Value Creation Story

Message from the President
Initiatives to Date Based on the Medium-Term Management Policy
FY2022 Results
In November 2021, the midpoint of the Sixth MediumTerm Management Plan (FY2020–FY2022), we formulated
and released a Medium-Term Management Policy thattook the Tokyo Stock Exchange market restructuring
and other changes as an opportunity to expedite
management transformation. In this policy, we set out
clear medium-term management goals for ROE (4% by
FY2022 and 5% by FY2025), and have since carriedout management transformation by mobilizing the fullresources of Group companies. As a result, ROE for
FY2022, the final year of the Sixth Medium-Term
Management Plan, was 4.36%, achieving the intermediate
ROE goal of 4% set in the Medium-Term Management

Policy, based on growth in the profit contribution of
securities financing, which we have steadily worked on(details on page 22: Message from the Officer
Responsible for Corporate Strategy).

FY2023 First-Half Results
For the Seventh Medium-Term Management Plan
(FY2023–FY2025), we set the management goals of 5%
ROE and consolidated ordinary profit of ¥10 billion by
FY2025. Results thus far show that we got off to a goodstart, led by securities financing. As of the midpoint of
FY2023, we are on track to achieve the 5% ROE goal
two years ahead of schedule.

Long-Term Management Vision

As the only securities finance company
in Japan, we will contribute to thedevelopment of the country’s securities
and financial markets.
Shigeki Kushida
Representative Executive Officer & President
Japan Securities Finance Co., Ltd.
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Given that our management efforts had achieved acertain level of success and we had reached a milestone,
we believed it was appropriate to further organize ourapproach to management going forward. As such, ourBoard of Directors engaged in thorough discussions onthat topic. As a result, we concluded that a two-tiered
approach to management would be appropriate, settingout a long-term management vision, and then using thatvision as a guide to formulate a medium-term
management plan and a shareholder return policy basedon specific business strategies. Accordingly, we recently
formulated the “Long-Term Management Vision,” andbased on that vision, upwardly revised the management
goals of the Seventh Medium-Term Management Plan.
We also formulated the new “Shareholder Return Policy
during the Period of the Seventh Medium-Term
Management Plan.” All of these were publicly announced
in November 2023.

mindful of the cost of equity, and will continue to work
toward the steady improvement of ROE, keeping the
8% level in mind. At the same time, with regard toshareholder returns, JSF will maintain a total payout
ratio of 100% during the period of its Seventh MediumTerm Management Plan, and strive to enhance shareholder
returns thereafter as well.
Through these management efforts, JSF aims toestablish a price to book ratio (PBR) exceeding 1.0 times.
In addition, under its organizational design as a Company
with a Nominating Committee, etc., JSF will strive tostrengthen its corporate governance by tackling sustainability
issues while focusing on further improvement of theeffectiveness of deliberations of its Board of Directors
and respective committees, the further enhancementof information disclosure, and the development of arobust human capital base.

Establishment of Corporate Message
Long-Term Direction
As its long-term management direction, JSF will continue
to agilely and flexibly address the trading needs of
securities and financial market participants as Japan’s
only securities finance company. Through its contributions
to market development, JSF will seek to concentrate
the collective efforts of its Group companies to sustain
growth and enhance its corporate value, while maintaining
strong financial soundness. Under this management
direction, JSF will continue striving to steadily strengthen
its earnings base and pursue the stable and steady
improvement of its capital efficiency, while remaining

In formulating the Long-Term Management Vision,
JSF reaffirmed its targeted vision of the future. To
communicate that vision to stakeholders inside andoutside the Company, we established a new corporate
message: “Be unique. Be a pioneer.” This expresses
what we want to be—a company that agilely and flexibly
addresses the trading needs of securities and financial
market participants, while incorporating advances infinancial technology in a constantly changing environment,
as Japan’s only securities finance company, thereby
pioneering the future of both the market and JSF.

Japan Securities Finance Co., Ltd.

Integrated Report 2023

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Value Creation Story

Message from the President

Seventh Medium-Term Management Plan

Capital Management Policy

Set and Revised Management Goals

Up to now, in the Medium-Term Management Policy
and the Seventh Medium-Term Management Plan, ourmanagement goal for ROE was 5%, based on ourestimate of the cost of equity (estimated to be around4.5%), and management has continued striving toachieve it. As I mentioned above, we are now working
toward the new, upwardly revised management goal:
maintain ROE at a stable level above 5% and aim forfurther improvement.
In terms of shareholder returns, during the periodof the Seventh Medium-Term Management Plan, we
will continue our policy of aiming to maintain a total
payout ratio of 100% through dividends and flexible

The Seventh Medium-Term Management Plan originally
had the goals of ROE of 5% and consolidated ordinary
profit of ¥10 billion by FY2025. However, in light of theLong-Term Management Vision and the JSF Group’s
performance so far in FY2023, we have revised thesegoals upward. Specifically, our new goals are to maintainROE at a stable level above 5% and aim for further
improvement, and to maintain consolidated ordinary
profit at a stable level of over ¥10 billion and aim forfurther improvement.

Further Strengthen the Loans for Margin
Transactions Business and Securities Financing
In the Seventh Medium-Term Management Plan, we
have outlined specific strategies and measures forachieving our management goals (details on page 20:
Seventh Medium-Term Management Plan). The main
pillar of the plan is to strengthen the loans for margintransactions business and securities financing.
The loans for margin transactions business is where
JSF has its origins as infrastructure for Japan’s securities
and financial markets. It is one of our core businesses,
accounting for a consistent portion of gross profit. We
have long worked to expand the number of loanable
stock issues and strengthen the procurement of stock
to be used for stock lending. We will continue working
to ensure stable operations and improve conveniencein the loans for margin transactions business in line withthe changing operating environments of stock markets.
In addition, with an accurate grasp of the trading needsof market participants, we will explore measures topromote the use of loans for margin transactions, andwork to bolster the foundation of the loans for margintransactions business by enhancing dissemination of
information related to standardized margin transactions
and loans for margin transactions.
In securities financing, needs for borrowing stockfor use as collateral in various financial transactions
and for lending stock to increase asset yields have fueled
strong demand in recent years for government bondand equity repurchase agreement (repo) transactions.
Demand for multi-currency cross-border transactions
has also been rising. In securities financing, we have
expanded transactions by agilely and flexibly addressingthese diverse domestic and international needs as theconnection point between markets in Japan and overseas.
In recent years, we have actively participated in overseas
conferences, which has helped to raise our international

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Integrated Report 2023

profile, and have also been increasing our roster ofclients and the number of transactions. We will continue toeffectively utilize our expertise in financial and securities
transactions to proactively meet diverse needs for domestic
and international transactions and increase the numberof clients, as well as the currencies and securities we
handle in our transactions. In this way, we will enhanceand expand our securities financing business and expand
our earnings base (details on page 26: Securities Financing
Centered on Loans for Margin Transactions).

Strengthening Our Human Resource BaseIn the Seventh Medium-Term Management Plan, oneof the key strategies for achieving our management
goals is to strengthen human resource development
and improve engagement. We will continue to set highmanagement goals, and to make them achievable it isimportant to create a workplace environment in which
diverse employees can fully demonstrate their individuality
and strengths, enthusiastically and autonomously exploring
and transforming their work, and grow as they accumulate
experience and achievements. From this perspective,
we established a Human Capital Policy as the basic
policy for promoting human resource development
and other initiatives related to human capital formation.
The aim of this policy is to strengthen our human resource
base, which is the source of corporate value creation.
The Human Capital Policy sets forth the following
vision: (1) We respect the diverse values of our employees
and will strive to provide opportunities and supportive
environments so that diverse individuals can maximize
their individuality and strengths and grow on their own
through the performance of their work; (2) We will
promote the creation of a comfortable work environment
so that employees can engage in their work with peaceof mind; and (3) We will improve our corporate vitality
and organizational transformation capabilities andachieve more productive work styles by working to
improve employee engagement. The policy also setsout our expectations for human resources and clarifies
the details and direction of management’s efforts going
forward toward achieving this vision, in areas including
recruitment, and training and career advice (details on
page 34: Strengthening Human Resource Development
and Improving Engagement).

implementation of share buybacks. We will increase
dividends in FY2023, and for the period from FY2024
through FY2025 our policy is to pay dividends with atarget payout ratio of 70%.
Through these management efforts, we aim to firmly
establish a PBR exceeding 1.0 times.
From FY2026 as well, we will strive to steadilystrengthen our earnings base and pursue stable andsteady improvement of capital efficiency, while remaining
mindful of the cost of equity. In this way, we will strive
to continuously improve corporate value and enhanceshareholder returns.

Message to Investors and Other Stakeholders
FY2023 is the first year of the Seventh Medium-Term
Management Plan, and we have made an auspicious startin terms of performance. We still have many challenges
to address in order to sustain growth and enhance ourcorporate value while maintaining strong financial
soundness. However, as a distinct and unique financial

institution that operates with a high degree of agility andflexibility, we remain committed to contributing to thedevelopment of the securities and financial markets while
holding dear the sentiments in our corporate message inthe Long-Term Management Vision: Be unique. Be apioneer. We look forward to your ongoing support.

Japan Securities Finance Co., Ltd.

Integrated Report 2023

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Value Creation Story

History of the JSF Group
70 years of involvement in the development of Japan’s securities market
Established in 1950 as an institution specializing in securities finance, JSF has provided infrastructure functions for Japan’s securities

The Strengths
We Have Built

market for more than 70 years through its core loans for margin transactions business. In addition, we have developed various
services related to securities finance by keeping abreast of the evolution in client needs resulting from changing conditions in the
securities and financial markets.

Loans for Margin
Transactions Business

Only one in Japan

Since 2013

Serving as Japan’s only
finance and taking on
In 2013, following the integration of the cash equity markets of the Tokyo Stock
Exchange and Osaka Securities Exchange, we merged with Osaka Securities
Finance Co., Ltd. In the loans for margin transactions business, we started handlingtransactions for Nagoya Stock Exchange in 2017 and for proprietary trading
systems (PTS) in 2019. Today, we are Japan’s only securities finance company.

1950−1979
Supporting Japan’s postwar
period of high economic growthwith institutional financing

institution specializing in securities
new challenges for growth
In 2019, JSF became a Company with a Nominating Committee, etc., thus separating
oversight and execution, with the Board of Directors responsible for making timely
management policy decisions and overseeing execution, and the executive side
responsible for executing management plans. In 2023, we launched the Seventh
Medium-Term Management Plan, covering the period from FY2023 through FY2025(from April 1, 2023 to March 31, 2026).

2022
Composition of Operating Revenue

We launched our loans for margin transactions
business in 1951 when the margin transaction
system was introduced. In 1968, when securities
companies became subject to licensing, weestablished a lending system to meet market
needs. As part of this system, we launched abond financing business to facilitate theunderwriting and circulation of public andcorporate bonds.

2019

Securities finance business
Trust banking business

18.8%

Real estate leasing business

2013

13.8%

1980−2012

51.6%

Japan Securities Finance Co., Ltd.

Integrated Report 2023

We are building business relationships withdomestic and overseas financial institutions
and institutional investors such as securities
companies, banks and insurance companies.
We also provide financial services forgeneral businesses and individual investors.

Securities investment/other

15.1%

Securities financing

21.3%
7,164

Consolidated Ordinary Profit (Millions of yen)
4,230
3,349

3,119

4,685

5,046

Ability to build
services by leveraging
JSF strengths
Through many years of providing infrastructure
functions in the securities and financemarkets, we have cultivated both an accurate
understanding of the needs of thoseengaged in market transactions and stable
operational capabilities. In addition, owing
to our relatively small size, the transaction
services we have built are very agile
and flexible.

47.2%

7,601

5,558
4,894

Stable Credit Ratings

3,611

   

R&I, JCR   S&PAA− AOver the years, we have secured high credit
ratings, including an AA− rating from two
rating agencies based in Japan and an A
rating from a a rating agency based outside
Japan.
2013

12

Network with domestic
and overseas financial
institutions

Value Creation

43.0%

Loans for margin transactions

In order to fulfill our role as securities market
infrastructure, in 1987 we built a network withsecurities companies and launched trading via
our JSF Online System. With the implementationof measures to promote the “Japanese Big
Bang” financial system reforms in 1998, weestablished JSF Trust and Banking Co., Ltd.,
whose business focuses on preservation trusts forcash segregated as deposits for customers forsecurities investments.

Business Partners

20.3%

30.4%

Addressing rapid progress insecurities markets, as well as
global financial uncertainty andchanges amid globalization

JSF is the only securities finance company
in Japan that has been licensed to conduct
loans for margin transactions businessunder the Financial Instruments andExchange Act.

2014

2015

2016

2017

2018
Fifth Medium-Term
Management Plan

2019

2020

2021
Sixth Medium-Term
Management Plan

2022

(FY)

Japan Securities Finance Co., Ltd.

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Value Creation Story

Value Creation Process

InputsBUSINESS  

Outcomes

MODEL

Financial Capital• High degree of financial soundness

External credit ratings: R&I: AA−
JCR: AA−
S&P: A
Capital adequacy ratio (based on FIEA)
	
496% (March 31, 2023)

Intellectual Capital• Ability to build securities finance services• Risk management expertise accumulated
over many years• Stable and highly productive operational
systemJSF’s Unique   Position

Vision of the Future Targeted by JSF

J apan’s only company that handles loans
for margin transactions

Network with domestic and overseas
financial institutionsN eutrality through not belonging to any
particular corporate groupMany years of high credit ratings

Business Domains

Human Capital

Outputs• Talent with knowledge and experience inSocial Issues• P opulation decline/aging• Globalization• P rogress of digitalization• Restructuring of market
segments and updates
to Japan’s Corporate
Governance Code andStewardship Code• Introduction of a new

NISA system by theJapanese government
to encourage stableasset formation

securities and finance, including operationof systems for loans for margin transactions,building of securities financing and trust
banking services, and risk management• S ecuring highly diverse human resources
through proactive and consistent hiringof experienced talent in addition to
new graduates• Using telework and other methods tocreate a comfortable work environment thatenables diverse work styles• Talent that can build risk management andsecurities finance services
Number of employees: 268 (consolidated)

In our loans for margin transactions business, we respond tochanges in the environment facing stock markets and totransaction needs. In securities financing, we meet the various
liquidity needs of our clients. In our securities investment
business, we aim to secure stable earnings through appropriate
risk control, and work to expand our fund procurement methods.
In the trust banking business, we are working to meet ourclients’ asset protection needs in new areas.

Social and Relationship Capital

Material Issues

Trust Banking Business
Enhance our custodial
trust business,
including customer
asset preservation
trustsSecurities FinanceBusiness• L ong track record (73 years) and trust built
in operating a securities finance business etwork with domestic and overseas•Nfinancial institutions and institutional
investors such as securities companies,
banks and insurance companies• B usiness operations through participationin the settlement systems of central banks
and clearing housesP rovision of liquidity through securities
finance functions

Securities FinanceBusiness

Loans for Margin
Transactions

Operation of Japan’s only
loans for margin transactions
business, an area where highstability is required

Securities Financing
Loans for Margin
Transactions

Securities Investment

Aim for growth by rapidly
responding
to diversifying securities
and finance market
needs

Securities Financing
Securities Investment

EnvironmentalO perational stability and improved
convenience of the loans for margintransactions businessS trengthening and enhancement of
securities financing by expanding therange of clients, currencies andsecurities, etc.

As Japan’s only securities finance company
supporting the infrastructure functions of
securities and financial markets, JSF aims to
be a distinct and unique company that
operates with a high degree of agility andflexibility. It will achieve sustainable growthand enhance its corporate value, while
maintaining strong financial soundness andcontributing to the development of
securities and financial markets.

Social ValueContributing to market liquidityS ecuring of stable revenues fromsecurities investments by reviewing
the portfolio in an agile manner;expansion of stable funding methods,
including using foreign currencies

Highly resilient,stable business operations

S trengthening and enhancement of
the lineup of custodial trusts,
including customer asset preservation
trusts and ABL trusts, and the relatedtransaction network

Responding to client needs
according to changes in the
securities and financial markets• Reduce environmental impact

SocialEconomic Value• Promote academic research activities andfinancial and economic education activities• Promote diversity and develop humanresources• Respect human rights and prohibit
discrimination• Enhance functions as infrastructure forJapan’s securities and financial markets• Contribute to overseas securities andfinancial market infrastructure

BEFORE

Establishing a governance system to demonstrate

Governance

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Integrated Report 2023

Real Estate Leasing Business

FY2025 Goals (Consolidated)

our public role and expertise as a financial institution

Corporate   Governance• S trive to enhance governance as a Company

with a Nominating Committee, etc.
• Implement the risk appetite framework (RAF)• Stably operate business that is not affectedby disasters, etc. (BCP)• Operate business based on a highawareness of compliance

AFTER

Risk appetite
framework (RAF)

Cyber  

Security

ROE: Maintain at a stable level above 5% andaim for further improvement.
Consolidated ordinary profit: Maintain at astable level of over ¥10 billion and aim forfurther improvement.

FY2022 Results (Consolidated)

Business Continuity
Plan (BCP)· Operating revenue · Ordinary profit · Profit attributable toowners of parent · ROE Japan Securities Finance Co., Ltd.

¥42.5 billion¥7.6 billion¥5.9 billion
4.36%

Integrated Report 2023

15

Value Creation Story

Message from the Chairperson of the Board

infrastructure of securities and financial markets, including
overseas. I intend to leverage my position as an outside director to
support these efforts, in addition to other initiatives such as theCompany’s initiatives to address climate change.

Improving the Effectiveness of
the Board of Directors

I will work to improve the board’s effectiveness froma long-term perspective to increase corporate value.
Naotaka Obata
Outside Director, Chairperson of the Board, Nomination Committee Chairperson, Remuneration Committee Chairperson
In 2019, JSF transitioned to a “Company with a Nominating Committee, etc.” structure, which is designed to clearly separate
management supervision and execution. Under this structure, the two main missions of the Board of Directors are to formulate theCompany’s management policies and to supervise executive officers to ensure that they are executing business appropriately based on thosepolicies. To make sure that the board can effectively fulfill that role, five of the seven members of the board are outside directors who are
independent from the Company, and the chairperson of the Board of Directors and the chairpersons of the Nomination Committee,
Remuneration Committee and Audit Committee are all outside directors. I have served as the chairperson of the board and as chairpersonof the Nomination Committee and Remuneration Committee for the past four years. We outside directors have worked to fulfill our rolefrom an objective standpoint with an outsider’s point of view, bearing in mind JSF’s corporate philosophy of contributing to thedevelopment of the securities market while always maintaining a keen awareness of its public role.
I mentioned in last year’s integrated report that as chairperson of the Board of Directors, I have always had a mindset of maximizing its
effectiveness as a “monitoring board.” Fortunately, JSF’s Board of Directors is supported by the diverse knowledge of its directors,
and meaningful discussions take place in a free and open atmosphere. Executive management seriously considers the issues raised andopinions pointed out by the Board of Directors, and provides feedback to the board.
Going forward, I want to continue to lead in a way that vitalizes discussion at board meetings.

About the Long-Term Management Vision
JSF adopted its Medium-Term Management Policy at the Boardof Directors meeting in November 2021. In the Seventh MediumTerm Management Plan based on that policy, the Company set a
management goal of 5% ROE by 2025. Management’s efforts
since then have produced notable successes. Among these, theCompany expects to achieve 5% ROE two years ahead of schedulebased on estimates of performance for FY2023. This can be seen
as a significant milestone for management. Consequently, theCompany recognized the need to further consolidate its approachto management. Following extensive discussions by the Boardof Directors from a long-term perspective, in November 2023 theCompany formulated and released its Long-Term Management
Vision. In this vision, the Company has declared that it will strive
to steadily strengthen its earnings base and pursue stable andsteady improvement of capital efficiency, while remaining mindfulof the cost of equity, and will continue to work toward the steady
improvement of ROE, keeping the 8% level in mind. In addition,
more extensive discussions were conducted regarding a corporate
message that would clearly communicate the Vision of the16

Japan Securities Finance Co., Ltd.

Integrated Report 2023

Future Targeted by JSF, which is to be a distinct and uniquecompany that operates with a high degree of agility and flexibility,
achieving sustainable growth and enhancing its corporate value,
while maintaining strong financial soundness. Guided by the LongTerm Management Vision, we then revised the Seventh MediumTerm Management Plan and formulated a shareholder return
policy for the period of the plan, and publicly announced both.

Enhancing and Strengthening Corporate
Governance to Improve Corporate Value
Following a review of the composition of the Board of Directors
from the viewpoint of creating a diverse board with multiple
layers of skills, the number of outside directors was increased bytwo (net increase) in 2022, and a second woman outside director
was appointed in 2023. Backed by their varied careers andknowledge, the newly added outside directors have actively
contributed opinions and suggestions, and we are now seeing
just how important diversity is.
In the area of sustainability, JSF is focusing on promoting
industry-academia collaboration and contributing to the

To further increase the effectiveness of the Board of Directors,
annual evaluations are conducted to identify issues related to theoperation of the board, and the board works in cooperation with
its secretariat to make improvements. Responses to the questionnairein the effectiveness evaluation indicated that the two new directors
appointed in FY2022 increased the diversity of opinions. Using
those opinions for reference, board members have beenworking with the secretariat of the Board of Directors tocreate a meeting environment that encourages lively
discussions. Initiatives include enhancing training to acquire
knowledge of the Company’s business, holding regular meetings
for outside directors to enable them to share information with one
another, and creating opportunities for outside directors anddepartment heads to exchange opinions. In Board of Directors andcommittee meetings, supervisory and executive sides ofmanagement deepen discussion on important matters while
mutually making proposals and raising points of contention in athree-step process: (1) issues are delineated and freely
discussed, (2) drafts are discussed, and (3) resolutions anddisclosure methods are deliberated, which leads to a final
conclusion. This approach is of great significance in the sensethat it ensures effectiveness in the oversight of business execution.

Initiatives in the Nomination Committee
In FY2022, the Nomination Committee discussed improving thetransparency of the nomination process for management
executives and in-house human resource development with aview to the selection of management executives.
Among these discussions, for the succession plan for thecurrent Representative Executive Officer & President, in January2023 the Board of Directors approved and announced a policythat the Company will consider candidates from a preliminary listof internal candidates, including experienced mid-career hires,but not public sector candidates, who possess the requisite
qualifications for the position. This policy stemmed from an informal
exchange of opinions between the Nomination Committee andexecutive management in the summer of 2022, in which theNomination Committee suggested that it would be appropriate
to have discussions from the viewpoint that the requisite qualities
and qualifications for the president may change depending on
the status of the Company’s business development. The executive
team had similarly become aware of this issue, and because there
was a consensus between the supervisory and executive sides
regarding a basic approach, subsequent discussions in the
Nomination Committee led to approval and announcement of
the policy. Since JSF’s business portfolio has centered on loans
for margin transactions, which are part of the infrastructure
supporting the securities market, the Company’s management
has been led by individuals with public-sector backgrounds.
However, given that the Company’s business strategy going
forward is to pursue business development with securities
financing and other businesses positioned as growth areas, it willplace greater emphasis on knowledge and experience related to thesecurities finance business, including technological innovation, andtherefore concluded that considering people from inside theCompany was appropriate. Based on this direction, the committee’s
policy is to move forward with discussions on a specific preliminary
list of succession candidates and the requisite qualifications, andto narrow the candidates down to a short list.
To ensure the effectiveness of management succession
planning, it is important to develop a pool of internal talent. To
that end, the Nomination Committee has discussed a specificapproach to cultivation of internal talent, and the results wereannounced on the Company website. Human resource strategy is
one of the pillars of the Seventh Medium-Term Management
Plan, and the Nomination Committee has raised issues with theexecutive side, such as the necessity of developing suitabletalent for the Company’s lines of business, and these issues havebeen reflected in the management plan.

Initiatives in the Remuneration Committee
The Remuneration Committee decides on the remuneration of
directors and executive officers, as well as officer remuneration
policies and other matters. In its officer remuneration system,
the Company has been working to enhance the linkage between
executive officer remuneration and performance, and has madechanges including properly reflecting the degree of progress
and achievement of the management goals in the medium-term
management plan in bonuses. In FY2023, the Company took
the start of the new medium-term management plan as anopportunity to revise the performance-linked remuneration of
executive officers to ensure that incentives are consistent with
our management policy. Bonuses are a short-term incentive,
with consolidated profit attributable to owners of parent usedas the reference indicator to clarify management responsibility
each fiscal year, while share-based remuneration is positioned
as a long-term incentive using ROE and consolidated ordinary
profit—the management goals of the Seventh Medium-Term
Management Plan—as the reference indicators. With the goalof reflecting both the performance of the Company as a wholeand each individual’s contribution to that performance, bonuses
are divided into a part linked to the Company’s performance anda part based on individual evaluations.
The Seventh Medium-Term Management Plan was revisedin November 2023, but only necessary changes were made to
the reference values for share-based remuneration based on
projected progress toward the management goals. Nochanges were made to the basic structure of the referenceindicators for bonuses and share-based remuneration.

Approach of the Board of Directors
Going Forward
The recently announced Long-Term Management Vision was theoutcome of extensive discussions by the Board of Directors
from a long-term perspective on matters such as the directionof our management policy regarding the realization of theCompany’s corporate philosophy and its targeted vision of the
future. The Company will continue to respond flexibly tochanges in the securities and financial markets. Through free andopen discussions, the Board of Directors will formulate
management policies, supervise business execution, and takeappropriate steps to strengthen corporate governance, firmly
determined to fulfill its role as a “monitoring board.”

Japan Securities Finance Co., Ltd.

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Value Creation Story

Dialogue with Newly Appointed Outside Directors
Futagoishi: My impression of JSF was that it is a solid company

of Directors meetings, over the past year, I feel that in addition

with a strong public role, as indicated by its corporate philosophy

to its solid governance and business execution, the Companyof contributing to the development of the securities and financial

takes advantage of its relatively small size to respond agilely

markets. Having attended various meetings, including Board

to changes in the environment.

Q. Please tell us about the activities and discussions of the Board of Directors
and the three statutory committees.

Kensuke Futagoishi

Takayoshi Yamakawa

Outside Director

Outside Director

Q. First, please tell us a little about your backgrounds and experience.
Futagoishi: I have been in the banking industry for many years.

Yamakawa: After working at an IT device manufacturer, I madeAfter gaining experience in various departments, including

a career change, joining a consulting firm in 1995. In 2000,

corporate sales at a major bank, I moved to IY Bank Co, Ltd.

I co-founded Dream Incubator, where I served as president(currently Seven Bank, Ltd.) in 2003, where I served as president

from 2006 to 2020. Currently, I provide advice on corporate

from 2010 to 2018. During that time, I focused on expanding

management and other matters at Business Producer LLC.

the number of ATMs installed as social infrastructure andAs digitalization progresses in the financial market, I believe

providing digital services to address changing client needs.

my experience in corporate management and knowledge ofI aim to draw on my corporate management and otherdigital transformation will be useful in identifying newexperience to help supervise the implementation of JSF’s

business opportunities.

management policies and to support the creation of agovernance system capable of responding flexibly to changes
in the operating environment.

Futagoishi: The focus of activities at Board of Directors

Yamakawa: Because the Board of Directors is made up of

meetings in FY2022 was discussion of the Seventh Medium-

members with diverse backgrounds, discussion on any given

Term Management Plan. This plan covers one of the most criticalmatter involves a multi-faceted approach, enabling comprehensive

periods in JSF’s history. The Company needs to transform its

judgment and decision-making. Having people with a wide

corporate culture in order to provide new value as it shifts

range of knowledge giving candid recommendations makes

from its former focus on its public role. In meetings of thefor lively discussion. Also, because the secretariat has explained

Board of Directors and the statutory committees, there havethe points for discussion to members of the board and the

been lively discussions on topics such as how to develop

committees in advance of each meeting, discussions are wellhuman resources responsive to change, and how to encourage

defined and focused. Discussions also lead to quick action.

employees to internalize the president’s ideas in the management

For example, in response to a request from the Tokyo Stockplan. As a result, I feel that a well-thought-out plan has been

Exchange to listed companies at the end of March 2023, theformulated, especially for human resource strategy. I also

Board of Directors conducted a series of discussions, leading

think great care is being taken by the secretariat to facilitate

to the issuance of a news release on May 15 detailing thethese discussions.

Company’s initiatives.

Q. What points do you think are key for the JSF Group to achieve medium- tolong-term growth?
Yamakawa: Looking at the condition of the Company overFutagoishi: As I mentioned before, I think the key will be

the last few years, I feel that stronger governance andstrengthening human resource development and improving

earnings growth have generated synergy.

engagement, which is one of the strategies in the SeventhInternationalization and digitalization have also progressed in

Medium-Term Management Plan. To ensure the effectivenessJapan’s financial market, so it is important that the Companyof the management succession plan announced in April 2023,

respond agilely to these external changes in its pursuit of

it is necessary to strengthen the human resource base, centeredsustainable growth. I intend to apply my experience andon ensuring diversity and strengthening professionalism andknowledge for the Company’s growth, in ways such as offering

independence. As a member of the Board of Directors, I would

suggestions for using digital transformation to develop new

like to focus my efforts on building a system that supportsbusinesses and improve business efficiency.

the Company in helping employees grow by taking on challenges,
thereby enabling further growth.

Q. How has your impression of JSF changed since your appointment to the board?
Yamakawa: What honestly surprised me was that securities

establish new businesses, but achieving success is extremely

financing, which began as a new business after the global

difficult. I am amazed that JSF’s securities financing business,financial crisis of 2008, has grown so large. Previously, I had

which has only been in operation for 10 years, now accounts

thought that loans for standardized margin transactions wasfor about 40% of the Company’s profit.

the Company’s core business. Many companies work to

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Japan Securities Finance Co., Ltd.

Integrated Report 2023

Japan Securities Finance Co., Ltd.

Integrated Report 2023

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