-term

decides on the individual remuneration awarded to

management plans, and monitors progress under those

executive officers and directors.

policies. The Board of Directors also makes decisions
on important aspects of management, including• Audit Committee

the appointment and dismissal of members of each

The Audit Committee audits and reports on thecommittee, executive officers, and representative executive

performance of duties by directors and executive officers.

officers. It also supervises executive officers, etc., in
the performance of their duties from a position that is• Risk Committee

independent from operational executive functions.

The majority of the Risk Committee comprises persons

Our commitment to user-oriented business operations

who are not involved in operational executive functions

and the public good is reflected in the fact that a majority

within the JASDEC Group. The Risk Committee advisesof the Board of Directors are external directors whoand supports the Board of Directors about all aspects ofare participant shareholders. The other members arerisks affecting the JASDEC Group.

independent directors, who have no relationship with

Business Execution Structure

JASDEC, and directors who concurrently serve as
executive officers.
External directors who are participant shareholders• Executive Board

are in principle appointed from major shareholders based

The Executive Board, comprising all executive officers,

on the frequency with which they use our systems.

deliberates and makes decisions on important aspects of

In accordance with this policy, the Board of Directors

operational executive functions under the supervision of theconsists of eight external directors chosen from participant

Board of Directors.
The allocation of executive officer duties is decided withshareholders, three independent directors and twodue consideration given to maintaining mutual supervision

directors who concurrently serve as executive officers.

of business groups and ensuring the independence ofinternal auditing and overall risk management.

• Nominating Committee
The Nominating Committee, in addition to determining thecontent of proposals submitted to the general meeting• Advisory Committeesof shareholders concerning the appointment or dismissal

Advisory Committees, which consist of participants andof directors, also promotes sound corporate governanceother stakeholders, are established to provide advice

by deciding on the appointment and dismissal criteria forand opinion regarding the matters of business operations

directors and executive officers and by confirming theto executive officers as requested or otherwise deemed

content of proposals submitted to the board concerning

necessary.

matters such as the selection of representative executive
officers, the appointment and dismissal of executive
officers, and the allocation of executive officer duties.

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16

Risk Management

Risk Management Structure
JASDEC has established the Basic Policy on Risk Management, which defines basic aspects of risk management
activities by the JASDEC Group, to ensure the soundness and reliability of the Group as a provider of settlement
infrastructure. Our basic thinking on risk management is outlined below.

Overall policy on risk management

I

JASDEC Group emphasizes the importance of risk management, and will strive to instill
this emphasis in each department and office.

II

JASDEC Group, in order to ensure sound management of operations, will takecomprehensive measures to manage each risk, while ensuring that the increasing
diversity and complexity of operations is reflected appropriately in the risk management
structure.

III

JASDEC Group shall periodically specify, analyze and appraise risks, and will implement
risk countermeasures and monitor the status of risk management as necessary. In theevent that a risk materializes, JASDEC Group shall identify the cause, take measures
to prevent recurrence and, with due consideration of available management resources,endeavor to minimize risk to the entire Group.

IV

JASDEC Group shall remain highly cognizant of the particular importance of managing
Information system risk, and shall endeavor to minimize this risk by using standardized
administrative procedures for planning, development and operations of information
systems, maintaining a consistent level of information system quality, and preparing arobust and up-to-date emergency response framework in case of disaster or damage.

V

Directors and employees shall maintain a high awareness of risk, and endeavor toensure that business operations are carried out properly at all times, based on anunderstanding that the materialization of risks could significantly damage JASDEC
Group assets and bring about significant losses.

VI

Each department and office shall endeavor to conduct proper risk management, andif a risk materializes in the course of conducting operations shall promptly report to theIntegrated Risk Management Council while taking necessary measures to minimize theimpact of the materialized risk.

Framework

Management
PolicyResponsibility

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17

RISK MANAGEMENTJASDEC has established the Integrated Risk Management Council under the chairmanship of the Chief Risk
Officer (CRO), with members that include executive officers and heads of departments. We have also establishedunits to manage each risk category under the overall coordination of the Risk Management Department. By
creating these organizations, we are building a structure capable of providing comprehensive risk management
for the JASDEC Group.

Functional framework of risk management

Board of Directors

adviceChairman: CRO
Integrated Risk Management Council

reportRisk Committee

President & CEO

reportExecutive Officer in charge: CRO
Risk Management Department

Departments in charge of specific risk management

Executive Officer
in charge ofInformation system risk

Executive Officer
in charge ofBusiness processing risk

Executive Officer
in charge ofAccident & Disaster risk•••
Department
in charge ofInformation system risk

Department
in charge ofBusiness processing risk

Department
in charge ofAccident & Disaster risk

reportcheck & balance

Departments exposed to certain risks

Annual Report 2015

Auditing

Internal
Audit
Office18

business ContinuitY plan oF JasDeC

Our approach
JASDEC has regularly structured itself so that, in the event of a disaster or other emergency, it would be able tocontinue operations to the extent possible or promptly resume business operations according to its Basic BCP
policy. This is to minimize the effect of such an emergency on JASDEC participants and related entities as asettlement infrastructure.
The specific measures taken by JASDEC include formulating concrete action plans in advance. JASDEC
has defined actions to be taken in the event of a disaster or other emergency, such as establishing the BCP
Countermeasure Office, delegated authority, organized emergency contact networks, and so on. Our IT systems
are installed in a robust main center equipped with a private electrical generator, and our core systems are basedon a redundant configuration. Furthermore, we have built a backup center in a remote location to be prepared incase the main center becomes unusable.

JasDeC systeM

users

Bank of Japan (BOJ)• JASDEC Participant
Information Network• ISDN• JASDEC Integrated Network• arrownet (offered by TSE)
• ISDNSWIFTNet

BOJ-NET<gateways>
JEX GW(JASDEC Extensible
Gateway)

Integrated Channel
Gateway

File Transfer
Gateway

Integrated Web
Terminal

Participant
Information Web
Terminal

BOJ’s
Gateway
System<subsystems>
Pre-Settlement Matching System

StocksParticipant Information

Foreign Stocks

Corporate Bonds (SB) &Commercial Papers (CP)Investment Trusts

Main Center
Backup CenterswitchAnnual Report 2015

19

Business Continuity Plan of JASDEC/
SOCIAL CONTRIBUTION ACTIVITIESIT Backup System
Operations data of the main center is reflected at the backup center almost in real time. In cases where the main
center becomes unusable due to a disaster, infrastructure failure (excluding software failure) or other such event,and the restoration task is deemed to be time-consuming, the systems will be switched over to the backup center.
Switchover to backup systems will take about 90 minutes. Furthermore, to prepare for the prospect of the head
office building becoming unusable, we have established an alternative office where we can execute operations asnecessary.

Main Initiatives in FY2014
In FY2014 we took the following steps to reinforce our business continuity plan (BCP).
Formulation of Contingency Plans

experts on topics such as the use of AEDs to perform
cardiopulmonary resuscitations and the use of triangle

We established the Basic Policy on Response to System
Failure and released it on our website. This policy allows forbandages to stop bleeding.
We also carried out training exercises with market

the quick and efficient restoration of services in the event

participants. For example, we carried out data center

that processing is impeded due to a system failure or a line

switching drills with system users and participated in the

failure in the systems of JASDEC Group, Japan Securities

joint BCP exercise among three markets (securities, short-

Clearing Corporation, the Bank of Japan or participants.

term money and forex market), which was conducted by
the industry.

BCP Exercises
We carried out several company-wide exercises, including

Survey and Study Concerning a Dual Site
Structure

an employee safety confirmation exercise, and an exercise
involving the set-up of a BCP Countermeasure Office,We have initiated a specific study concerning theas well as an employee contact exercise based on aestablishment of an alternative base in a remote location. The

scenario in which phone lines were congested. Thereaim is to prevent the entire JASDEC organization from being

were also activities aimed at mitigating the effects ofaffected at the same time by a wide-area disaster, by basing

disasters, including in-house seminars by invited outside

our operations on a dual site structure in normal times.

Social Contribution Activities
As well as contributing to the economy through ourdaily business activities, we implement social
contribution activities based on direct employee
participation with the aim of improving people’s lives
and contributing to community revitalization.

Activities
Recycling of plastic bottle caps as an Eco-friendly action and for charity
Recycling of used stamps and spoiled postcards for charity
Installation of vending machines with donation functions in offices
Participation in the “Table for Two” program
Participation in the Nihonbashi Bridge cleaning activity

Annual Report 2015

20

business overvieW

01

Book-entry
transfer System
for Stocks, etc.
ongoing enhancements to this all-electronic
record system are bringing greater
convenience, speed, and ﬂexibility to stock
ownership transfers.

the Book-entry transfer system for stocks, etc.

Issuing company
shareholder registry
General Shareholders
General Shareholders Notification
notification

JasDeCtransfer
Account
Book

Book-entry transfer

transfer
Account
Book

Direct accountManagement institution

Direct accountManagement institution(securities companies, banks, etc.)(securities companies, banks, etc.)

indirect accountManagement institution(securities companies, banks, etc.)

participants

participants

participants(shareholders)(shareholders)(shareholders)Annual Report 2015

21
01 Book-Entry Transfer System for Stocks, etc.

The Book-entry Transfer System
for Stocks, etc., has been operating smoothly
The dematerialization system applies not only tostocks, but also to bonds with share options, shareoptions, investment units of Real Estate Investment Trusts(REITs), investment equity subscription rights, preferred
equity investment of cooperative financial institutions,Exchange Traded Funds (ETFs), beneficial interest in atrust issuing a beneficiary certificate such as Japanese
Depositary Receipts (JDRs), and similar products (herein
after referred to as “JDRs”).
As of March 2015, the total number of issues handled
was 3,884, including 3,602 share issues, 24 bonds withshare options, 20 share options, 52 investment units,
1 preferred share issue, 130 ETFs, and 55 JDRs. The
number of companies participating in the Book-entry
Transfer System, including JASDEC participants (directAMIs), indirect AMIs, and fund settlement corporations,etc., was 381. Foreign institutions designated by thecompetent minister are also allowed to participate in the
System as AMIs. As of March 2015, 62 foreign financial
institutions are indirect AMIs.

JASDEC launched its Book-entry Transfer System for
Stocks, etc., under the Act on Book-Entry Transfer ofCorporate Bonds, Shares, etc. (“Book-Entry Transfer Act”)
in January 2009. Under this system, listed securities aremanaged in the accounts opened at JASDEC or AccountManagement Institutions (AMIs) such as securities
companies and banks by electronic records registered intheir computer systems. The Book-entry Transfer System
has a variety of features that contribute to the safety andconvenience of securities settlement.
• Only the electronic records noted above determine
the vesting of rights pertaining to stocks, etc.; and therewriting of those records transfers those rights. This
reduces the cost of printing, storing and transporting
securities in physical form, along with the risk of loss
or theft.
• JASDEC provides issuing companies with allshareholder information as of the record date
(General Shareholder Notifications), which is needed
to compile shareholder registries. To ensure that
information is supplied efficiently, JASDEC maintains
centralized management of shareholder information.
For example, JASDEC preliminarily obtains andintegrates names, addresses and other shareholder
information from AMIs.

JASDEC participants and indirect AMIs (as of March 31, 2015)
JASDEC participants by category
Securities financecompanies
2 (1%)

Indirect AMIs by category

Banks, etc.
17 (15%)

Total

Total

111

178

Life & non-life
insurancecompanies
1 (1%)
Banks, etc.
20 (11%)

Note:	“Banks, etc.” include The Norinchukin Bank,Tokyo Shoken Shinyou Kumiai, and JapaneseBanks’ Payment Clearing Network.
	“Stock exchanges, etc.” include Japan Securities
Clearing Corporation, JASDEC DVP Clearing
Corporation, three securities agents and three
Tanshi companies (which offer short-term credit
brokerage services)

Stock exchanges, etc.
11 (6%)

companies

companies
Securities
companies, etc.
144 (81%)

Securities
companies, etc.
32 (29%)Annual Report 2015

Foreign indirect
AMIs
62 (56%)

22
01 Book-Entry Transfer System for Stocks, etc.

Ongoing enhancements to increase user convenience
JASDEC is continually developing a variety of enhanced
measures to ensure the smooth operation and to improvethe usability of the Book-entry Transfer System of Stocks,
etc. We also implement programs to inform participants
about these improvements.
First, we take appropriate steps in response to thelegal reforms. In December 2014, we implemented newmeasures in order to handle investment equity subscription
rights, to cancel investment units owned by the issuer andto merge investment trusts following changes to “the Act
on Investment Trusts and Investment Corporations” and“the Book-Entry Transfer Act”, based on relevant law1.
In May 2015, we revised our operations in order tohandle purchase accounts pertaining to share purchasedemands by shareholders who object to organizational
restructuring, etc., following amendments to “the BookEntry Transfer Act”, based on relevant law2.
We also continue to improve our business in responseto the situations and needs of participants. In January
2015, we implemented a new scheme in cases of
discontinuance to handle any issues of ETFs and JDRs.
In the past, ETF or JDR issuers had been required toissue beneficiary certificates stipulating those rights andallocate them to beneficiaries. Since the dematerializationof stock certificates, however, issuers and AMIs haveseen substantially reduced ability to manage and forward
certificates. For these reasons we modified our systems toallow monetary redemptions in place of the allocation of
beneficiary certificates. In January 2015, we also modified
our systems to enable ETF and JDR issuers to make thedemand for a General Beneficiaries Notice at any time,
subject to certain conditions.
In October 2014, in order to respond to the Social
Security and Tax Number (“My Number”) system fromJanuary 2016, we finalized the pending agenda andreleased the revised version of “the outline requirements
for My Number Act3 in relation to the Book-Entry Transfer
System for Stocks, etc.,” whose first edition had beenannounced in the previous fiscal year.
Issuers of book-entry shares are required to notify
JASDEC of the details of corporate actions when theydecided to initiate them. We conducted the review ofguideline to explain notification procedures, and publishedthe Guidebook for Notification in February 2015 which ismore intelligible for issuers. We also conducted promotion
activities for them to introduce notification procedures.

“the Act on Partial Revision of the Financial Instruments and Exchange Act, etc.”“the Act on the Arrangement, etc. of Related Acts that Accompany the Enforcement of the Act on Partial Revision of the Companies Act”
3
The official name of My Number Act is “the Act on the Use of Numbers to Identify a Specific Individual in the Administrative Procedure”
12Book-entry transfers■ Stock-exchangetransfers(Billion shares)
396.7

400
345.1

321.0

350.3

335.7

(Billion shares)

300

1,500

200

1,000

100

500

0

(FY) 2010

2011

2012

2013

2014

1,241.82,0000Annual Report 2015

695.1

677.4

(FY) 2010

669.4

652.5

2011

1,111.3

797.2

656.8

2012

732.4

2013

724.7

2014

■ Transfers between
JASDEC participants■ Internal transfers
within the same
companies

23
01 Book-Entry Transfer System for Stocks, etc.

■A
 ccount balance (end of FY) ● Number of issues (end of FY)

Account balance and number of issues
Bonds with share options

Stocks(Billion shares)(Issues)

450

433.9

431.0

418.6

406.8

4,000

404.6

400

1,500

80
1,168.1

3,800

350

3,581

3,548
3,400

300
0

(FY) 2010

2011

2012

2013

0

2014

97%
0

499.6
16

(FY) 2010

2,791

2011

2012

22

24

133.4

163.8

2013

2014

(Thousand shareholders)

100
50

900
0

0

(FY) 2010

2011

2012

150,000

Number of general shareholder notifications(Issues)
15,000129,619 127,292

125,694

127,032

127,623

8,888

8,597

8,715

8,771

120,000
90,000● Number of issues● Total shareholders

8,723(Notifications, in billion)
1,001.1
1,000

12,000

800

9,000

600

60,0006,000

400

30,000

3,000

200

0

(FY) 2010

2011

2012

2013

2014

0

0

Number of shareholders(Data for shareholder notifications)
18,00016,459

961.8

2011

2012

2013

16,727

17,063

2,800

4,500

2012

2013

0

*Figures are as of
day of notification toissuers.

2014

2014

*Number ofshareholders (datafor shareholder
notifications) is
integration ofparticipant information
notified by AMIs.
*Figures are as of endof fiscal year.

1,000

2,649

2,428

9,000

2011

2014

1,021.4(Issues)
2,697

2,100

(FY) 2010

947.3(Notifications)
18,005

13,5000(FY) 2010

972.8

2013

Individual shareholder notifications(Thousand notifications)
17,547150

126

General shareholder notifications
Number of issues and total shareholders

3,409
154

4,384 200
185

93

1,800
20

2,339
111

2,563

40
27

500

3,600
2,700

43

(Issues)

4,500

60

959.7

3,602
3,600

3,561

(Million units)(Issues)

1,000
3,640

ETFs and JDRs

(Billion yen)

810

1,958

■N
 umber of
notifications●N umber of issues

2,392
800

720

626

600

1,400
400

401

412
700
0

200

(FY) 2010

2011

2012

2013

2014

0

Information requests4
Number of notifications

Number of issues(Notifications)
6,000

5,443
4,969

4,500
3,069
1,589
477
0

4

(Issues)
800654(FY) 2010● (Total record)
number of issues● (Partial record)
number of issues

580

600

3,000
1,500

■ (Total record)
notifications■ (Partial record)
notifications

482

3,252

2,688

400

314

302

87

77

57

(FY) 2010

2011

2012

1,857
200
375
2011

521
2012

2013

0

2014

114

122

2013

2014

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

Annual Report 2015

24

business overvieW

02

Book-entry
transfer System for Commercial
paper and Corporate Bonds
JASDeC is maintaining the security of the
Cp and corporate bond book-entry transfer
system whose daily settlement value typicallysurpasses the trading value per day at the
tokyo Stock exchange.

Flowchart for Book-entry transfer for CP/Corporate Bonds (DVP)① tradeseller② trade matching③ notice of settlement
matching status

settlement
parties

Buyer

JasDeC④ notice of settlement status(Awaiting fund settlement)② trade matchingaffirmation
settlement matching
Pre-Settlement
Matching Systemsecurities transfer③ notice of settlement
matching status④ notice of settlement status(Awaiting fund settlement)

settlement
partiesBook-entry Transfer
System for
CP/Corporate Bonds⑨ notice of securities
transfer completion⑨ notice of securities
transfer completion⑧ notice of payment completion

Fund
settlement
corporation⑧ notice of payment completion⑤ payment instruction

Bank of Japan⑥ payment request⑦ payment instruction

Annual Report 2015

Fund
settlement
corporation

25
02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

Supporting seamless and secure CP and corporate bond settlement
As a means of managing participation in JASDEC’s
Book-entry Transfer System, we set up a multilayer
holding structure for direct/indirect Account Management
Institutions (AMIs) to address the diverse needs of investors
and financial institutions. For example, direct AMIs can open
an account directly at JASDEC and indirect participation ispossible by opening an account at a direct AMI. Anotheroption for indirect participation is through the opening of an
account at an indirect AMI. Upon the payments of principal
and interest of corporate bonds to bondholders, AMIs
receive principal and interest from paying agents or their
upper AMIs through the multilayered structure on behalf of
their bondholders.

In March 2003, JASDEC launched the Book-entry Transfer
System for Short-Term Corporate Bonds (dematerialized
CP), and this was followed by the launch of the Book-entry
Transfer System for Corporate Bonds in January 2006. Ineach system, settlement procedures—issuance, transfer(trading), and redemption—are conducted based on thebalance electronically recorded in the transfer accountbooks. In addition, at all stages of issuance, transfer, andredemption of CP and corporate bonds, DVP settlement
is available by the linkage between JASDEC’s book-entry
transfer system and the Bank of Japan Financial Network
System (BOJ-NET). Furthermore, interfacing the bookentry transfer system to its PSMS (Pre-Settlement Matching
System; see page 34, JASDEC has realized Straight
Through Processing (STP), which fully automates the entire
process through trade matching to settlement of securities
and funds.

Participants in Book-entry Transfer System for CP (as of the end of March 2015)

Issuers 498

Issuing/
paying agents

18

JASDECJASDEC
participants(Direct AMIs)

66
Fund settlement corporations 139

Annual Report 2015

Indirect
AMIs

46

CP holders

26
02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

The Book-entry Transfer System
for Commercial Paper continues to operate efficiently
Commercial Paper (CP) currently refers to short-term
corporate bonds in a dematerialized form issued bycorporate entities as a means of procuring short-term
funds. As CP was previously drawn as promissory notesin physical form, there were always some risks of theft orloss when notes were transferred or deposited, as wellas costs of a documentary stamp tax upon transfers. To
eliminate such risks and costs, the fully electronic Bookentry Transfer System for dematerialized CP was launchedin 2003. Almost all CP issued in Japan is handled by thissystem.
In fiscal 2014, improving business performance andother factors were reflected in lively issuing activity by
issuers in a wide range of industries, and the accountbalance increased from the ¥16 trillion level to the ¥17

CP account balance (nominal value) andnumber of issues(Trillion yen)
25

4,392

(Issues)
5,000

4,447
3,926

trillion level in the second half of the fiscal year. Although
the account balance fell sharply toward the end of the
fiscal year because of a combination of factors specific to
the year-end period, it stood at ¥14.2 trillion as of March
31, 2015, an increase of ¥1.6 trillion from the position at
the end of the previous fiscal year. A total of 3,717 issues
were being handled, an increase of 165 from the end of
the previous fiscal year. The settlement methods used for
new records, redemptions and book-entry transfer are“DVP settlement,” which links CP records by JASDEC withsettlements using the BOJ-NET, and “non-DVP settlement”
for other types of transactions. DVP settlements accounted
for 66% in terms of the number of settlements and 75% ofsettlements on a value basis.

Issuance, transfer andredemption of CP (daily average)● Number of issues(end of FY)■ Account balance(end of FY)

7.0

4,000

14.2

3,000

4.0

10

2,000

3.0

5

1,000

15

0

14.0

(FY) 2010

13.6

2011

13.7

2012

3,552
12.6

2013

0.4
5.6

6.0

3,717

20

■R
 edemptions■T ransfers■ Issuance(Trillion yen)

5.0

2014

0

*Nominal value isthe value at time ofissuance (based on
the amounts for each
bond)

0.4
3.8

0.5
4.0

0.4
4.1

0.4
4.1

0.5

0.4
2012

0.4
2013

2.0
1.0
0

0.4
(FY) 2010

2011

0.4
2014

Continually adapting to CP market needs
The total settlement amount of issuance, transfer andredemption of CP handled by JASDEC’s Book-entry
Transfer System averages ¥6.5 trillion per day. In addition,month-end settlements sometimes surpass ¥13 trillion.
This means that the settlement value of CP at JASDEC
is more than the daily trading value at the Tokyo Stock
Exchange.
In fiscal 2014, lively trading activity lifted the value of
settlements by over 30% year on year to ¥1,300 trillion. In

addition to an increase in the amount of issues, this trend
also reflects a growing need for investment in CP.
This huge settlement amount reflects the importanceof CP in the Japanese financial market. JASDEC is willingto continue maintaining a high level of safety in the Bookentry Transfer System for CP, which is a critical role forsecurities settlement infrastructure, while rapidly reflecting
market needs in the system.

Annual Report 2015

27
02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

The Book-entry Transfer System for Corporate Bonds
operates with security and reliability
At the request of the Study Group to Vitalize the
Corporate Bond Market, which is administered by the Japan
Securities Dealers Association, JASDEC explored ways
to create a framework to ensure the efficient transmissionof information, including issuer-related information, tobondholders in Book-entry Transfer System for Corporate
Bonds. This resulted in the publication of Outline of Bond
Information Transmission Service in January 2015. We will
next establish detailed administrative procedures based on
the Outline in preparation for the introduction of services
before the end of fiscal 2015.
In January 2016, integrated taxation on financial income
and gains will be introduced. JASDEC is making thenecessary preparations, including the disclosure of technicalspecifications, to ensure smooth connection to the new
system.

JASDEC’s Book-entry Transfer System for Corporate
Bonds handles various types of bonds, both through public
offerings and private placements. These include bonds
issued by business companies, municipal bonds, bonds ofspecial corporations, such as quasi-government and local
government bodies, bonds issued by investment firms,
specified bonds issued by special purpose companies(SPCs), Samurai bonds (yen-denominated bonds issued
in the Japanese bond market by foreign governments orentities), J-Sukuk (Islamic financial instruments similar tobonds) and others.
In fiscal 2014, both new records and redemptions werearound the same levels as the previous fiscal year. As of
March 31, 2015, the number of issues being handled was
54,294, a decrease of 1,301 from the end of the previous
fiscal year, and the account balance was ¥1.4 trillion lowerat ¥251.7 trillion. Meanwhile, demand for foreign currency
denominated funding expanded in the previous fiscal year,
and that trend continued in the year ended March 2015. In
particular new issues denominated in U.S. dollars increased.
On a face value basis, the account balance of U.S. dollars
denominated bonds rose by US$2,695 million year on year
to US$6,168 million as of March 31, 2015.
The settlement methods used for new issues,
redemptions and book-entry transfer are “DVP settlement,”
which links corporate bond records by JASDEC withsettlements using the BOJ-NET, and “non-DVP settlement”
for other types of transactions. DVP settlements accounted
for 28% in terms of the number of settlements and 49% ofsettlements on a value basis.

Corporate Bonds account balance andnumber of issues(Trillion yen)
400

(Issues)
75,00067,78860,701

300
250.0

252.4

58,48655,59554,294

253.2

251.7

252.7

●N
 umber of issues(end of FY)■A ccount balance(end of FY)

50,000200
25,000100
0(FY) 2010

2011

2012

2013

2014

0

Participants in Book-entry Transfer System for Corporate Bonds (as of the end of March 2015)
Issuers 2,682*

Issuing/
paying agents

198

JASDECJASDEC
participants(Direct AMIs)

85
Fund settlement corporations 139

Indirect
AMIs

434

Bond holders*Issuers do not include unlisted companies, etc., that issued
private offering bonds only.

Annual Report 2015

28

business overvieW

03

Book-entry
transfer System for
Investment trusts
JASDeC is streamlining the process fortrustors, trustees and beneficiaries, ensuring
security and convenience for a system thatserves virtually all investment trusts in Japan.

Basic Model of Book-entry transfer system for Investment trusts

Flow of funds
Flow of data

Investors(beneficiaries)

private vendor financial network systems/fax

Fund
distributors

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

aMIs

Fund settlement
corporations(BoJ-net Fund
settlement
corporations)

JasDeCBank of Japan
Japanese banks’
payment clearing
network

Annual Report 2015

trustees

Fund settlement
corporations(BoJ-net Fund
settlement
corporations)29
03 Book-Entry Transfer System for Investment Trusts

A faster, safer approach to investment trust administration
The Book-entry Transfer System for Investment Trusts
is a computer system for managing beneficial rights ofinvestment trusts.
The system covers contract-type investment trusts(hereinafter, simply called “investment trusts”), which
involve three parties—a trustor, a trustee, and a beneficiary
who is an investor in the investment trust. (Exchange
Traded Funds (ETFs) and investment trusts of the nontrustor instruction type are outside the scope of thesystem.) Since the system was launched on January 2007,
all trustors and trustees involved in investment trusts haveparticipated in the system, and thus almost all investment
trusts issued in Japan have been dematerialized.
Diverse institutions, including fund distributors,
participate in the Book-entry Transfer System for
Investment Trusts as Account Management Institutions(AMIs), which open accounts at JASDEC to record
Beneficial Interest in Investment Trusts owned by investors.
They consist of not only securities companies, but also
entities such as banks, insurance companies, Shinkinbanks, credit cooperatives, agricultural cooperatives, andinvestment trust management companies engaged indirect marketing. The total number of institutions having
accounts at JASDEC as AMIs or JASDEC participants was
823 as of March 31, 2015.
The Book-entry Transfer System for Investment Trusts
enables direct or indirect connection between trustors,
trustees, AMIs, and JASDEC. This ensures greater
security, accuracy, and speed of processing through theelectronic management of the accounts of investment
trust beneficiaries.

Participants in Book-entry Transfer System for Investment Trusts (as of the end of March 2015)
Issuers 88

Trustees 11

JASDECJASDEC participants 171

BOJ-NET Fund settlement corporations

43

Designated fund distributors 345
Indirect AMIs 652

Indirect AMIs

JASDEC ParticipantsLife and non-life
insurance companies
9 (2%)

Others1 (0%)

Securities companies
68 (10%)Banks
95 (14%)

Investment
trust managementcompanies 3 (0%)

Others7 (4%)

Investment trust
management companies
21 (12%)

Total

652

Financial institutions
for small businesses
11 (6%)Banks
35 (21%)

Annual Report 2015

Total

171

Financial institutions
for small businesses
476 (73%)*Others: Securities agents, securities exchanges, CCPs, call loan dealers, etc.

Life and non-life
insurance companies
5 (3%)

Securities companies
92 (54%)

30
03 Book-Entry Transfer System for Investment Trusts

Strong support from users

Investment trusts account balance andnumber of issues

The total number of investment trusts handled by JASDEC
as of March 31, 2015 was 8,956 issues (a 1,016-issue
increase from March 31, 2014), comprising 5,412
publicly offered and 3,544 privately placed investment
trusts. The number and balance of new trusts recorded(purchases) remained high, reflecting a favorable investment
environment and the introduction of the Nippon Individual
Savings Account (NISA) tax exemption scheme for small
investments in January 2014. Throughout the entire
business year, the account balance increased consistently.
As a result, the outstanding balance as of March 31, 2015
increased ¥17.3 trillion year on year to ¥141.8 trillion,
comprising ¥98.3 trillion in publicly offered and ¥43.4 trillion
in privately placed investment trusts.
Fund settlement systems in the Book-entry Transfer
System for Investment Trusts include DVP settlement (linking
record by JASDEC with settlements using the Bank ofJapan Financial Network System) and non-DVP settlement(using the Japanese Bankers Association’s financial
network system for online fund settlement between financial
institutions). In fiscal 2014, the proportion of settlements
using DVP was 27% by transaction volume and 61% byprincipal value.

(Trillion yen)

8,956

150

8,000
141.8

7,940
6,575
114.9

100

7,112
6,868
115.3
112.5

(Issues)

124.5

6,000
4,000

50
2,000
0

(FY) 2010

2011

2012

2013

0

2014

■P
 urchases■C ancellations(Transactions)
10,0007,634
6,906 6,710
6,293
6,064
5,685

8,000
6,000

8,619
8,119

9,467

9,028

4,000
2,000
0

(FY) 2010

2011

2012

2013

2014

Principal values of investment trusts for purchases andcancellations (Daily average)
479.2

500

Amendments to the Act on Book-Entry of Corporate
Bonds, Shares, etc. in December 2014 resulted in theestablishment of provisions relating to transfer accountbook entries and record procedures pertaining to themerger of investment trusts. We made the necessarychanges to our procedures, including Business Regulations
Relating to Corporate Bonds, etc. We also formulated andpublished administrative rules concerning the treatment oftrust mergers under the Book-entry Transfer System for
Investment Trusts, which stipulate administrative processes
pertaining to the parties to a trust merger.
JASDEC will continue to implement measures thatenhance the user-friendly Book-entry Transfer System for
Investment Trusts, while maintaining the high level of safety
required for settlement infrastructure.

Account balances
are calculated bymultiplying the principal
amounts for eachissue by the number ofaccounts

Purchase and cancellation transactions(Daily average)■P urchases■C ancellations(Billion yen)

Dedicated to ongoing improvement●N umber of issues(end of FY)■A ccount balance(end of FY)

400
300

311.0

289.6
288.5 282.5

487.3
439.1

412.6

341.5 326.7

200
100

Annual Report 2015

0(FY) 2010

2011

2012

2013

2014

31

business overvieW

04

DVp
Settlement System
for netDs
JASDeC has combined delivery and payment
into a single, smooth reciprocal system,
reducing risk and raising convenience forparticipants on both sides of the trade.

Reducing principal risk by using the DVP settlement method

Delivery of securities
Transfer of securities and payment carried out separately

seller

Buyer

Payment of settlement amountuse of DVP settlement

Account delivery through JASDEC
seller’s
account

Securities
data

account of JasDeC
DVP Clearing Corp.

Stocks data transfer and payments are linked on

Securities
data

Buyer’s
account

the system, enabling secure and reliable settlement

Provision/receipt of funds through current accounts at the Bank of Japanseller’s
account

Funding dataaccount of JasDeC
DVP Clearing Corp.

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

Annual Report 2015

Funding data

Buyer’s
account

32
04 DVP Settlement System for NETDs

Providing safe,
secure securities transactions
The Non-Exchange Transaction Deliveries (NETDs) referto Book-entry Transfers for Stocks, etc., carried out by
JASDEC for non-exchange transactions, and the majorityof them consist of such trades of domestic and overseas
institutional investors buying and selling Japanese stocks,
etc., through the DVP settlement system for NETDs.
Previously, the delivery of the securities and thepayment of the settlement amounts for non-exchangetransactions have mostly been processed separately, so
the transactions have been exposed to the risk (principalrisk) that settlement payments may not be made eventhough the securities have been delivered. The use of the
DVP settlement system for NETDs links the delivery of the
securities and the payment of the settlement amounts
through the system, diminishing the risk and making
it possible for securities settlements to be conductedsafely and reliably. To further support reliability, the entire
administrative process is handled automatically andelectronically using Straight Through Processing (STP).
Since May 2004, the DVP settlement system for
NETDs has been administered by JASDEC’s wholly
owned subsidiary, JASDEC DVP Clearing Corporation(JDCC). JASDEC participants applying to make use of
the system are examined for their suitability in terms offinancial condition, organizational structure, and other suchfactors before receiving authorization from JDCC. In orderto ensure stringent risk management of all participants,
JDCC secures collateral in advance, comprising assets(assurance assets) with the appraisal value that exceeds
the net debit (total payables – total receivables) of eachparticipant, and sets an upper limit to the value of theliabilities payable (the net debit cap) in proportion to the
trading status of each participant. Settlement within
the DVP settlement system for NETDs is conducted inaccordance with the so-called “Gross-Net DVP model”
system by which securities pass through the JDCC
account within JASDEC and the transfer of the securities
from the seller’s into the buyer’s account is conducted
separately for each transaction (gross). Meanwhile, thesettlement amounts pass through the JDCC’s accountwithin the BOJ-NET funds transfer system, and settlement
is concluded by the appropriate net calculated amount offunds being paid on each settlement date (net).
The DVP settlement system for NETDs mainly deals
with securities handled by JASDEC through its Bookentry Transfer System for Stocks, etc., such as sharesand bonds with share options, etc. In January 2014,
we commenced DVP settlements for stock lendingtransactions.

DVP settlement for NETD transactions(Daily average)(Transactions)
160,000
56,18652,591
48,537

114,555
98,68983,29982,52280,23540,000

Annual Report 20150■N
 on-DVP
transactions■D VP transactions

45,570120,000
80,00046,899(FY) 2010

2011

2012

2013

2014

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

33
04 DVP Settlement System for NETDs

As of the end of March 2015, 54 companies(comprising 12 banks and 42 securities companies) wereparticipants in the DVP settlement system for NETDs.
Excluding internal transfers within the same company,
DVP transactions accounted for about 70% of NETD
transactions—evidence that use of the system has
become firmly established as an important customer-side
settlement method.
In fiscal 2014, the usage of DVP settlements continued
to increase. Considering this situation, we refunded
settlement fees according to each participant’s usage level
between April 2014 and February 2015. Total refunds infiscal 2014 amounted to ¥ 277 million.

DVP settlement for NETD fund settlement(Daily average)(Billion yen)

(%)

2,000
12.2

11.9

1,500
1,000

12.7

12.2

844.2

15

1,687.4

1,498.5
963.7

12.8

10

876.2

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

5
500
118.0
0

(FY) 2010

100.1
2011

111.3
2012

183.5
2013

216.8
2014

0

Securities covered: Stocks, bonds with share options (convertible bonds), ETFs, REITs, share options(share subscription warrants), foreign stocks, etc.
Total payments is the total amount used for execution of securities transfers.
Total value of net settlement payments is the total amount used for a net transaction basis.

Annual Report 2015

34

business overvieW

05

pre-Settlement
Matching System(pSMS)In January 2014, JASDeC launchedbrand new services in pSMS for further
enhancement of Stp, including introduction of
the ISo 20022 standard and SWIFtnet.

PsMs for non-residents’ transactions
Overseas
Order

Investment
managers

securities
companies

Notice of execution
Allocation, matching

Settlement instruction

globalcustodiansJapan

Settlement
instruction

Settlement instruction

Settlement
instruction

subcustodians

Notice ofmatching status

Pre-settlement
Matching system*

Settlement
instruction
Notice ofmatching status

Request for DVP transfer

linkage with book-entry transfer systems for stocks, etc., corporate bonds and Cp(excluding Japanese government bonds)* From January 2014, onward, “Tolerance Matching” function is available.

Annual Report 2015

Notice ofexecution

Order

securities
companies
Notice ofexecution

Order

stock
exchanges

35
05 Pre-Settlement Matching System (PSMS)

Pre-Settlement Matching System (PSMS)—
for smooth and secure matching infrastructure in the Japanese securities market
It is crucial for financial institutions to smoothly andsecurely complete the settlement of a huge number oftransactions. While our Book-entry Transfer Systems(BETS) realize secure settlement, PSMS realizes smoothsettlement on top of that.
Since the launch of PSMS in September 2001,
JASDEC has promoted Straight Through Processing(STP) in Japanese securities market, by matching thetrade and settlement information for institutional investors,
and others. PSMS has three basic attributes below, as abridge between trades and settlements.
1. Rapid post-trade process
2. Automatic data linkage to Central Counterparty(CCP) and BETS for Delivery Versus Payment (DVP)
settlement
3. Globally standardized protocol suitable to both
domestic and non-resident transactions

Following the booming stock market in Japan, in
fiscal 2014, the number of input/output transactions of
PSMS significantly increased to 1,766 thousand on a daily
average. Furthermore, 681 users are utilizing PSMS as a
primary matching infrastructure in the Japanese market.

Total number of PSMS input/output instructions
using the PSMS system (Daily average)(Thousand)
2,000

1,766
1,577

1,500

1,315

1,360

1,353

(FY) 2010

2011

2012

1,000
500
0

2013

2014

More Standardized Communication—
ISO 20022 and SWIFT Network
With non-residents now accounting for more than half ofthe stock transactions, it is important to provide smoothcommunication to the Japanese market from overseas.
As one of the first major adoptors in the world, JASDEC
leveraged the ISO 20022, the new international standard
for financial messaging, in its system. JASDEC now
supports system connectivity via SWIFT network as well.
The adoption of ISO 20022 will not only improvesystem connectivity, but will also help to enhanceharmonization with worldwide and Japanese market

practices. JASDEC has been actively participating inmarket practice groups like the global Securities Market
Practice Group (SMPG), as well as ISO 20022 Securities
SEG.
All JASDEC participants are required to migrate fromthe old message format to the ISO 20022-based format
by the end of 2018. As of March 31, 2015, 51 companies
out of total of 172 had completed the migration to the ISO
20022-based format.

Annual Report 2015

36
05 Pre-Settlement Matching System (PSMS)

Further actions for ongoing progressquite large. JASDEC believes a shorter settlement cycle
would contribute to reduction of settlement risk as a direct
effect, as well as improvement in market liquidity andenhancement in competitiveness among overseas markets
as an indirect effect.
JASDEC is currently making system preparations
to start T+1 settlements (T+0 settlements for GC repo
transactions) for outright transactions in JGB from 2017
onward. System implementation includes revision of
trade matching functions, linking matched trade data to
Japan Securities Clearing Corporation (JSCC), and the
distribution of JSCC notices to PSMS users.

JASDEC has been continuously working on initiatives thatwill contribute to further efficiency improvements in theJapanese securities market. In November 2015, the Japan
Securities Dealers Association (JSDA) plans to enforcea system that will disclose trade information of specificcorporate bond transactions, aiming at revitalization in
the Japanese bond market. JASDEC cooperates on the
project by making use of transaction data of corporate
bonds sent to PSMS.
With market participants, JASDEC also takes partin the discussion on shortening the settlement cycle forJapanese Government Bonds (JGB). The balance of JGB
has tended to rise over the years, and the market is now

PSMS for domestic stock transactions (Centralized matching for three parties)

Stock exchanges
Notice of execution

Investment trust
management/
investment
advisory
companies

Order

Order
Notice of execution
Allocation

Pre-Settlement
Matching System (PSMS)
Investment instruction
Investment instruction andtrade report

Trade matching

Trade report

Trade report affirmation

Trust banks

SSI

Settlement
matching
Request for DVP transfer*

Linkage with book-entry transfer systems for stocks, etc., corporate bonds and CP(excluding Japanese government bonds)* From January 2014 on, DVP settlement for Stock Lending and Borrowing (SLB) transactions is available.

Annual Report 2015

Securities
companies

37

business overvieW

06

Custody Services
for Foreign Stock
Certificates, etc.
Making it easier for Japanese investors toinvest in foreign companies by handling thecomplicated procedures involved in transfers,
dividend payments and taxation.

Overview of the system relating to foreign stocks

Share-handling service agents (trust banks)

notice ofbeneficial
shareholders

overseas CSDs
Japan Securities Clearing Corporation

Stockexchange
DVp

Dividend
information

Shareholder notice host

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

Collateralmatching

Beneficial
shareholder
reportDividend
information

Custodian banks

notice ofbalance(settlement)

non-DVptransfer
for netD

DVp transfer
for netD

AMIs (Securities companies and banks)

Beneficial shareholders of foreign stock certificates, etc.

Annual Report 2015

local
custody/transfer

Communication
server with foreign
CSDs/banks

38
06 Custody Services for Foreign Stock Certificates, etc.

Safe and secure settlement infrastructure andservices for listed foreign securities
In May 2006, JASDEC commenced services to process
deposits, transfers, and corporate actions for foreign stock
certificates, etc., listed on Japanese stock exchanges.
Although foreign stock certificates, etc., are generally
deposited with CSDs or custodians in the same countries
as the issuing companies, settlements of transactions at
Japanese stock exchanges are conducted through bookentry transfers in JASDEC.
JASDEC entrusts dividend payments to relevant
share-handling service agents and dividend-paying banks.
Information on beneficial shareholders at the dividend
record date is transferred from the JASDEC participants tothe share-handling service agents through JASDEC.
Based on this information, the share-handling service
agents calculate the amount of dividends, which arethen paid directly to the beneficial shareholders from thedividend-paying banks.

Foreign stocks, etc. account balance andnumber of issues (excluding foreign covered warrants)(Thousand shares)(Issues)

150,000

50
41

120,000
90,00089,90538

37

88,93086,57739
92,422■ Account balance● Number of issues

JASDEC also undertakes the necessary procedures
regarding dividend taxation for local tax authorities andother such entities, for tax relief under tax treaties withthe countries concerned. Beneficial shareholders canalso exercise their voting rights at general meetings ofshareholders through instructions issued to JASDEC.
JASDEC therefore provides the infrastructure andservices necessary for reliable settlement of trading
activities in foreign stock certificates, etc., smooth exerciseof shareholder rights, and error-free receipt of dividends
and other payments.

Number of sharesdeposited/withdrawn

118,585
115,478

39

40
105,96430■N umber of sharesdeposited■N umber of shares
withdrawn(Thousand shares)
150,000
131,801

100,000
71,16760,00020

30,000100(FY) 2010

2011

2012

2013

2014

59,72750,00041,84015,6500

0Annual Report 2015

(FY) 2010

2011

2012

22,62816,8632013

28,3062014

39
06 Custody Services for Foreign Stock Certificates, etc.

Service improvements forbeneficial shareholders and participants
As a part of the revision of service, we introduced a newcustodial fee structure in October 2014. Specifically,in order to ensure that custodial fees can be levied
appropriately according to the price level for each issue,
we have amended the custodial fee structure for thoseissues of which the trading unit was not determined based
upon the price level when such issues were newly listed.
We also took appropriate steps in response tochanges in the QI withholding tax system relating to U.S.
shares, etc., as a result of the enforcement of the U.S.
Foreign Tax Compliance Act (FATCA) from July 1, 2014.
For example, we modified our format between JASDEC
and JASDEC participants for tax relief of dividends on U.S.
shares, etc.
In addition, JASDEC worked to improve services forbeneficial shareholders and participants, including a study
concerning the handling of listed products from various

countries that are likely to be listed on Japanese stock
exchanges.
At present, there are four types of foreign securities
that are handled by JASDEC, such as, foreign stocks,
foreign investment trust beneficiary certificates, etc.,
foreign investment securities, etc., and depository receipts
of foreign stocks. As of March 31, 2015, the total number
of issues handled by JASDEC was 39.

Book-entry
transfers■ Non-exchangetransaction deliveries■ Exchangetransaction transfers(Thousand shares)
400,000
300,000
200,000

365,437
302,746
258,701

163,944
133,511

100,0000(FY) 2010

242,710

236,159

158,5732011

116,370

115,001

2012

2013

2014

Annual Report 2015

40

international relationsHips

JASDeC engages ininternational activities to guidethe rational development of a
global settlement infrastructure.
Research on overseas trends
and information sharing are key
elements of a leadership role.

JASDEC conducts research on overseas trends andfrequent information exchange with overseas institutions
as essential to its ongoing efforts to deal with the many
issues that affect securities market infrastructure, suchas the globalization of financial and capital markets andthe global tightening of regulations. We participate inregular CSD meetings, seminars and other international
conferences and maintain active exchange programs withinstitutions with which we have signed memorandums ofunderstanding (MOUs).

Honorary Chairman

yoshinobu takeuchi

JASDEC is also contributing to the improvement of
securities market infrastructure in Japan and internationallyand raising its global presence by playing an importantrole in the administration of the Asia-Pacific Central
Securities Depository Group (ACG) and the World Forumof CSDs (WFC), and by providing various forms of support
and assistance in response to requests from emerging
countries.

Annual Report 2015

41

International Relationships

ACG (Asia-Pacific Central Securities Depository Group)
The ACG was established in November 1997 as a forum for
information exchange and mutual cooperation among CSDs in the
Asia-Pacific region. The ACG has for many years carried out surveys
or other activities through task forces (TFs). In addition to TFs, theExecutive Committee, with a three-year term, was formed to plan
and administer the activities of the ACG from medium-to long-term
perspectives at the 14th General Meeting in December 2010. This
committee consists of all TF conveners, together with representativesof three organizations chosen through a general vote.
At the 17th General Meeting in October 2013, the Executive
Committee and the Secretariat were renewed upon the expirationof their terms of service. The new Executive Committee consistsof eight organizations. The five organizations represented on thecommittee through the convener of TFs are JASDEC (Exchange ofInformation TF), Korea Securities Depository (KSD, New BusinessInitiative TF), National Securities Depository Limited (NSDL,Technical TF), China Securities Depository and Clearing Corporation
Limited (CSDC, Legal TF), and the Central Depository Company
of Pakistan Limited (CDCPL, Risk and Recovery Management TF).
The three organizations elected to membership through the generalvote are Singapore Exchange (SGX), China Central Depository &Clearing Co., Ltd. (CCDC) and Central Depository Services (India)
Limited (CDSL). Mr. Muhammad Hanif Jakhura of CDCPL wasappointed as the new Chairman among representatives of theabove eight organizations and CDCPL as the new Secretariat.
As a member of the executive committee and the convener ofthe Exchange of Information TF, JASDEC will continue to provide
leadership in initiatives to expand and energize ACG activities.

WFC (World Forum of CSDs)
The WFC was created in April 2011 at the 11th Conference of
CSDs, after agreement was reached among leaders of the world’s
five regional CSD associations. The WFC took over the collaborative
activities among regional associations from the CSD Contact Group,
which had been engaged in them during the previous four years. Its
function is to strengthen the influence of CSDs and disseminate theirshared views as a forum of information exchange and discussion
on issues that affect all CSDs. The WFC is administered by a
10-member board made up of two representatives from eachregional association. JASDEC participates on behalf of the ACG with
CDCPL.

The WFC has an active program of initiatives, including theSingle Disclosure Project, the aim of which is to create a databaseof CSD information by ensuring unified and efficient disclosure of the
Principles for Financial Market Infrastructures (PFMI) developed jointly
by the Committee on Payment and Settlement Systems* of the BIS
and the International Organization of Securities Commissions (CPSSIOSCO), and response to the questionnaire from the Association of
Global Custodians (AGC).
There was also a change in the administration of the Conferenceof CSDs, which, from the 13th Conference (WFC 2015) onwards, isorganized by the WFC and bears the “WFC” name.

MOUs on Information Exchange and Mutual Cooperation with Overseas CSDs, etc.
JASDEC has been working to develop collaborative relationships
with overseas institutions by signing MOUs on the exchange of
information and mutual cooperation with overseas CSDs, etc. Asof the end of March 2015, JASDEC is in bilateral cooperation witha total of 18 institutions through MOUs. With MOU partners, weare actively implementing initiatives, including regular exchanges of
information, cross-training programs involving trainee exchanges,
and support for CSDs of emerging nations.

The Asian Bond Markets Initiative (ABMI)
The ABMI is being developed under the auspices of the ASEAN+3
Finance Ministers and Central Bank Governors’ Meeting. Four task
forces have been established for the ABMI, the third of which, withresponsibility for improving the regulatory framework, has created
the ASEAN+3 Bond Market Forum (ABMF). Studies are now being
carried out by two sub-forums within the ABMF. Sub-Forum 1 ismainly focusing on the creation of the ASEAN+3 Multi-Currency
Bond Issuance Framework (AMBIF), while Sub-Forum 2 is concerned
primarily with the standardization of cross-border settlement processes
in the region. Phase 1 and Phase 2 activities have already been
completed, and reports have been published. Phase 3 activities are

currently in progress, and an outline report was presented at the
Finance Ministers and Central Bank Governors’ Meeting in May 2015.
The full report will be released in the summer of 2015.
As the member representing Japan, JASDEC is actively
participating in the ABMF as the co-vice-chair of Sub-Forum 2. Asa Japanese CSD, JASDEC is also participating in the Cross-Border
Settlement Infrastructure Forum (CSIF). The CSIF was created under
Task Force 4, which is studying improvements to bond market
infrastructure. The CSIF membership consists of central banks andnational CSDs from participating economies.

* The Committee on Payment and Settlement Systems (CPSS) was renamed as the Committee on Payment and Market Infrastructures (CPMI) on 1 September, 2014.

Annual Report 2015

42

International Relationships

Major
International
Activities in
Fiscal 2014

May 20-21• The ACG Cross-Training Seminar washeld in Teheran, Iran. As the convener ofthe Exchange of Information TF, JASDEC
supported the host organization, the Central
Securities Depository of Iran (CSDI), to
manage the event. JASDEC also planned andorganized the Exchange of Information TF
session and breakout sessions.
• During sessions, JASDEC gave
presentations on stock collateral schemes inJapan, and JASDEC’s Business Continuity
Plan (BCP). Participants in the breakout
sessions exchanged views on the promotionof globalization, and crisis management in
the event of system failures.

2014.45

6

April 47

8

May 20• At the 6th Meeting of the WFC
in Zurich, Switzerland, JASDEC
reported on the progress and statusof the Single Disclosure Project,which considers unified and efficient
information disclosure methods for
the CPSS-IOSCO’s PFMI and AGC’squestionnaire, and discussed theway forward for it. The meeting also
approved the establishment of a new
WFC working group for training andinformation exchange relating to the
PFMI.

• Under JASDEC’s MOU with KSEI,an Indonesian CSD, a total of 80 KSEI
shareholders, including officers from securities
companies and banks, visited JASDEC
headquarters for discussions centering on
governance and an overview of operations.

Annual Report 20159

43International Relationships

October 15-16

March 16-19• JASDEC participated in ACG18 in Xi’an, China. A number of resolutions werepassed at the meeting, including the approval of the Indian Clearing Corporation
Limited (ICCL), which is a subsidiary CCP of the Bombay Stock Exchange,
for ACG membership, the selection of Hong Kong as the venue for the 2017
Conference of CSDs (WFC 2017), and the adoption of the “Xi’an Initiative,” themain aims of which are the promotion of best practice by CSDs in the AsiaPacific region, and the facilitation of cross-border securities transactions.

10

11

September 8-9• A two-day IT training program wasprovided for two staff members from
the Mongolian CSD, MSCH&CD, withwhich JASDEC has signed an MOU.
The program included an overview of
JASDEC’s IT systems and covered
various aspects, including system
replacement, telecommunications
standardization, BCP, andinformation security.

12

2015.1

September 28-October 2• At the 7th WFC Meeting in Boston, U.S.A.,
there was an exchange of views about a proposal
formulated by the Single Disclosure ProjectWorking Group for the creation of a database.
• JASDEC participated in Sibos 2014, which wasin Boston on September 29.

Annual Report 2015

• JASDEC welcomed participants in the
fourth trainee exchange program under
its MOU with Korea Securities Depository(KSD). Five employees from KSD took
part in seminars designed primarily
to provide an overview of JASDEC’s
business operations.

23

November 18• At the request of Vietnam Securities
Depository (VSD), with which JASDEC
has signed an MOU, JASDEC
welcomed eight visitors, including
financial officials, for a seminar covering
the DVP settlement system for nonexchange transaction deliveries by
JASDEC DVP Clearing Corporation,
as well as JASDEC’s pre-settlement
matching system, and the investment
trust system.

44

Analysis of Business Performance and Financial Results
Fiscal year ended March 31, 2015 (Fiscal 2014)
In the following section, all comparisons are with the previous fiscal year unless stated otherwise.

Outline of Financial Results
In the securities market, the Nikkei Stock Average started thefiscal year in the high end of the ¥14,000 range. The situation
remained unstable due to a range of factors, including
speculation about when the U.S. would start to taper
quantitative easing (QE), and prices fell sharply in May 2014.
However, the Nikkei subsequently made significant gains,reaching the low end of the ¥17,000 range in November 2014.
Reasons for this rise included the accelerated weakening of theyen following the Bank of Japan’s announcement of additionalmonetary easing at the end of October, and the postponementof an increase in the consumption tax rate due to a downturn in
the GDP growth rate in the second quarter. The Nikkei
continued to climb, and in March 2015 it recovered to the¥19,000 level for the first time in the 15 years since April 2000.
Contributing factors included a recovery in the domestic
economy, and an increase in business earnings due to theweakness of the yen.
Under this environment, for the year ended March 31,
2015, JASDEC’s operating revenues increased by ¥1,968,427
thousand, or 10.9%, year on year to ¥19,967,287 thousand.
Selling, general and administrative expenses were ¥1,748,209
thousand, or 11.7%, higher at ¥16,727,654 thousand, while
operating income increased by ¥220,218 thousand, or 7.3%, to¥3,239,632 thousand. Ordinary income increased by ¥292,822
thousand, or 10.0%, year on year to ¥3,232,482 thousand, andnet income by ¥281,578 thousand, or 15.8%, to ¥2,065,670
thousand. Segment information is provided below.

thousand, a year-on-year increase of ¥263,494 thousand, or
1.5%. JASDEC refunded ¥3,172,798 thousand of the bookentry transfer commissions and account management fees
received, leaving total revenues of ¥14,382,776 thousand, a
year-on-year increase of ¥1,313,328 thousand, or 10.0%.

Book-entry Transfer System for Commercial Paper
A total of 498 corporate issuers were using this system as ofMarch 31, 2015, an increase of two over the previous year’s
total. The account balance was ¥1,607.2 billion higher year on
year at ¥14,217.0 billion. The total number of issuance, transfer
and redemption transactions increased by 71,286 year on year
to 359,858. At ¥479,747 thousand, revenues from this segment
exceeded the previous year’s result by ¥36,437 thousand, or
8.2%.

Book-entry Transfer System for Corporate Bonds
In this business segment, JASDEC was handling a total of
54,294 issues as of March 31, 2015, a year-on-year decline of
1,301 issues. On a face value basis, the account balance was¥1,420.6 billion lower year on year at ¥251,779.5 billion. The
total number of issuance, transfer and redemption transactions
increased by 27,901 to 523,656. As a result, revenues from thisbusiness segment declined by ¥16,762 thousand, or 1.4%,
year on year to ¥1,221,201 thousand.

Book-entry Transfer System for Stocks, etc.
In this business segment, the number of issues handled by
JASDEC as of March 31, 2015 was 3,884, an increase of 89
issues compared with the total as of March 31, 2014. Accountbalances included 433.9 billion of shares (2.9 billion higher year
on year ), ¥163.8 billion of bonds with share options (¥30.4
billion higher year on year), 4,384.05 million units of ETFs andbeneficial rights of trusts issuing beneficial certificates, such as
JDRs, (974.52 million units higher year on year), 45.56 million
units of REITs (8.62 million higher year on year), and 700,000
units of preferred equity investments of financial institutions
established by cooperative associations (unchanged year onyear). The total number of new registrations, book-entry
transfers, obliterations and other transactions processed was105,903,180, a year-on-year increase of 3,160,482. As a result,revenues from this business segment amounted to ¥17,555,574

Financial Results(consolidated)■O perating revenues■O rdinary income(Millions of yen)
25,00020,00019,726

19,69817,31617,99919,967

15,00010,000
5,000

2,673

0
(FY ended) 3/2011

Annual Report 2015

3,699

3/20122,340
3/20132,940
3/20143,232
3/2015

45

Analysis of Business Performance and Financial Results

Book-entry Transfer System for Investment Trusts

Pre-Settlement Matching System

As of March 31, 2015, JASDEC was handling a total of 8,956
issues in this business segment, a year-on-year increase of
1,016. This total consists of 5,412 publicly offered investment
trusts and 3,544 privately placed investment trusts. On a
principal value basis, the account balance as of March 31,
2015 was ¥17,306.2 billion above the previous year’s figure at¥141,810.8 billion, made up of ¥98,348.4 billion in publicly
offered investment trusts and ¥43,462.4 billion in privately
placed investment trusts. The number of registrations,obliterations, and transfers in the year ended March 31, 2015
increased by 556,657 year on year to 5,955,686. Revenues forthis segment increased by ¥84,564 thousand, or 7.6%, to¥1,201,462 thousand.

Revenues from this segment increased by ¥253,416 thousand,or 11.2%, to ¥2,523,846 thousand in the year ended March 31,
2015. After payment of fee refunds totaling ¥812,000 thousand,revenues amounted to ¥1,711,846 thousand, a year-on-yearincrease of ¥353,415 thousand, or 26.0%.

DVP Settlement Services for
Non-Exchange Transaction Deliveries (NETDs)

Custody Services for Foreign Stock Certificates, etc.
As of March 31, 2015, the account balance for foreign stock
certificates, etc., was 105.96 million shares, an increase of
13.54 million shares over the level a year earlier. The total
number of book-entry transfers was 5,261 lower year on year at
108,275. However, because the average month-end accountbalances in each month were higher than in the previous fiscal
year, revenues from this business segment increased by¥23,394 thousand, or 18.2%, to ¥151,606 thousand.

The number of NETD DVP settlements in the year ended March
31, 2015 was 4 million higher year on year at 28.17 million.
Operating revenues from this segment increased by ¥143,989
thousand, or 15.1%, to ¥1,095,646 thousand. Refunds of NETD
DVP settlement fees in the year ended March 2015 amounted
to ¥277,000 thousand. This left revenues of ¥818,646 thousand,a year-on-year increase of ¥174,049 thousand, or 27.0%.

Financial Results(consolidated)

Financial Results(consolidated)(Millions of yen)

243,020.10

2,400

209,893.23
189,283.71

1,800

173,912.87

1,608

1,478

179,102.15(Yen)
240,000■ Net income● Net income per share(Millions of yen)

180,000

1,522

60,000600

60,00030,0003/201357,454

61,57457,45145,000120,000

3/2012

67,783

2,066

1,784

1,200

0
(FY ended) 3/2011

73,96375,0003/20143/2015

021,13622,27523,45824,902

26,457

15,0000(FY ended) 3/2011

Annual Report 2015

3/20123/20133/20143/2015■T otal assets■N et assets

46

Consolidated Financial Statements

The accompanying consolidated financial statements expressed in Japanese yen are the translation of those issued domestically. The
amounts expressed in U.S. dollars are not included in the original audited consolidated financial statements. Such U.S. dollar amounts arepresented herein solely for the convenience of readers outside Japan, and are not subject to audit.

Consolidated Balance Sheet (As of March 31, 2015)$1=¥120.17$ (thousands)¥ (thousands)

2014

2015

2015

¥ 6,262,876
3,160,922
126,624
166,976
169,855
30,819,217
7,867(6,765)40,707,573¥ 7,416,046
3,521,010
132,534—
151,054
38,949,709
4,202(6,868)50,167,688$ 61,712
29,300
1,102
—
1,257
324,12134(57)
417,472

Non-current Assets:
Property and Equipment:
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Tools and furniture
Accumulated depreciation
Tools and furniture, net
Total Property and Equipment

832,971(442,192)
390,779
5,159,436(3,433,798)
1,725,638
2,116,417

845,681(471,276)
374,404
3,677,415(1,963,595)
1,713,819
2,088,224

7,037(3,921)
3,115
30,601(16,340)
14,261
17,377

Intangible Assets:
Software
Software in progress
OthersTotal Intangible Assets

23,203,230
418,564
17,577
23,639,373

18,596,720
1,825,420
17,462
20,439,604

154,753
15,190145
170,089

427,474
129,805
257,824
497,970
27,7471,000(22,021)
1,319,801
27,075,591¥ 67,783,165

501,957
100,096
255,892
402,737
17,603
1,000(11,930)
1,267,358
23,795,186¥ 73,962,874

4,177
832
2,129
3,351
146
8
(99)
10,546
198,012$ 615,485

ASSETS
Current Assets:
Cash and deposits
Accounts receivable—trade
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Designated assets for clearing funds
OthersAllowance for doubtful accounts
Total Current Assets

Investment and Other Assets:
Investment securities
Long-term prepaid expenses
Deferred tax assets
Long-term refundable lease deposits
Claims provable in bankruptcy, rehabilitation and other
OthersAllowance for doubtful accounts
Total Investment and Other Assets
Total Non-current Assets
Total Assets

Annual Report 2015

47

Consolidated Financial Statements¥ (thousands)

2014
LIABILITIESCurrent Liabilities:
Accounts payable—trade
Lease obligations
Accounts payable—otherConsumption taxes payable
Income taxes payable
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Deposits received for clearing funds
Allowance for asset removal
OthersTotal Current Liabilities¥ 1,011,031
5,880
72,3609,856
572,372
209,106
23,00030,819,217
84,08370,18632,877,095

Non-current Liabilities:
Long-term loans payable
Lease obligations
Liability for retirement benefits
Allowance for executives’ retirement benefits
Long-term guarantee deposits received
Total Non-current Liabilities
Total Liabilities
NET ASSETS
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Total Shareholders’ Equity
Total Net Assets
Total Liabilities and Net Assets

Annual Report 2015

$ (thousands)

2015

¥

895,554812
248,983
759,343732,686
238,456
22,00038,949,709—－
75,36541,922,911

2015

$

7,452
6
2,071
6,318
6,097
1,984
183
324,121—－627
348,863

9,400,000
812
510,867
30,00062,69410,004,375
42,881,470

5,000,000—－
582,597－—－—
5,582,597
47,505,509

41,607
－—
4,848
－—
－—
46,455395,319

4,250,000
4,250,000
16,401,694
24,901,694
24,901,694¥ 67,783,165

4,250,000
4,250,000
17,957,365
26,457,365
26,457,365¥ 73,962,874

35,36635,366
149,433
220,166
220,166$ 615,485

48

Consolidated Financial Statements

Consolidated Statement of Income and Comprehensive Income (For the year ended March 31, 2015)¥ (thousands)$ (thousands)

2014¥ 17,998,860

2015¥ 19,967,287

2015$ 166,158

196,952
1,657,727
209,106
21,800127,053
5,440,639
4,877,326
552,123
30,666
1,866,049
14,979,445
3,019,414

190,854
2,027,032
238,456
22,000136,157
5,983,330
5,834,273
552,926—
1,742,622
16,727,654
3,239,632

1,588
16,868
1,984
183
1,133
49,79048,5504,601—
14,501
139,199
26,958

5
9,294
2,036
11,92011,17834,4354
5,977
88,16318,93011,165
124,240

0
49
733
157
92
1,033

57,872
48,2057,580
530
114,1892,939,660

77,80344,9997,889
697
131,390
3,232,482

647
374
65
5
1,093
26,8992,350
2,350
2,937,310——
3,232,482——
26,899

Income taxes—current
Income taxes—deferred
Total Income Taxes
Income before Minority Interests
Net Income
Income before Minority Interests
Comprehensive Income

926,346
226,871
1,153,217
1,784,092
1,784,092
1,784,092¥ 1,784,092

1,146,079
20,732
1,166,812
2,065,670
2,065,670
2,065,670¥ 2,065,670

9,537
172
9,709
17,18917,18917,189$ 17,189(Details of Comprehensive Income)Comprehensive income attributable to shareholders of the parent company
Comprehensive income attributable to minority interests¥ 1,784,092—¥ 2,065,670—$ 17,189—

Operating Revenue
Operating Expenses:
Executives’ compensation
Salaries
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Retirement benefit expenses
Maintenance of systems
Depreciation and amortization
Rent
Allowance for asset removal
OthersTotal Operating Expenses
Operating Income
Non-operating Income:Interest income
Operational revenue on designated assets for clearing funds
Equity in earnings of an affiliate
Registered members’ information disclosure claim charges
OthersTotal Non-operating Income
Non-operating Expenses:
Interest expenses
Commitment fees
Fees for fund operation of designated assets for clearing fund
OthersTotal Non-operating Expenses
Ordinary Income
Extraordinary Losses:
Loss on disposal of non-current assets
Total Extraordinary Losses
Income before Income Taxes and Minority Interests

Annual Report 2015

49

Consolidated Financial Statements

Consolidated Statement of Changes in Net Assets (For the year ended March 31, 2015)
For the year ended March 31, 2014¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 14,957,602¥ 23,457,602¥ 23,457,602———¥ 4,250,000———¥ 4,250,000(340,000)
1,784,092
1,444,092¥ 16,401,694(340,000)
1,784,092
1,444,092¥ 24,901,694(340,000)
1,784,092
1,444,092¥ 24,901,694

For the year ended March 31, 2015¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 16,401,694¥ 24,901,694¥ 24,901,694———¥ 4,250,000———¥ 4,250,000(510,000)
2,065,670
1,555,670¥ 17,957,365(510,000)
2,065,670
1,555,670¥ 26,457,365(510,000)
2,065,670
1,555,670¥ 26,457,365$ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

Total Shareholders’EquityTotal Net Assets$ 136,487$ 207,220$ 207,220(4,243)
17,18912,945$ 149,433(4,243)
17,18912,945$ 220,166(4,243)
17,18912,945$ 220,166

CommonStockCapitalSurplusRetained
Earnings$ 35,366$ 35,366———$ 35,366———$ 35,366

Annual Report 2015

50

Consolidated Statement of Cash Flows (For the year ended March 31, 2015)¥ (thousands)

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization(Decrease) increase in allowance for doubtful accounts
Increase (decrease) in allowance for employees’ bonuses(Decrease) increase in allowance for executives’ bonuses(Decrease) increase in allowance for employees’ retirement benefits(Decrease) increase in allowance for executives’ retirement benefits(Decrease) increase in allowance for asset removal
Increase (decrease) in liability for retirement benefits
Interest income
Interest expenses
Equity in (earnings) loss of affiliates
Foreign exchange (gains) losses
Loss on disposal of property and equipment
Loss on disposal of intangible assets(Increase) decrease in accounts receivable—trade(Decrease) increase in accounts payable—trade
Decrease/increase in consumption taxes receivable/payable
OthersSub-totalInterest and dividends received
Interest paid
Income taxes paid
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchase of property and equipment
Payments for purchase of intangible assets
Proceeds from refund of refundable lease deposits
Payments for refund of guarantee deposits received
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayment of lease obligations
Cash dividends paid
Net Cash Used in Financing Activities
Effect of exchange rate changes on cash and cash equivalents
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year

Annual Report 2015

$ (thousands)

2014

2015

2015

¥ 2,937,310
4,877,326(4,298)(10,191)
1,200(442,447)—(40,501)
510,867(5)
57,872(2,036)(1,588)2,156
193(9,753)
145,719
82,931
4,685
8,109,440
2,805(57,872)(567,912)
7,486,460¥ 3,232,482
5,834,273(9,988)29,350(1,000)—(30,000)(84,083)
71,729(4)
77,803(88,163)(1,028)——(349,943)(115,476)
916,463(11,593)9,470,821
13,684(77,803)(988,646)
8,418,055$ 26,899
48,550
(83)
244
(8)
—
(249)
(699)
596
0
647
(733)
(8)
—
—
(2,912)
(960)
7,626
(96)
78,811113(647)(8,227)70,051(191,579)(13,512,223)
100(4,426)(13,708,129)(693,285)(1,694,749)
100,696(62,694)(2,350,033)(5,769)(14,102)837(521)(19,555)

7,400,000—(10,462)(340,000)
7,049,537
1,588
829,457
5,433,419¥ 6,262,876—(4,400,000)(5,880)(510,000)(4,915,880)
1,028
1,153,169
6,262,876¥ 7,416,046—(36,614)(48)(4,243)(40,907)
8
9,596
52,116$ 61,712

51

Corporate
Information

Annual Report 2015

52

History

1984

1985

1991

1992

2000

2001

May 15th

Relevant
Legislation

2002

2003

June 12th

Law Concerning Central Securities
Depository and Book-Entry Transfer ofStock Certificates and Other Securities(CSD Law) was promulgated (effective
on November 14th)

The Act on Improvements, etc., of the Laws Related to the Improvements of the
Securities Market through a Reform of the Securities Settlement System, etc.
was promulgated (the Act on Transfer of Short-term Bonds, etc. was amended
to the Act on Transfer of Bonds, etc. The Securities and Exchange Act wasamended upon the establishment of the clearing organization system)

June 27th
The Law for Partial Amendments to the Law Concerning
Central Securities Depository and Book-Entry Transfer
of Stock Certificates and Other Securities as well as the
Act on Transfer of Short-term Bonds, etc. were
promulgated (fully effective on April 1st, 2002)

Jan. 4th
Nov. 2ndOrganization of
JASDEC and
its Subsidiary

Detailed plan for conversion of JASDEC
to a joint-stock company was announced

May 27th
JASDEC was designated as
the depository organization
under the CSD Law

Japan Securities Depository
Center, Inc. was establishedJan. 10th

JASDEC received official designation as
Book-entry Transfer Institution under the
stipulations of the Act on Transfer of Bonds, etc.

June 6th

June 17th

Dec. 6th

Japan Securities Depository Center, Inc.
took over all depository and book-entry
transfer operations from the JASDEC
Foundation, which was dissolved

Japan Securities Depository
Center (JASDEC), wasestablished as a foundation

JASDEC DVP Clearing
Corporation (JDCC) wasestablishedJan. 4th
JASDEC launched Securities
Information Tracing System(SITRAS) for lost stocks

Operation of
the System

March 31st

May 8th

May 1st

New depository and book-entry
transfer system launched

JASDEC launched proprietary JASDEC inaugurated
system for DVP settlement of Short-Term Corporate Bonds
exchange trades(Commercial Paper) Bookentry Transfer System

Oct. 9th
Depository and book-entry transfer
business started (initially for 50 listed
stocks on the TSE)

Oct. 9th
Computer system for depository andbook-entry transfer began operation

Sept. 10th
Pre-Settlement Matching System (PSMS) started

Oct. 9th
Full-scale depository and book-entry
transfer business started

Nov. 26th
Handling of convertible bonds started

Annual Report 2015

53

History

2004

2005

2006

2007

2008

2009

2010

2014

June 9th

Jan. 5th

The Law for Partial Amendments to the Act on
Transfer of Bonds, etc. for the Purpose of
Streamlining the Settlement for Trades of Stocks
and Other Securities (Securities Trade
Settlement Streamlining Law) was promulgated

The Securities Trade Settlement
Streamlining Law was enacted (the Act on
Transfer of Bonds, etc. was amended to the
Act on Transfer of Bonds, Shares, etc.), andthe Law Concerning Central Securities
Depository and Book-Entry Transfer ofStock Certificates and Other Securities wasabolished

2015

April 6th
JDCC obtained a license for securities
obligation assumption business to act
as a clearing organization in line with
the Securities and Exchange Act

July 24th
JASDEC migrated to theCompany with Nominating
Committee, etc.

Jan. 4th

Jan. 4th

JASDEC inaugurated
Book-entry Transfer System
for Investment Trusts

Operations of SITRAS
were terminatedJan. 4th
Jan. 10th
JASDEC inaugurated Book-entry
Transfer System for Corporate Bonds

Feb. 14th
JGB repo and gensaki (transactions
with repurchase agreement) wereadded to the list of targets of PSMSJASDEC inaugurated Book-entry Transfer System
for Investment Trusts listed on the stock
exchanges, i.e. for Exchange-Traded Funds (ETFs).

Jan. 6th
JASDEC launched new system introducing
ISO 20022-based format, tolerance matchingfor non-residents’ transactions, and DVP
settlements for stock lending transactions

Jan. 5th
JASDEC inaugurated Book-entry
Transfer System for Stocks, etc.

July 1st
JASDEC inaugurated Japanese
Depository Receipts in Book-entry
Transfer System for Stocks, etc.

May 1stJASDEC inaugurated Custody
Services for Foreign Stocks

May 17th
DVP settlement system for Non-Exchange
Transaction Deliveries (NETDs) started

Annual Report 2015

54

Corporate Data
(As of July 24, 2015)

Company Outline
Corporate NameJapan Securities Depository Center, Incorporated

Registered Office Address

1-1 Nihombashi-Kayaba-cho, 2-chome, Chuo-ku, Tokyo, Japan

Established

January 4, 2002

Representative

President and CEO Haruhiko Kato

Major Businesses(1) Book-entry transfer for stocks, etc.
(2) Book-entry transfer for commercial paper(3) Book-entry transfer for corporate bonds(4) Book-entry transfer for investment trusts(5) DVP settlement services for NETDs(6) Pre-settlement matching system(7) Custody services for foreign stocks, etc.
(8) Other businesses

Operational OfficeChuo-ku, Tokyo

Consolidated Subsidiary

JASDEC DVP Clearing Corporation (Chuo-ku, Tokyo)

Number of Employees

222

Board Members and Executive Officers
Members of the Board
MemberHaruhiko Kato
MemberMunetaka Saito
Outside Member

Mamoru Kamio
Outside Member

Moriyuki Iwanaga
Senior Executive Officer,
Japan Exchange Group, Inc.
Senior Executive Officer,
Tokyo Stock Exchange, Inc.

Outside Member

Masakazu Kubota
Director General,
KEIDANREN (Japan Business
Federation)

Outside Member

Kazuya Kobayashi
Managing Executive Officer,
Mizuho Financial Group, Inc.
Managing Executive Officer,
Mizuho Bank, Ltd.

Outside Member

Outside Member

Masayuki Shimura

Hisato Miyashita

Senior Managing Director,
Sumitomo Mitsui Financial Group, Inc.
Senior Managing Director,
Sumitomo Mitsui Banking Corporation

Senior Managing Director,
Nomura Holdings, Inc.
Representative Executive Officer,
Senior Corporate Managing Director,
Nomura Securities Co., Ltd.

Outside Member

Masahisa Nakagawa
Executive Managing Director,
Daiwa Securities Group Inc.
Executive Managing Director,
Daiwa Securities Co. Ltd.

Outside Member

Outside Member

Satoshi Murabayashi
Managing Executive Officer,
Mitsubishi UFJ Financial Group, Inc.
Senior Managing Director,
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Hideki Hiraki

Board Committee Members

Senior Managing Executive Officer,
Sumitomo Mitsui Trust Bank, Limited

Nominating

Outside Member

Koichi Hirata
Senior Executive Director,
Japan Securities Dealers Association

Outside Member

Shigeyuki Maeda
LawyerHaruhiko KatoMoriyuki Iwanaga
Koichi Hirata
Compensation

Masakazu Kubota
Hisato Miyashita
Satoshi Murabayashi
Audit

Mamoru Kamio (Full-time)
Masayuki Shimura
Shigeyuki Maeda

Annual Report 2015

Executive Officers
Representative Executive Officer,
President and CEO

Haruhiko Kato
Senior Executive Officer(Business Operations)

Munetaka Saito
Senior Executive Officer(Corporate Administration), CRO

Hideki Kono
Senior Executive Officer(Corporate Strategy)

Jun Sugie
Senior Executive Officer(IT System), CIO

Yoshinori Suzuki

55

Corporate Data

Organization Structure
Shareholders’ Meeting
Board of Directors
Nominating Committee
Compensation Committee
Audit Committee

Audit Committee Office

Risk Committee
President & CEO

Internal Audit Office[Corporate Administration Group]

General Administration Department
Risk Management Department[Corporate Strategy Group]

Corporate Strategy Department
Office of International Research and Relations[Business Operations Group]

Executive Board

Equity Department
Shareholders Notification Office
Fixed Income and Investment Trust Department
Post–Trade Services Department

Executive Officers[IT System Group]

System Planning and Management Department
System Development Department
System Services Department

Major Shareholders

SharesNumber of
Stake inshares held Company (%)

Total shares approved for issue

20,0008,500

Japan Exchange Group, Inc.

2,073

24.38

Total issued shares

Japan Securities Dealers Association

1,067

12.55

Paid-in capital¥4,250,000,000

Nomura Holdings, Inc.

485

5.70

Shareholders

127

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

425

5.00

Mizuho Bank, Ltd.

425

5.00

Mitsubishi UFJ Trust andBanking Corporation

424

4.98

Daiwa Securities Co. Ltd.

360

4.23

Trust & Custody Services Bank, Ltd.

340

4.00

Citigroup Global Markets Japan Inc.

321

3.77

Japan Trustee Services Bank, Ltd.

320

3.76

Annual Report 2015

Daini-Shoken Kaikan Bldg., 1-1, Nihombashi-Kayaba-cho 2-chome, Chuo-ku, Tokyo 103-0025, JAPANTEL +81-3-3661-0139 http://www.jasdec.com/en/