Management Message

08
Annual Report 2013
Haruhiko Kato, President & CEO

Yoshinobu Takeuchi, Chairman

Japan Securities Depository Center, Inc. (JASDEC), as a providerof securities settlement infrastructure that is essential for financial
and capital markets, we are committed to operate reliably to assure
the availability of our services. In addition to this commitment
to reliability, we are also continually working to provide moreadvanced world-class functionality by enhancing our services andimproving operational efficiencies.
09

To make our systems safer and more efficient,
JASDEC plans to replace its current computer
systems with next-generation systems inJanuary 2014. In preparation, throughout fiscal
2012 (the year to March 31, 2013), we diligently
engaged in systems development andimplemented various measures for a smoothtransition to the new systems. They entailed
announcing and publicizing the basic policy forsystems transition, connection specifications
and participant test implementation guidelines,
and formulating market rules concerning newfunctions to become available as a result of
the systems replacement. During the year, wedelivered the following improvements in ourservices as well.
First, in order to expand the range ofinstruments that can be handled by the Bookentry Transfer System for Stocks, etc., werevised handling requirements for bonds withshare options and share options, making

Annual Report 2013

Initiatives in fiscal 2012it possible to handle all bonds with shareoptions and share options issued in Japan bylisted companies. To increase convenience
for users, we are implementing system
improvements to extend the termination
date for handling of commitment-type rights
offerings and bring forward the starting datefor handling of rights processing for foreign
stock certificates, etc.
Also, as a JASDEC group-wide crosssectional initiative to reduce the administrative
workload for participants, we havestreamlined procedures, such as notificationof changes of their trade names, addresses,etc., through the use of common forms forall systems that JASDEC group operates andimproving support for electronic submissionof procedure documents.
We continued to engage in international
activities to strengthen our relationships
with overseas CSDs and other organizations
through information exchange and otheractivities. At the Asia-Pacific Central Securities
Depository Group (ACG) and the World ForumManagement Message

10
Annual Report 2013of CSDs, where Chairman Takeuchi serves
as Executive Committee Chairman and ViceChair, respectively, JASDEC was in charge ofplanning and administration in its capacity ofsecretariat and summarized member opinions
concerning international standards pertaining
to securities market infrastructure. In addition,
we continue to expand our relationships withoverseas CSDs and other institutions throughsigned memorandums of understanding(MOUs). This year, we have signed MOUs with
China Central Depository & Clearing (CCDC),
Depozitarul Central (DC) of Romania andMerkezi Kayit Kurulusu (MKK) and Takasbankof Turkey.

bonds and investment trusts, CA information
relating to foreign stocks, etc. In addition, weplan to disseminate CA information about
Japanese stocks using the ISO 20022 standard.
These improvements will provide users
with one-stop access to a wide range ofinformation, including CA information about
Japanese securities, in an international digital
data format. This will allow efficient Straight
Through Processing (STP). We plan toimplement this initiative in February 2014.

Implementation ofinternational standards

To provide services that offer greater reliability,
convenience and efficiency, we are constantly
innovating from the perspective of investors,
issuers and market intermediaries. Described
below are some of the priority projects on
which we are working currently.

As mentioned above, we are currently making
preparations for the replacement of ourcomputer systems in 2014. In replacing thesystems, we will adopt ISO 20022, a nextgeneration message standard, in the interestof promoting international standardization.
Additionally, in the new systems, we will
implement connectivity with SWIFTNet, which
is widely used in other countries, so that users
can connect to the new system through either
our proprietary network or SWIFTNet.

Efficient collection anddissemination of CA information

Introduction of DVP for stock
lending and tolerance matching

We have agreed with the Tokyo Stock
Exchange (TSE) to collaborate on enhancing thecorporate action information (CA information)dissemination service. Specifically, we aim toexpand the content of Tokyo Market Information(TMI), TSE’s information distribution service, byadding information we collect about corporate

Accompanying the replacement of computer
systems in 2014, we plan to introduce Delivery
Versus Payment (DVP) settlement for stock
lending transactions and tolerance matching to
non-residents’ transactions.

Current priorities

Response to global
strengthening of riskmanagement

The management and staff of JASDEC will continue to contributeto the development of financial and capital markets throughcontinual innovation in response to user needs and structural andenvironmental changes in Japan and overseas. We look forward tothe continuing support and cooperation of our stakeholders.

Haruhiko Kato, President & CEO

Yoshinobu Takeuchi, Chairman

11Annual Report 2013

While JASDEC is continually pushing for
greater convenience in services, we recognize
ever-stronger risk management as a criticalissue for CSDs. And, indeed, across the globe,
financial supervisory authorities are working tostrengthen risk management with an emphasis
on financial institutions and financial market
infrastructures. With regard to new mandatoryinternational standards for securities

settlement infrastructure, the Committee on
Payment and Settlement Systems (CPSS) andthe International Organization of Securities
Commissions (IOSCO) published Principles
for Financial Market Infrastructures (PFMI) inApril 2012 and an accompanying document,
Disclosure Framework and Assessment
Methodology, in December 2012, resulting ina higher mandatory level of risk management
for securities settlement infrastructure. As afinancial market infrastructure, JASDEC iscommitted to appropriately responding to PFMI
and further strengthening risk management.