Guideline for Client Clearing Authorization in Interest Rate Swap Clearing BusinessFebruary 24, 2014
Amended on September 24, 2015
Japan Securities Clearing Corporation
I. Position of the Guideline
・This Guideline describes checking points prescribed by JSCC with regard to its authorization for a Clearing Participant1 to undertake Client Clearing for a Customer
which does not belong to the same Corporate Group as its Clearing Broker (“ Client Clearing”) with respect to the IRS Clearing Business under the provisions ofArticle 12-2 of IRS Clearing Business Rules.
1. Such a Clearing Participant may be an applicant for IRS Clearing Qualification which apply for the qualification along with JSCC’s authorization for Client Clearing.

II. Content of the Guideline
・If a Clearing Participant desires to undertake Client Clearing, it must have the requisite business capability for Client Clearing. This Guideline describes the provisions ofIRS Clearing Business Rules as well as primary examination review points and confirmation points2, as explained below.
2. The provisions of IRS Clearing Business Rules and the descriptions of the Guideline may change due to JSCC’s future rule changes.

Confirmation Points Related toClient Clearing Authorization
Business Capability

Provisions of IRS Clearing Business Rules

Primary Review Points and Confirmation Points (Guideline)

JSCC shall determine whether the Applicant has the[Settlement Procedures]

capability to settle Cleared Contracts, manage risk and・ JSCC will check if the Applicant has the requisite businessavoid conflicts of interest related to Client Clearing incapability to perform the following procedures in accordance withlight of review points and confirmation points

operational procedures prescribed by JSCC: approval of Client1/2

Confirmation Points Related toClient Clearing Authorization

Provisions of IRS Clearing Business Rules

Primary Review Points and Confirmation Points (Guideline)

prescribed by JSCC in a notification or a public notice.

Brokerage Contracts requested by a Customer (excluding aJSCC shall give an authorization for handling Client

Customer which belongs to the same Corporate Group as an

Clearing if it determines that such Clearing Participant

applicant for JSCC’s Client Clearing authorization (the same shallhas the requisite business capability.

apply in the Guideline)); and deposit and withdrawal of Initial(Article 12-2)

Margin and Cash Settlement Amount (Variation Margin, Interests
on Variation Margin, Coupons and Upfront Fees).
[Risk Management]
・ JSCC will check if the Applicant has the requisite businesscapability to properly manage risks involved with Customers bylooking at the Applicant’s examination of Customers in starting
Client Clearing, a Clearing Broker’s response to a deterioration inthe credit standing of Customers, and the Applicant’s handling ofincreased risks associated with positions.
[Compliance]
・ JSCC will check if the Applicant has the requisite businesscapability to prevent a Customer’s interests from being unfairlyharmed through conflict of interest management measures,
including a step to block communication with any divisions withwhich the Applicant could have a conflict of interest.

End of Document

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