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Annual Report 2012

Yoshinobu Takeuchi

Haruhiko Kato

ChairmanPresident & CEO

JASDEC services combine excellent usability andefficiency with high standards of reliability andsecurity. We are continually working to enhance
the functionality of our various systems and tostrengthen our risk management.

Japan Securities Depository Center, Inc. (JASDEC) provides securities settlement infrastructure,that is essential for financial and capital markets. We are constantly aware of the importance of risk
management in this role, and we are continually working to strengthen our business continuitymanagement as part of our wide-ranging efforts to ensure the reliability of our systems.
In addition to this commitment to reliability, we also contribute to the growth and success ofinvestors, issuers and market intermediaries through our efforts to enhance the convenience,efficiency and security of our services. We place particular emphasis on the introduction of newservices, improvements in the efficiency of operations relating to securities settlements, measures tocounter the various risks that are inherent to markets and the expansion of international activities.

5Initiatives in fiscal 2011
March 31, 2012).
First, we continued to expand the range of products weWhile our facilities were not damaged in last year’s Great
East Japan Earthquake, we took the opportunity to strengthen
our business continuity plan (BCP) by reviewing ourhandle. In particular, we have enabled issuance of J-Sukukmanuals, including the manual concerning the establishment(Islamic financial instruments similar to bonds) usingof a BCP Countermeasure Office to ensure a timely andour transfer systems. This innovation was made possible

flexible response in the event of a disaster or system failure.

by changes to the Japanese tax system to accommodate

Other actions included verification of our business continuity

J-Sukuk and was the result of close collaboration among

management, system failure response training and businessall concerned. Since April 1, 2012, it has been possible tocontinuity training at our back-up office.

handle J-Sukuk through the Book-entry Transfer System for

We were also very active internationally during the year

Corporate Bonds using a special purpose trust beneficiaryunder review. Activities included information exchanges

rights structure.

and other initiatives to strengthen our relationships withIn regard to the Book-entry Transfer System for Stocks,

overseas settlement institutions. In April 2011, the Worldetc., in August 2011, we began to handle Japanese Depositary

Forum of CSDs (WFC) was established to take overReceipts (JDRs), which have exchange-traded notes (ETNs)

the activities of the CSD Contact Group as a forum foras trust assets. We are also improving our systems toinformation exchange and discussion among the world’s

support commitment-type rights offerings in relation tofive regional CSD associations. At the first WFC meetingshare options.

in September 2011, JASDEC was given responsibility for

We further enhanced the functionality of our systems

planning and administration as the secretariat of the WFC,

by improving temporary suspension functions for transfer

and our Chairman served as Vice-Chairman of the forum. In

requests relating to stocks, etc., enhancing the ease with which

September 2011, we signed a memorandum of understanding

users can manage settlement processes. We also decided toproviding for information exchange and mutual cooperation

introduce a Tolerance Matching function to the Pre-Settlementwith the Russian CSD, National Settlement Depository.

Matching System (PSMS) for non-residents’ transactions.

Annual Report 2012

JASDEC undertook a range of initiatives in fiscal 2011 (toCurrent priorities
In fiscal 2012 (to March 31, 2013), we will continue toSecurities Standard Evaluation Group (SEG), and throughimplement a range of projects under the medium-termcoordination with SWIFT and interested parties in Japan.

business plan announced in March 2012. Our priorities

This involvement allows us to ensure that items required

under that plan are to provide services with high levels offor the Japanese market are reflected in ISO20022. Whereconvenience, efficiency and reliability, to reinforce ournecessary, we also consider changes to practices that arebusiness fundamentals and to strengthen the competitivenessunique to Japan.

of financial and capital markets. Measures under this6

Our preparations for the replacement of our systems alsoplan will include the establishment of schemes to mitigate

include numerous enhancements to our services, such as thesettlement risks relating to stock lending transactions, and a

introduction of SWIFTNet, which is widely used in otherreview of system participation procedures, with the specificcountries, the provision of tolerance matching function

aims of simplifying processes for users of our systems andfor non-residents’ transaction, introducing use of the DVP

providing integrated access points. We will also makesettlement system for stock lending transactions, and thepreparations for the transition to our next-generation system,

enhancement and expansion of statistical data.

Annual Report 2012

including the replacement of some of our mainframe IT
infrastructure with open system platforms and a review ofsystem structures. In addition, we will develop a more robust

Efficient dissemination of CA information

business continuity plan, adopt ISO20022, and improve theefficiency of our information gathering and distribution

We are currently assessing improvements to the functionality

processes for corporate actions (CAs) by issuers, such as theand efficiency of CA information dissemination service

announcement of financial results, capital increases, dividendin collaboration with the Tokyo Stock Exchange (TSE).

payments and M&A. Described below are two of the priority

Specifically, we aim to expand the content of the Tokyo

projects on which we are working currently.

Market Information (TMI), the information distributing
service of TSE, by adding JASDEC information about basic
information on corporate bonds and investment trusts, CAApplication of ISO20022

information relating to foreign stocks, etc. In addition, weplan to disseminate CA information about Japanese stocks

We are currently making preparations for the replacementof our systems in 2014. We have decided to move toward

using the ISO20022 standard.
These improvements will provide users with one-stop

international standardization by applying ISO20022,

access to a wide range of information, including CA

which is the next-generation message standard scheme for

information about Japanese securities, in the form of digitalthe financial industry. In preparation for the adoption ofdata that includes the international format. This will allow

ISO20022, we have been participating in the development

efficient Straight Through Processing (STP). We will start toof the standard through participation in the ISO/TC68

implement these initiatives in 2014.

Strengthening risk management in financial and capital markets
Financial supervisory authorities are now working globally

published by the Committee on Payment and Settlement

to strengthen risk management systems targeting financial

Systems (CPSS) and the International Organization ofinstitutions and financial market infrastructure throughout

Securities Commissions (IOSCO) in April 2012. As one ofthe world. These efforts are based on recent experiences,

the financial market infrastructures, JASDEC is committed

including the financial crisis triggered by the Lehman shock.

to the further improvement of risk management under theIn the area of securities settlement infrastructure, there

supervisory guidelines that will be compiled by the Financial

are plans to introduce mandatory compliance with theServices Agency under the Principles for Financial Market

Principles for Financial Market Infrastructures, which wereInfrastructures.

7Yoshinobu Takeuchi, Chairman

Haruhiko Kato, President & CEO

Annual Report 2012

The management and staff of JASDEC will continue to contribute to the development of financial
and capital markets through continual innovation in response to user needs and structural andenvironmental changes in Japan and overseas. We look forward to the continuing support andcooperation of all concerned.