Guideline on Standard for Clearing Qualification Acquisition in Credit Default Swap and Interest Rate Swap Clearing
July 4, 2012
Amended on March 31, 2013
Amended on February 24, 2014
Amended on March 31, 2014
Amended on April 1, 2014
Amended on May 29, 2015
Amended on September 24, 2015
Amended on March 9, 2016
Amended on April 15, 2019
Amended on October 11, 2022
Japan Securities Clearing Corporation

I.

Purpose of the GuidelineThe guideline intends to contribute to judgment by market participants of their satisfaction of the standard for Clearing Qualification acquisition throughclarification and publication of perspectives and matters to be confirmed for the purpose of examination pertaining to the acquisition of qualificationnecessary to be a Clearing Participant (hereinafter referred to as “Clearing Qualification”), in accordance with the provisions of Article 9 of the CDS
Clearing Business Rules and Article 9 of the Interest Rate Swap Clearing Business Rules, regarding clearing business for Credit Default Swap
Transactions started in July 2011 (hereinafter referred to as “CDS Clearing Business”) and clearing business for Interest Rate Swap Transactions(hereinafter referred to as “IRS Clearing Business”) started in October 2012.

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DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

II.

Content of the GuidelineThe standard for Clearing Qualification acquisition is consisted of 3 items of “Management Structure,” “Financial Basis,” and “Business Execution
Structure.” Major perspectives for the purpose of perspectives and confirmations and understandings are described below as the Guideline inaccordance with stipulations in the Business Rules for each relevant item, regarding CDS Clearing Business and IRS Clearing Business (Note).

(Note)

Stipulations in the Business Rules, etc. as well as this Guideline are subject to change with future systemic revision, etc. for both CDS Clearing

Business and IRS Clearing Business.
1.

CDS Clearing BusinessStandards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition(1) Management

The Applicant has a sound management structure (e.g., it is not This item confirms that one who is subject to judgment ofStructurecontrolled or influenced by one who is deemed inappropriate fromwhether or not the one satisfies the standard of Clearing

the perspective of JSCC’s operation of CDS Clearing Business)

Qualification acquisition (hereinafter referred to as “Subject

such that the social credibility of CDS Clearing Business carriedParticipant”) has a sound management structure primarily byout by JSCC can be expected to be sufficiently protected.

examining that a Director or Major Shareholder of the
Subject Participant is not falling under grounds for(pursuant to Article 9-1-1)

disqualification under laws and regulations (*1) and the
Subject Participant is not affected by so-called antisocial
forces (*2).
(*1) Referring to the stipulations set forth in Article 29-4,
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DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Paragraph 1, Item 2, a.-i, and Article 29-4, Paragraph 1,
Item 5, d.-f. of the Financial Instruments and ExchangeAct, for the Director and Major Shareholder respectively.
(*2) Referring to one falling under Article 15 of Japan
Securities Dealers Association’s “Rules of Enforcement of
the Article of Incorporation.”
 This item confirms that Subject Participant has a sufficient(2) Financial Basisfinancial basis to fulfill obligations pertaining toperformance of settlement or collateral deposit, etc. that a
Clearing Participant is required to perform.
In the case where the Subject Participant is not guaranteed by
its Parent Company, etc.:
In accordance with the classifications of Applicant set forth in a. or
b. below, the Applicant is expected to satisfy the requirements
prescribed in a. or b. below and to have stable profitability as a
Clearing Participant as of the Qualification Target Date: The expression “expected to have stable profitability as a
Clearing Participant” confirms that Subject Participant has a

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DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
prospect for reporting stable profits in future in light of the
Subject Participant’s most recent status of the assets andprofits and projection of future profits and losses (the same
shall apply hereinafter).
a. Financial Instruments Business Operator:(a)

Its Net Capital Amount is not less than 100 billion yen;

 The standard judged by figures such as the standard related
to Net Capital Amount confirms that Subject Participant
attains the relevant figure (the same shall apply hereinafter).

(b)

(c)

Its Capital-to-Risk Ratio is more than 200% (or 250%

 Conformity with the requirements will be examined inin the case where JSCC deems it necessary in light ofreference to the “Guidelines Concerning Credit Standing of

its credit standing);

Clearing Participants, etc. in CDS Clearing Business”

In respect of a Special Financial Instrument Business(hereinafter referred to as “Guideline on CDS Credit

Operator (limited to the one filing the notification

Standing”) publicly notified by JSCC to determine whether

prescribed in Paragraph 2 of Article 57-5 of theor not to fall under “in the case where JSCC deems it

Financial Instruments and Exchange Act; the same shallnecessary in light of its credit standing” (the same shallapply hereinafter), Consolidated Capital-to-Risk Ratio

apply hereinafter).

is more than 200% (or 250% in the case where JSCC
deems it necessary in light of its credit standing); and4/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition(d) Conformity with the requirements will be examined in

It has sufficient creditworthiness.

reference to the “Guideline on CDS Credit Standing” todetermine whether or not to fall under “It has sufficientcreditworthiness.” (the same shall apply hereinafter).
b. Registered Financial Institution:(a)

Its Net Capital Amount is not less than 100 billion yen;(b)

In respect of a Registered Financial Institution subject
to Uniform International Standards, an applicant
satisfies the conditions specified in (i) to (iii) below (inthe case of a foreign bank, it shall satisfy the conditions
equivalent to the foregoing):(i) its non-consolidated or consolidated Common
Equity Tier 1 ratio (or non-consolidated orconsolidated common investment Tier 1 ratio for
an institution which operates with investmentsfrom its members, the same shall apply
hereinafter) is more than 4.5% (or 5.625% in thecase where JSCC deems it necessary in light of its
5/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
credit standing);(ii) its non-consolidated or consolidated Tier 1 ratio is
more than 6% (or 7.5% in the case where JSCC
deems it necessary in light of its credit standing);(iii) its non-consolidated or consolidated Total Capitalratio is more than 8% (or 10% in the case where
JSCC deems it necessary in light of its credit
standing);(c)

In respect of a Registered Financial Institution otherthan those subject to Uniform International Standards,
foreign banks and insurance companies (hereinafterreferred to as “Financial Institution subject to JapaneseStandard), its non-consolidated or consolidated capital
adequacy ratio is more than 4% (or 5% in the casewhere JSCC deems it necessary in light of its credit
standing) under the Standard in Japan;(d)

In respect of an insurance company, its
non-consolidated or consolidated solvency margin ratio
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DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
is more than 400% (or 500% in the case where JSCC
deems it necessary in light of its credit standing); and(e)

It has sufficient creditworthiness.

(pursuant to Article 9-1-2)
In the case where the Subject Participant is guaranteed by its
Parent Company, etc.:
In respect of an Applicant under Guarantee, the Examination shallbe conducted in accordance with the classifications of Applicant
under Guarantee set forth in the following Items, to review if the
Applicant under Guarantee is expected to satisfy the requirements
prescribed in each Item below instead of the matters set forth in
Item 2 of the preceding Paragraph, and to have stable profitability
as a Clearing Participant as of the Qualification Target Date:(1)

Financial Instruments Business Operatora.

Its Net Capital Amount is not less than 50 billion yen
7/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
and the Net Capital Amount (or, in the case where the
Parent Company, etc. is not a Financial Instruments
Business Operator or a Registered Financial Institution,
the amount equivalent thereto) of its Parent Company,
etc. (limited to the Parent Company, etc. of such
Applicant under Guarantee which provides Guarantee
by Parent Company, etc. to such Applicant under
Guarantee; the same shall apply in this Paragraph) is notless than 100 billion yen (or, in the case where a Parent
Company, etc. provides Guarantee by Parent Company,
etc. to more than one Clearing Participant, the amountobtained by multiplying 100 billion yen by the numberof the Clearing Participants guaranteed by the Parent
Company, etc. (or, in the case where a Parent Company,
etc. itself is a Clearing Participant, add one (1) to thenumber of the guaranteed Clearing Participants; thesame shall apply in the following Item));b.

The Applicant under Guarantee satisfies the
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DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
requirements in Item (2) a. (b) and (c) of the preceding
Paragraph, or its Parent Company, etc. satisfies any of
the requirements in Item (2) a. (b) and (c) or b. (b) to (d)of the preceding Paragraph (or, in the case where the
Parent Company, etc. is not a Financial Instruments
Business Operators or a Registered Financial Institution,
it satisfies the requirements equivalent thereto). In thiscase, the credit standing shall be judged by the credit
standing of the Parent Company, etc.; andc.

The Parent Company, etc. has sufficientcreditworthiness.

(2)

Registered Financial Institutiona.

Its Net Capital Amount is not less than 50 billion yen
and the Net Capital Amount of its Parent Company, etc.
(or, in the case where the Parent Company, etc. is not a
Financial Instruments Business Operator or a
Registered Financial Institution, the amount equivalent
thereto) is not less than 100 billion yen;
9/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisitionb.

The Applicant under Guarantee satisfies therequirement in Item (2) b. (b) of the preceding
Paragraph, or its Parent Company, etc. satisfies any of
the requirements in Item (2) a. (b) and (c) or b. (b) to(d) of the preceding Paragraph (or, in the case where the
Parent Company, etc. is not a Financial Instruments
Business Operator or a Registered Financial Institution,
it satisfies any equivalent requirements). In this case, its
credit standing shall be judged by the credit standing of
the Parent Company, etc.; andc.

The Parent Company, etc. has sufficientcreditworthiness.

(pursuant to Article 9-2)
 This item confirms that Subject Participant has a sufficient(3) Business
Executionbusiness execution structure to conduct the settlement

Structureprocedure as a Clearing Participant.
10/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisitiona.

The Applicant has an appropriate structure of business[Settlement ]execution for the settlement of Clearing Contracts,

Confirms whether or not Subject Participant has amanagement of the risk of loss and compliance withmanagement structure in place for each of the following

laws and regulations, dispositions of the administrative

operations that a Clearing Participant is required to perform

agencies in accordance with the laws and regulations,in accordance with the method of operating procedures

and these Business Rules, etc.; andestablished by JSCC. In particular, 2). refers not only to a
structure for operations but also to a structure for submissionof interest-rate quotes in line with the actual realities of themarket.

For each of those operating procedures, anenvironment for the connection of IT systems with JSCC
(arrownet lines, Web Portal and Web Portal+) also needs tobe developed.

1). Application for Assumption of Obligation
A series of procedures from application for Assumption of
Obligation through TIW to completion of clearing (*3)(*3) An environment for the connection to TradeServ andTIW needs to be developed.

2). Submission of Quotes for Calculation of Clearing Price
11/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
A procedure for submitting quotes using a Markit service
by an hour between 15:15 and 16:00 on every businessday, with stocks of CDS trades with positions (*4) (*5)(*6)(*4) It is necessary to develop a structure that will allow
day-to-day calculation of quotes reflecting the actual
realities of the market for stocks of CDS trades thatare subject to quotes submission and submission ofsuch quotes by the submission deadline.

In moredetail, the Subject Participant needs to have such astructure in place to secure appropriate personnel withneeded skills and experiences in professional practiceso that procedures for actively and swiftly calculating
quotes needs to be handled presupposing assumptionof positions by the Participant.

This will include

collecting and analyzing pertinent information also
taking into consideration the circumstances of theParticipant’s positions, etc. based on the prospect for
12/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
market prices or supply and demand, just as a market
participant offers quotes and repeatedly trades in theinterbank market.
(*5) An environment for the connection to Markit services
needs to be developed.
(*6) This is the case where a pair exists with a Bid priceexceeding an Ask price in quotes submitted by each
Clearing Participant to ensure credibility of quotes
submitted, and in case a certain condition is met, a
procedure will be conducted to execute CDS trades
between the Clearing Participants involved with therelevant pair. Thus, the ISDA Master Agreement
needs to be concluded (including the case where theconclusion is expected) with all Clearing Participantsin becoming one of the Clearing Participants.

3). Fund Settlement
A procedure for account transfer over the BOJ Net
pertaining to the transfer and receipt of Variation Margin
13/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisitionor any fixed amount of money using a saving or current
deposit at the Bank of Japan (*7)(*7) The Subject Participant needs to have a BOJ account.

4). Collateral Deposit and Refund
Account transfer procedure pertaining to theconfirmation, deposit, and refund of the Required
Amount for Initial Margin and CDS Clearing Fund
(Deposit and refund/return of cash and Japanese
Government Bonds will be made through an accounttransfer on the BOJ Net, and deposit and return of US
Treasuries will be made through an account transfer on
FED-WIRE) (*8)(*8) A BOJ current account is necessary for deposit andrefund of collateral by cash (Account(s) for collateralother than cash is optional).

5). Credit Event
A series of procedures pertaining to cash settlement or
Physical Settlement upon occurrence of either of
14/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
bankruptcy, Failure to Pay, and restructuring (*3)
[Risk Management] Whether a management structure is in place to address
market risk, liquidity risk, credit risk, operational risk,
system risk, etc. will be examined by the examination ofinternal rules.
[Compliance] Whether compliance monitoring and reporting structures arein place will be examined.
b.

The outstanding amount of CDS Transactions (meaning In the event of Clearing Participant’s default, the Defaulting

the total amount of the Notional Amounts of the

Clearing Participant’s positions will be disposed of throughoutstanding CDS Transactions; the same shall apply inan Auction. This item confirms that the Subject Participant

this Item) of the Applicant or the Corporate Group

has the following structures in place, as Clearing Participants

including the Applicant is not less than 500 billion yen

are required to provide a Representative of the Default(or, in the case where the outstanding amount of CDS

Management Committee Member who is to provide advice

Transactions is calculated for the Corporate Groupthroughout the process of default settlement conducted byincluding the Applicant, 500 billion yen multiplied by

JSCC including hedging and Auction and participate in thethe number of Clearing Participants belonging to the

Auction to assume the positions:

15/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Corporate Group), and the Applicant otherwise1). Provision of Personnel to the Default Management

maintains a structure of execution of business which

Committee

enables it to participate in the procedures for the

In case any Clearing Participant defaulted, a humansettlement of Clearing Contracts entered into by aresources structure that will allow the Subject Participant toClearing Participant in respect of whom default has

provide a person reported in advance to JSCC as someone

occurred.

familiar with the professional CDS practice as a
Representative of the Default Management Committee(pursuant to Article 9-1-3)

Member (*9) (*10)(*9) The Committee Member Representative is required toanalyze the Defaulting Clearing Participant’s positions
and provide necessary advice to JSCC on execution of ahedge trade and Auction, etc. necessary to neutralizerisks.
(*10) Until the default settlement is over, Committee Member
Representative is to be devoted to the role as aCommittee Member Representative.

The personnel

familiar with the professional CDS practice needs to be
secured for the purpose of providing as a Committee
16/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the CDS Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Member Representative in the event of a default, apartfrom management related to the operation of the Subject
Participant’s business.

2). Bidding in the Auction for Disposal of Positions-

A structure to bid by a fixed deadline at the Auction for
disposal of the Defaulting Clearing Participant’s positions
(*11)

-

A structure to assume positions and dispose of thepositions-A structure to prevent Clearing Participants to beconstantly exempted from participation in Auction(building a Chinese wall for prevention of insider trading,
etc.)

(*11)

A structure that will allow pricing of the Defaulting
Clearing Participant’s positions reflecting the actual
realities of the market and submitting a bidding priceby the bidding deadline is necessary.

In more detail,the Subject Participant needs to have such a structure
17/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the CDS Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisitionin place to secure appropriate personnel with needed
skills and experiences in professional practice, as such
personnel is required to actively and swiftly calculate
the bidding price by such means as collecting andanalyzing pertinent information also taking into
consideration the circumstances of the Participant’s
positions, etc. based on the prospect for market prices
or supply and demand.

2.

IRS Clearing BusinessStandards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition(1) Management

Applicant must have a sound management structure, including not This item confirms that one who is subject to judgment ofStructure

being controlled or influenced by a person deemed inappropriate

whether or not the one satisfies the standard of Clearing

by JSCC from the viewpoint of the continued operation and good

Qualification acquisition (hereinafter referred to as “Subject

18/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
reputation of the IRS Clearing Business.

Participant”) has a sound management structure primarily byexamining that a Director or Major Shareholder of the(pursuant to Article 9-1-1)

Subject Participant is not falling under grounds fordisqualification under laws and regulations (*12) and the
Subject Participant is not affected by so-called antisocial
forces (*13).
(*12) Referring to the stipulations set forth in Article 29-4,
Paragraph 1, Item 2, a.-i, and Article 29-4, Paragraph
1, Item 5, d.-f. of the Financial Instruments andExchange Act, for the Director and Major Shareholder
respectively.
(*13) Referring to one falling under Article 15 of Japan
Securities Dealers Association’s “Rules of
Enforcement of the Article of Incorporation.”
 This item confirms that Subject Participant has a sufficient(2) Financial Basisfinancial basis to fulfill obligations pertaining toperformance of settlement or collateral deposit, etc. that a
19/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the Interest Rate Swap Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Clearing Participant is required to perform.
In the case where the Subject Participant is not guaranteed by
its Parent Company, etc.:
Depending upon the category into which Applicant falls, Applicant
shall satisfy the requirements prescribed in a. or b. below anddemonstrate adequate continuing financial stability from the The expression “demonstrate adequate continuing financial

Qualification Date:stability” confirms that Subject Participant has a prospect forreporting stable profits in future in light of the Subject
Participant’s most recent status of the assets and profits andprojection of future profits and losses (the same shall apply
hereinafter).
a.

Financial Instruments Business Operator:(a) Applicant’s Net Capital is not less than the lower of 50
million US dollars and 5 billion yen;

 The standard judged by figures such as the standard related
to Net Capital Amount confirms that Subject Participant
attains the relevant figure (the same shall apply hereinafter).

(b) Applicant’s Capital-to-Risk Ratio is more than 200% or
250% if JSCC deems it necessary in light of its

 Conformity with the requirements will be examined inreference to the “Guidelines Concerning Credit Standing of

20/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing

Stipulations in the Interest Rate Swap Clearing Business Rules

Qualification

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
creditworthiness;

Clearing Participants, etc. in IRS Clearing Business”(c) If Applicant is a Special Financial Instrument Business(hereinafter referred to as “Guideline on IRS Credit

Operator that has filed the notification prescribed inStanding”) to be publicly notified by JSCC to determine

Article 57-5.2 of the Financial Instruments and Exchange

whether or not to fall under “if JSCC deems it necessary in

Act ( “Special Operator”), Applicant’s Consolidated

light of its creditworthiness” (the same shall apply

Capital-to-Risk Ratio is more than 200% or 250% if JSCC

hereinafter).

deems it necessary in light of Applicant’s
creditworthiness; and Conformity with the requirements will be examined in(d) Applicant is sufficiently creditworthy.

reference to the “Guideline on IRS Credit Standing” todetermine whether or not to fall under “Applicant issufficiently creditworthy.” (the same shall apply hereinafter).
b.

Registered Financial Institution:(a) Applicant’s Net Capital is not less than the lower of 50
million US dollars and 5 billion yen;(b) If Applicant is a Registered Financial Institution subject toUniform International Standards, it must fulfil theconditions specified in (i) to (iii) below or, in the case of a
21/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
foreign bank, equivalent conditions under the applicablelaws and regulations in its country of incorporation:(i) Applicant’s non-consolidated or consolidated
Common Equity Tier 1 ratio (or non-consolidated orconsolidated common investment Tier 1 ratio for an
institution which operates with investments from its
members) is more than 4.5% (or 5.625% if JSCC
deems it necessary in light of its creditworthiness);(ii) Applicant’s non-consolidated or consolidated Tier
1 ratio is more than 6% (or 7.5% if JSCC deems it
necessary in light of its creditworthiness);(iii) Applicant’s non-consolidated or consolidated Total
Capital ratio is more than 8% (or 10% if JSCC
deems it necessary in light of its creditworthiness);(c) If Applicant is a Registered Financial Institution otherthan those subject to Uniform International Standards,
foreign banks and insurance companies (“Financial
Institution subject to Japanese Standard”), its
22/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
non-consolidated or consolidated capital adequacy ratio is
more than 4% (or 5% if JSCC deems it necessary in lightof its creditworthiness) under the Japanese Standard;(d) If Applicant is an insurance company which is a
Registered Financial Institution, its non-consolidated orconsolidated Solvency Margin Ratio is more than 400%
(or 500% if JSCC deems it necessary in light of its
creditworthiness); and(e) Applicant is sufficiently creditworthy.
(pursuant to Article 9-1-2)
In the case where the Subject Participant is guaranteed by its
Parent Company, etc.:
For a Guaranteed Applicant, an examination shall be conducted,
depending upon the category into which the Guaranteed Applicant
falls, in lieu of Paragraph 1.(2), to determine whether the
Guaranteed Applicant satisfies the requirements prescribed in the
23/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
below Items and demonstrates adequate financial stability from the
Qualification Date:(1)

Financial Instruments Business Operatora.

The Net Capital of the Guaranteed Applicant is not lessthan the lower of 50 million US dollars and 5 billion
yen, and the Net Capital of its Parent Company
providing Guaranteed Applicant’s Parental Guarantee,
or its equivalent if the Parent Company providing
Parental Guarantee is neither a Financial Instruments
Business Operator nor a Registered Financial
Institution, is not less than the lower of 50 million US
dollars and 5 billion yen;
If the Parent Company providing the Guaranteed
Applicant’s Parental Guarantee also provides Parental
Guarantee to one or more other Clearing Participants,
the Parent Company’s Net Capital must not be less than
the amount obtained by multiplying the lower of 50
24/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
million US dollars and 5 billion yen by the number of
the Clearing Participants guaranteed by that Parent
Company or, if the Parent Company itself is a Clearing
Participant, the number of the guaranteed Clearing
Participants plus one;b.

The Guaranteed Applicant satisfies the requirements of
Paragraph 1.(2). a.(b) and (c) or,
Its Parent Company satisfies the requirements of
Paragraph 1.(2).a.(b) and (c) or Paragraph 1.(2).b.(b) to(d), or equivalent requirements, if the Parent Company
providing Parental Guarantee is neither a Financial
Instruments Business Operators nor a Registered
Financial Institution.
For this purpose, the satisfaction of the requirements
related to creditworthiness shall be judged by reference
to the creditworthiness of the Parent Company; andc.

The Parent Company is sufficiently creditworthy.
25/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition(2)

Registered Financial Institutiona.

Applicant’s Net Capital is not less than the lower of 50
million US dollars and 5 billion yen and the Net Capitalof its Parent Company providing Parental Guarantee, orits equivalent if the Parent Company providing Parental
Guarantee is neither a Financial Instruments Business
Operator nor a Registered Financial Institution, is notless than the lower of 50 million US dollars and 5
billion yen;
If a Parent Company provides Parental Guarantee toone or more other Clearing Participants, the Parent
Company’s Net Capital must not be less than theamount obtained by multiplying the lower of 50 million
US dollars and 5 billion yen by the number of the
Clearing Participants guaranteed by that Parent
Company or, if the Parent Company itself is a Clearing
Participant, the number of the guaranteed Clearing
Participants plus one;
26/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisitionb.

Guaranteed Applicant satisfies the requirements of
Paragraph 1.(2).b.(b), or,
Its Parent Company providing Parental Guarantee
satisfies the requirements of Paragraph 1.(2).a.(b) and(c) or Paragraph 1.(2).b.(b) to (d) of, or equivalentrequirements if the Parent Company providing Parental
Guarantee is neither a Financial Instruments Business
Operator nor a Registered Financial Institution.
For this purpose, the satisfaction of the requirements
related to creditworthiness shall be judged by reference
to the creditworthiness of the Parent Company; andc.

The Parent Company must be sufficiently creditworthy.

(pursuant to Article 9-2)

(3) Business This item confirms that the Subject Participant has aCapability

sufficient business execution structure in conducting
27/34

DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
settlement procedures, etc. as a Clearing Participant.
a.

Applicant has capability to settle Cleared Contracts,
manage risk, comply with laws and regulations,[Settlement] Confirms whether or not Subject Participant has asanctions imposed by administrative agencies inmanagement structure in place for each of the following

accordance with laws and regulations, and the Rules;

operations that a Clearing Participant is required to performandin accordance with the method of operating procedures
established by JSCC. For each of those operatingprocedures, an environment for the connection of IT systems
with JSCC (arrownet lines, Web Portal and Web Portal+)also needs to be developed.

1). Application for Clearing
A series of procedures from application for clearing
through an affirmation method or an electronic trading
platform prescribed by JSCC in a public notice tocompletion of clearing (*14)(*14) An environment for the connection to an affirmation
method or an electronic trading platform prescribed by
JSCC in a public notice needs to be developed.
28/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition2). Fund Settlement
A procedure for account transfer over the BOJ Net
pertaining to the transfer and receipt of Variation Margin or
any fixed amount of money using a saving or current
deposit at the Bank of Japan (*15)
When a Clearing Participant desires to apply for clearing of
foreign currency denominated IRS, in addition to fundsettlement using BOJ current account, a procedure foraccount transfer at one of the foreign currency fundsettlement banks designated by JSCC.
(*15) The Subject Participant needs to have a saving or
current deposit at BOJ.

3). Collateral Deposit and Refund
Account transfer procedure pertaining to the confirmation,
deposit, and refund of the Required Amount for Initial
Margin and IRS Clearing Fund (Deposit and refund/returnof cash and Japanese Government Bonds will be madethrough an account transfer on the BOJ Net, and deposit
29/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
and return of US Treasuries will be made through an
account transfer on FED-WIRE) (*16)(*16) An account is need for deposit and refund ofcollateral by cash (Account(s) for collateral other thancash is optional is optional).
[Risk Management] Whether a management structure is in place to address
market risk, liquidity risk, credit risk, operational risk,
system risk, etc. will be examined by the examination ofinternal rules.
[Compliance] Whether compliance monitoring and reporting structures arein place will be examined.
b.

Applicant maintains a business capability

 In the event of Clearing Participant’s default, the Defaulting

which enables it to participate in the procedures

Clearing Participant’s positions will be first hedged and thenfor the liquidation of a defaulting Clearing

disposed of through an Auction. This item confirms that

Participant’s Cleared Contracts. Applicant shallthe Subject Participant has the following structures in place,

be deemed to fulfil this requirement if anotheras Clearing Participants are required to provide a

30/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
person meeting the qualifications prescribed byRepresentative of the Default Management Committee

JSCC23 shall act on its behalf in the liquidation

Member who is to provide advice throughout the process ofof such Cleared Contracts as prescribed bydefault settlement conducted by JSCC including hedging and

JSCC.

Auction and participate in the Auction to assume thepositions:1). Provision of Personnel to the Default Management(pursuant to Article 9-1-3)

In case any Clearing Participant defaulted, a humanresources structure that will allow the Subject Participant toprovide a person reported in advance to JSCC as someone
familiar with the professional IRS practice as a
Representative of the Default Management Committee
Member (*17) (*18)(*17) The Committee Member Representative is required
to analyze the Defaulting Clearing Participant’s
positions and provide necessary advice to JSCC on
execution of a hedge trade and Auction, etc. necessary
to neutralize risks.
(*18) Until the default settlement is over, Committee
31/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Member Representative is to be devoted to the role asa Committee Member Representative.

The personnel

familiar with the professional IRS practice needs to be
secured for the purpose of providing as a Committee
Member Representative in the event of a default, apartfrom management related to the operation of the
Subject Participant’s business. If a Clearing
Participant holds foreign currency denominated IRS
positions, it is required to provide the Committee
Member Representative familiar with the trading
practices of foreign currency denominated IRS.

2). Bidding in the Auction for Disposal of Positions-

A structure to bid by a fixed deadline at the Auction for
disposal of the Defaulting Clearing Participant’s positions
(*19)

-

A structure to assume positions and dispose of thepositions(*19) A structure that will allow pricing of the Defaulting
32/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
Clearing Participant’s positions reflecting the actual
realities of the market and submitting a bidding priceby the bidding deadline is necessary.

In more detail,the Subject Participant needs to have such a structure
in place to secure appropriate personnel with needed
skills and experiences in professional practice, as such
personnel is required to actively and swiftly calculate
the bidding price by such means as collecting andanalyzing pertinent information also taking into
consideration the circumstances of the Participant’s
positions, etc. based on the prospect for market prices
or supply and demand.
- The requirements in this section can be met by having
another Clearing Participant act on its behalf in theauction bidding and acceptance of positions when it wins
the bid.

In this case, the agreement concerning theoutsourcing shall provide for matters concerning theparticipation by the outsourcee in the default settlement
33/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.

Standards for
Clearing
Qualification

Stipulations in the Interest Rate Swap Clearing Business Rules

Perspectives and Matters to be Confirmed for the Purpose of
Examination (Guideline)

Acquisition
drill, the method for avoiding conflict of interests, theconfidentiality

regarding

procedures

respect

in

of

the

default

settlementa

Defaulting

Clearing

Participant, and the outsourcee’s agreement to comply
with the provisions of the IRS Clearing Business Rules
and their subordinate rules relating to such procedures,
and any other matters specified by JSCC on acase-by-case basis in connection with such procedures.
Also, a Clearing Participant which has already becomesuch outsourcee for a Clearing Participant cannot accept
outsourcing from any other Clearing Participant.
- End of Document -34/34
DISCLAIMER: This translation may be used only for reference purposes. This English version is not an official translation of the original Japanese document. In cases where any differences occur
between the English version and the original Japanese version, the Japanese version shall prevail. Japan Securities Clearing Corporation and/or Tokyo Stock Exchange Group, Inc. (including Tokyo
Stock Exchange, Inc., and Tokyo Stock Exchange Regulation) shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, or misunderstanding
with regard to this translation.