Business Overview
For the the year ended March 31, 2006

BASIC DATA FOR STOCK CERTIFICATES
BOOK-ENTRY TRANSFER
Participants and Accounts
Participant firms open accounts at JASDEC and deposit the certificates they wish to consign. Such firms include securities companies, banks, trust banks, insurance companies, securities finance companies and stock exchanges.
As of the end of March 2006, the number of participants stood at 277, and the number of accounts stood at 471.
Stock exchanges
and others 16

PARTICIPANTS BY
CATEGORY(As of March 31, 2006)

NUMBER OF ACCOUNTS BYCATEGORY

Securities financecompanies 3Life and non-life
insurance companies 7

Securities financecompanies 4(As of March 31, 2006)

Banks38

Stock exchanges
and others 34

Life and non-life
insurance companies 9Securities
companies 213

Securities
Banks 178 companies
246

Total 471

Total 277

Note: Clients of participant firms do not deposit certificates directly with JASDEC. Rather, they utilize JASDEC’s services through the accounts they establish atparticipant firms.

Issuing Companies
As of March 31, 2006, all listed companies in Japan, a total of 3,837 companies, have consented to JASDEC handlingtheir stocks.

Eligible Securities
ELIGIBLE SECURITIES (As of March 31, 2006)
Stocks281,914 million shares

Preferred investment securities

269,255 units

3,838 issues
1 issue

Beneficiary certificates of ETFs

1,627,248 thousand units

14 issues

Certificates of REITs

5,177,216 units

34 issuesCBs

1,689,287 million yen

146 issues

Note: JASDEC accepts securities described in the CSD Law. Consent of the issuing company is also a prerequisite. Currently, eligible securities are domestic
securities, including stocks, convertible bonds (corporate bonds with subscription warrants to new shares), convertible bond beneficiary certificates of
exchange-traded funds (ETFs), certificates of real estate investment trusts (REITs), and preferred investment bonds of financial institutions established bycooperative associations, which are listed on stock exchanges.

14

Business Overview

REVENUES BY OPERATION
Fiscal 2005 Review
Fiscal 2005, ended March 31, 2006, was characterized by brisk stock trading backed by economic recovery. In fiscal
2005 average daily stock trading volume at the Tokyo Stock Exchange exceeded 2 billion shares from September 2005
to February 2006. The JASDEC Group benefited from this environment as heightened stock-trading activity triggered
more account transfers through the Group’s securities depository and book-entry transfer systems. As a result, operating
income increased 14.4%, to ¥21,745.1 million, operating expenses decreased 1.2%, to ¥16,889.2 million, income fromoperations increased 154.0%, to ¥4,855.9 million, and net income increased 197.2%, to ¥3,121.3 million.

Book-Entry Transfer Services for Stock Certificates
Account Transfer Operations

The number of shares in the transfer account—that is, combined exchange trade and non-exchange trade deliveries(NETDs)—averaged 87.7 billion a month, primarily a reflection of stock trading levels that maintained their momentum
from the previous year. Consequently, income related to account transfer services, particularly services for stock certificates, corporate bonds with subscription warrants to new shares and ETF beneficiary certificates, increased 33.6%, to¥16,594.0 million

Custody Operations

The number of shares in custody as of March 31, 2006, were as follows: stock certificates at 281.9 billion shares, corporate bonds with subscription warrants to new shares at ¥1,689.2 billion, and ETF beneficiary certificates at 1,627
million units. From April 1, 2005, we reduced the basic premiums of custody fees related to stocks. As a result, income
related to custody operations, particularly services related to stock certificates, corporate bonds with subscription warrants to new shares and ETF beneficiary certificates, increased 5.5%, to ¥5.1 billion.

Handling of Shares(a) Deposits and Withdrawals
The withdrawals to deposits ratio settled at 16.7%,
as of March 31, 2006.

(Years ended March 31)

Number of Shares Deposited
Number of Shares Withdrawn
Withdrawals to Deposit Ratio

Billion shares%

6040453030

2015

100

FY2001

FY2002

FY2003

FY2004

FY2005

53.2

33.7

34.9

45.8

30.7

10.5

9.6

7.4

6.9

5.1

19.8%

28.5%

21.4%

15.1%

16.7%

0Note: The above ratios are calculated based on the number of shares deposited, excluding shares deposited by stock splits, and shares withdrawn, excluding shares by stock transfer and merger.

15Business Overview(b) Custody
As of March 31, 2006, the number of shares inJASDEC’s custody stood at 281,914 million shares

Billion shares
300%
80

225

60150

407520and represented 77.4% of all outstanding sharesissued by companies listed on stock exchanges inJapan.

0

FY2001

Custody Balance
Ratio of Custody Balance to Shares Issued in Japan
Ratio of Immobilized Shares in Custody

FY2002

FY2003

FY2004

FY2005

191.5

203.1

228.2

262.1

281.9

53.5%

58.1%

64.1%

71.7%

77.4%

49.9%

51.9%

56.3%

60.2%

61.5%

0Note: Immobilized shares are shares in custody that have been replaced by jumbo certificates, based on set criteria, to reduce administrative costs associated with custody and minimize risks, such as the physical loss of stock certificates.

(c) Book-Entry Transfer
Of the number of shares transferred between
accounts by book-entry transfer in fiscal 2005, theBillion shares

%

800

80

600

60

400

40200

20

number of shares pertaining to exchange tradetransfers represented 421,149 million and the number of shares pertaining to NETDs accounted for632,401 million.
0FY2001

FY2002

FY2003

FY2004

FY2005

308.9

355.0

442.7

514.0

632.4

219.1

225.7311.9

338.6

421.1

58.5%

61.1%

58.7%

60.3%

60.0%

NETD Transfers
Exchanges Trade Transfers
Ratio of NETD Transfers to Total Transfers(d) Beneficial Shareholder Notification
In fiscal 2005, beneficial shareholder notification
services covered 571,785 million shares and 89,174

Million cases

0Billion shares

100600

75450

50300

25150

thousand cases.

0

Number of Cases
Number of Shares

16FY2001

FY2002

FY2003

FY2004

FY2005

47.8

54.7

61.2

73.9

89.1

367.1

430.2

448.1

532.6

571.7

0

Business Overview

Other Securities Operations

An overview of other securities operations conducted during fiscal 2005 is presented below.
(a) Convertible Bonds (CBs) / Corporate Bonds
with Subscription Warrants to New Shares
Deposits
Withdrawals
CustodyBook-entry transfer
Exchange trade transfer
NETDs
Number of issues(Millions of yen)604,750
1,519,696
1,689,287
776,663
7,125,831
146(c) Preferred Investment Securities of Financial
Institutions
Deposits
Withdrawals
CustodyBook-entry transfer
Exchange trade transfer
NETDs
Number of issues(Number of units)
18,102
607
269,255
66,58866,3441(b) ETFs

Deposits
Withdrawals
CustodyBook-entry transfer
Exchange trade transfer
NETDs
Number of issues(Thousands of units)
958,135
1,038,982
1,627,248
2,286,079
9,237,727
14(d) REITs

Deposits
Withdrawals
CustodyBook-entry transfer
Exchange trade transfer
NETDs
Number of issues(Number of units)
1,805,869
78,247
5,177,216
4,394,310
7,745,723
34

Book-Entry Transfer Services for Other Certificates
Book-Entry Transfer Services for Corporate Bonds

A s of March 31, 2006, book-entry transfers for Corporate Bonds (which commenced on January 10, 2006) had
reached 7,055 issues, the account balance stood at ¥6,406.6 billion, and the number of transfers was 23,851. As aresult, income related to book-entry transfer services for Corporate Bonds reached ¥269.1 million.

Book-Entry Transfer Services for Commercial Paper

On March 31, 2003, JASDEC launched a book-entry transfer system for commercial paper (CP), in accordance with
the Law Concerning Book-Entry Transfer of Corporate Bonds, etc. Instead of CP in the conventional paper form—thepaper-based certificates that prevailed from issuance to redemption, including transfers—JASDEC’s system totally
dematerializes the certificates and records CP issuance, transfer and redemption electronically in JASDEC’s computerbased transfer account book, by adding issuance, transfer and redemption, respectively.
Since March 2003, the account balance has steadily expanded—a trend given further momentum when preferential tax treatment was terminated at the end of March 2005—and stood at ¥21,766.5 billion as of December 29,
2005. The switch from paper-based CP to dematerialized form is more or less complete.

17

Business Overview

As of March 31, 2006, book-entry transfer for commercial paper (CP) had been extended to 399 issuers, anincrease of 161 companies from a year earlier, and the number of issues reached 5,848, an increase of 4,534. The
account balance stood at ¥18,624.0 billion, up ¥13,760.7 billion, and the number of transfers reached 190,996, up
179,224. As a result, income related to book-entry transfer services for CP reached ¥281.7 million, up 406.2%.

CP Account Balance (Month-end)
Trillions of yen

8,000

18

6,000

12

4,000

62,0000

Outstanding amount
Number of Issues

Number of Issues

24FY
2002
0.01
3

FY
FY
Apr.
MayFeb.
Jun. Jul. Aug. Sept. Oct. Nov. Dec. Jan.
2003 2004 2005
2006
1.4
4.8
9.8 13.7 18.2 19.2 20.1 20.2 20.0 21.1 22.4 21.9
21.5
257 1,314 2,754 3,880 5,121 5,533 5,562 6,024 5,991 5,859 6,157 5,745 5,748

Mar.

018.6
5,848

DVP Settlement Services for NETDs

The number of transfers for DVP for NETDs reached an average of about 80,000 a day during fiscal 2005, which far
surpassed the approximately 60,000 of the previous fiscal year. As a result, income related to DVP settlement services
for NETDs amounted to ¥1,513.2 million, a 45.6% increase from a year earlier.

Pre-Settlement Matching Services

In fiscal 2005, as in fiscal 2004, stock trading was brisk, spurring use of JASDEC’s PSMS. Consequently, income related
to pre-settlement matching services amounted to ¥2,007.1 million, a 42.9% increase from a year earlier.

Other Services

Of other services, we made deposit fees related to stocks charge-free from October 2005. Mainly due to this, income
related to other services decreased 20.3%, to ¥2,702.5 million, in fiscal 2005

Pre-Settlement Matching System (PSMS) This central matching system automatically confirms the contents of trade and settlement, such as trade names/amounts, counterparties and account numbers.

Delivery versus Payment (DVP) This system simultaneously attaches specific conditions to the delivery of and payment for securities. International standards, recommended by the Group of 30 and other organizations, require the application of a DVP settlement system to all securities settlements to eliminate settlement risk18