Daini-Shoken Kaikan Bldg, 1-1, Nihombashi-Kayaba-cho 2-chome, Chuo-ku, Tokyo 103-0025, JAPANTEL +81-3-3661-0139 http://www.jasdec.com/en/

Annual Report 2012

Reliability
withInnovation
Annual Report 2012

Profile
SharesMajor shareholders
Number of
Stake inshares held Company (%)

Total shares approved for issue

10,000Total issued shares

8,500

Tokyo Stock Exchange Group, Inc.

1,930

22.70

Japan Securities Dealers Association

1,050

12.35

Nomura Holdings, Inc.

485

5.70

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

425

5.00

Mizuho Corporate Bank, Ltd.

425

5.00

and by continually implementing reforms and innovations based on the

Mitsubishi UFJ Trust and Banking Corporation

424

4.98

perspectives of investors, issuers, market intermediaries and other users.

Trust & Custody Services Bank, Ltd.

340

4.00

Citigroup Global Markets Japan Inc.

321

3.77

Japan Trustee Services Bank, Ltd.

320

3.76

Daiwa Securities Capital Markets Co. Ltd.

230

2.70

JASDEC is determined to maintain high standards of reliability,
usability and efficiency in its settlement infrastructure by monitoring

Paid-in capital¥4,250,000,000

environmental and structural changes affecting capital markets in Japan

Shareholders

149

and overseas, by ensuring that its systems and services operate reliably,

63

Organization structure

Our Business2

Management Message

4

Corporate Governance8

Business Continuity Plan of JASDEC

10Business Overview

11

01 Book-Entry Transfer System for Stocks, etc.

1202	Book-Entry Transfer System forCommercial Paper and Corporate Bonds

16

03 Book-Entry Transfer System for Investment Trusts

22

04 DVP Settlement System for NETDs

26

05 Pre-Settlement Matching System (PSMS)

30

06 Custody Services for Foreign Stock Certificates, etc.

34

International Relationships

38

Analysis of Business Performance and Financial Results

42

Consolidated Financial Statements

44

Independent Auditor’s Report

59

History

60

Corporate Data

62

Meeting of
Shareholders

Board ofDirectors
Board of Auditors
Auditors Office

President &CEO

Compliance Office
General Administration Department
Corporate Planning Department
Equity Department
Shareholders Notification Office
Fixed Income and Investment Trust Department
International Department
Post–trade Services Department
Information Services Department
First Systems Department
Second Systems Department

Annual Report 2012

Contents

JASDEC isJapan’s financial
foundation
1

Annual Report 2012

At a Glance

696 trillion
Number of Issues Handled
75,856
Number of Transactions
83.4 million
Number of Transactions/Day 339 thousand
Total Account Balance¥OurBusiness2

Annual Report 2012

JASDEC recognizes the importance of its public role
as a provider of settlement infrastructure, which isvital to the functioning of capital markets. We arecommitted to the continuing provision of highly
reliable services through ongoing efforts to enhance
the usability and efficiency of our services and reduce
settlement risks. Strengthening our IT infrastructure
also remains an important priority, and in 2014 weplan to launch next-generation computer systems
that will further enhance reliability.
We will steadily raise the presence of JASDEC
by keeping pace with changes in the international
environments and structures that surround financial
and capital markets.

Reliability
As a provider of settlement
infrastructure for thefinancial and capital
markets, we work from theuser’s perspective tomaintain high standards ofusability, efficiency, safety
and reliability in the services
that we offer.

JASDEC is continuallyworking to strengthen its
business fundamentals
to support future
innovations in securities
settlement systems and thediversification of its
services.

Reinforcement

Cooperation
We actively exchange
information with overseas
settlement institutions andprovide support to emerging
countries. Through suchactivities, we aim to contributeto the improvement of
securities market
infrastructure in Japan andthroughout the world.

Management
Message4

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 continuity
management 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.

5

Initiatives 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 World

etc., 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 to

information exchange and discussion among the world’s

support commitment-type rights offerings in relation to

five 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. Where

convenience, 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 the

preparations 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, CA

Application 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 of

institutions and financial market infrastructure throughout

Securities Commissions (IOSCO) in April 2012. As one of

the 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 the

In 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 were

Infrastructures.

7

Yoshinobu 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.

Corporate
GovernanceOur basic policy on corporate governance
JASDEC fully recognizes its social obligation as the central

sure that our activities promote corporate transparency andbody for the provision of the infrastructure for securities

that our business operates with fairness and accountability, inclearing and settlement, which is an important base of theline with the public needs of our function. Our commitment

capital markets. Accordingly, JASDEC has determined

to corporate governance is to earn and maintain a solida basic management policy of providing a highly secure,

reputation for reliability as the central organization

convenient and efficient service. To this end, we ensure that

responsible for creating and operating the infrastructure forour system meets the needs of users, including investors,

securities clearing and settlement in Japan.

issuing companies and market intermediaries. We also make

Overview of implementation of corporate governance practices
Framework for management structure and corporate governance to exercise business judgments, manage operations andimplement audits.

Corporate Structure
8

Annual Report 2012

• Board of Directors• Business Operations Committee

The Board of Directors is composed of 19 members, and is basically

Separately from the Board of Directors and the Board of Auditors,

structured to achieve a balanced approach to business with user-

JASDEC has set up the Business Operational Committee to fullyoriented views, as well as business-oriented ideas on maintaining

reflect the needs of system users in our operations. The Committee

operational neutrality and fairness. To fully reflect the opinions of

examines important issues related to the business of JASDEC, basedusers in our operations, nine of the 14 external directors are selected

on queries from the Board of Directors, and has ten subcommittees

from JASDEC participants. The remaining five external directors

under its control. Each subcommittee is responsible for a specificcome from an issuing company and a related organization, or fromsegment of operations, and is composed of members who are actually

the Japan Securities Dealers’ Association, academia and the legal

involved in the field. JASDEC applies the opinions provided byprofession, enabling the Board to conduct vigorous discussions fromeach subcommittee to various operational issues. JASDEC discloses

a broad perspective in consideration of the public good. In principle,

summaries of discussions and other information by the committees

the Board meets once a month to decide basic management policies

to relevant parties for greater operational transparency.

and discuss other key issues.

As the provider of key infrastructure elements for the securities
market, we are required to operate the system with an extremely• Board of Auditors

high level of fairness and accountability. To achieve this end, we

JASDEC employs the corporate auditor system for corporate

have established the Advisory Committee, which is composed ofgovernance instead of the committee system, as provided for in theexperts in financial and securities systems. The committee advises

Companies Act. The Board of Auditors is made up of three auditors,

JASDEC’s president from a broad perspective about wide-ranging

two of whom are selected from eligible participants (one each fromissues relating to securities clearing and settlement system operations.

a securities company and a bank) and all three (including an auditor

JASDEC DVP Clearing Corporation (JDCC), JASDEC’s wholly

who is serving on a full-time basis) are external auditors. In principle,

owned subsidiary, operates in accordance with a business philosophy

the Board of Auditors holds a regular meeting each month. In line

similar to that of JASDEC. JDCC has also set up a committee forwith auditing plans and the basic policies established by the Board

reviewing important issues regarding DVP operations to reflectof Auditors, auditors attend important meetings, including those of

the needs of users of the DVP settlement system for non-exchange

the Board of Directors, and assess the status of services and assets

transaction deliveries (NETDs). In addition, JASDEC’s Board of

to perform audits of directors. To ensure that audits are effective,

Directors receives reports regarding issues decided by JDCC’sauditors work closely with directors and conduct regular

Board of Directors to ensure consistency in the activities of theexchanges of opinions, including through meetings with thetwo companies.

representative directors.

An outline of JASDEC’s management structure and corporate
governance systems is presented on the next page.

Corporate Governance
Overview of JASDEC’s Management Structure and Corporate Governance Framework
General Shareholders’ Meeting
Appointments/Dismissals

Appointments/Dismissals

Board of Auditors(Three including one auditor
serving on a full-time basis)
Auditing

ReportingAccounting
auditors

Appointments/
Dismissals

Auditing

Appointment/
Supervision

Subcommittees
Consultation

Board of Directors(Five full-time, fourteen external)

Auditing

Auditors
OfficeBusiness Operations Committee

Opinions, reports

ChairmanPresident & CEO
Risk Management
Committee

Monitoring

Conveying
information

Compliance Office

Stock
Bond with share option
ETF
Foreign stock
Corporate bondCP
Investment trust
PSMS (Domestic Trade)
PSMS (Non-Residents’ Trade)
ISO20022

Internal
audit

Departments

Risk Management System

AdviceAdvisory Committee

JASDEC has two certified public accountants who perform
accounting audits for JASDEC in the capacity of accounting auditor
under the Companies Act: Yohei Kishi and Naoto Saito (designatedpresident. It takes measures to strengthen overall risk management,

members of a limited liability partnership under Article 34,

and regularly monitors internal control systems for various risks.

Paragraph 10-5 of the Certified Public Accountants Law).
They are employed by Ernst & Young ShinNihon LLC, a member

Internal Audits, Corporate Audits, and Accounting Audits

firm of Ernst & Young Global, and execute accounting audits,
including checks of financial documents, based on the Companies Act.

JASDEC has established the Compliance Office, and internal auditing

It is our understanding that no items of particular regard, such asaccomplished primarily through onsite surveys based on the audit

serious irregularities or instances of illegal behavior, have been foundplan, to assess the effectiveness of operational procedures. For

through the execution of accounting audits.

corporate audits, an auditor serving on a full-time basis routinely
attends important meetings, such as those of the Board of Directors

Directors’ and Corporate Auditors’ Limit of Liability

and the Executive Committee (comprised of managing directors
serving on a full-time basis) and examines circulars intended to

We expect directors and Corporate Auditors to fully demonstrateobtain approvals of decisions by persons in charge. The full-time

the skills involved in successfully executing their responsibilities.

auditor performs audits in accordance with the auditing plans

Additionally, to retain top-level professionals, we have set limits onestablished by the Board of Auditors, and provides the otherliability for damages incurred by directors and Corporate Auditors.

Corporate Auditors with updates on the progress of auditing
activities at the meeting of Corporate Auditors, which takes

Resolutions on Election/Dismissal of Directors

place monthly.
Auditors serving on a part-time basis attend meetings of the Board

The election of directors by resolution at the general meetingof Directors and monitor the directors’ execution of their duties.

of shareholders is conducted in the presence of shareholders

They also assess the legality of business operations by reviewing

representing no less than one-third of voting rights held byreports on auditing activities from the full-time auditor.
JASDEC assigns staff specifically to assist corporate auditors intheir audits.
Corporate Auditors perform audits in close cooperation with theeligible shareholders, and directors are elected by a majority voteof said shareholders.
The dismissal of directors by resolution at a general meetingof shareholders is conducted in the presence of shareholders

Company’s accounting auditors. This includes hearing reports

representing no less than one-third of voting rights held by eligible

from the accounting auditors on auditing plans and the results ofshareholders, and directors are dismissed on a vote of no less than

the audits.

two-thirds of voting rights held by said shareholders.

Annual Report 2012

JASDEC has set up the Risk Management Committee, chaired by the9Business Continuity Planof JASDEC
Our approach

IT backup system

JASDEC has regularly structured itself so that, in the

Operations data of the main center is reflected at theevent of a disaster or other emergency, it would be able tobackup center almost in real time. In cases where the main

continue operations to the extent possible and promptly

center becomes unusable due to a disaster, infrastructure

resume business operations according to its Basic BCP

failure (excluding software failure) or other such event,policy. This is to minimize the effect of such an emergency

and the restoration task is deemed to be time-consuming,on JASDEC participants and related entities as a settlement

the systems will be switched over to the backup center.

infrastructure.

Switchover to backup systems will take about 90 minutes.

The specific measures taken by JASDEC include

Furthermore, to prepare for the prospect of the head

formulating concrete action plans in advance. JASDEC

office building becoming unusable, we have established

has defined actions to be taken in the event of a disaster oran alternative office where we can execute operations

other emergency, established BCP Countermeasure Office,as necessary.

delegated authority, organized emergency contact networks,
and so on. Our IT systems are installed in a robust main
center equipped with a private electrical generator, andFuture approach

our core systems are based on a redundant configuration.
10

Annual Report 2012

Furthermore, we have built a backup center in a remote

JASDEC has been able to continue operations despite thelocation to be prepared in case the main center becomesGreat East Japan Earthquake, as neither its employees nor

unusable due to a large-scale disaster or the double failure

its facilities were affected. We will strive to establish a moreof equipment with a redundant configuration, or otherrobust business continuity plan based on the lessons learnt

such event.

from the earthquakes, etc .

Conceptual Diagram of System
Switch within 90 minutes

Main Center

Backup Center

Dedicated line,
ISDN, Wide Area Ethernet (Optical line)

SWIFT Net
Integrated channel
gateway(Online real-timesystem, Channel
file system)

File transfer
gateway

Integrated
web terminal

Participant
information web
terminal

Japan Securities
Clearing
Corporation(JSCC)

Japan Government
Bond Clearing
Corporation(JGBCC)Bank of Japan
Financial Network
System(BOJ-NET)

Business Overview

Custody Services for
Foreign Stock Certificates, etc.
¥203 million
Pre-settlement Matching System (PSMS)¥1,547 million
DVP Settlement System for NETDs¥644 million

Book-entry Transfer System
for Stocks, etc.
¥14,576 million

Revenues by
Operation
Year ended March 31, 201211

Annual Report 2012

Book-entry Transfer System for
Investment Trusts¥1,064 million

Book-entry Transfer System for
Corporate Bonds¥1,201 million

Book-entry Transfer forCommercial Paper¥463 million

01

02

03

04

05

06

Book-Entry
Transfer System
for Stocks, etc.

Book-Entry
Transfer System
for Commercial
Paper andCorporate Bonds

Book-Entry
Transfer System
for Investment
TrustsDVP Settlement
System for
NETDs

Pre-Settlement
Matching System(PSMS)

Custody Services
for Foreign Stock
Certificates, etc.

P12

P16

P22

P26

P30

P34

Business
Overview

01
Book-Entry
Transfer System for
Stocks, etc.
12

Annual Report 2012

Ongoing enhancements to this recently
introduced all-electronic record system arebringing greater convenience, speed, andflexibility to stock ownership transfers.

株式等
振替業務

01 Book-Entry Transfer System for Stocks, etc.

The Book-entry Transfer System for Stocks, etc. is operating to plan
The Book-entry Transfer System for Stocks, etc. began

institutions established by cooperative associations, Exchange

operations in January 2009. Stock certificates issued by all

Traded Funds (ETFs), Japanese Depositary Receipts (JDRs,

Japanese companies listed on Japanese stock exchangesetc.) and other negotiable securities.

were abolished and became invalid. They were replaced by

As of March 2012, the total number of issues handledelectronic records registered and managed by computerwas 3,762, including 3,581 share issues, 27 bonds withsystems within accounts opened at JASDEC or accountshare options, 6 share options, 36 investment units, one

management institutions (AMIs) such as securities companies

preferred share issue, 97 ETFs, and 14 JDRs, etc. The number

and banks. Instead of stock certificates, records in computerof companies participating in the new system, including

systems represent share ownership. Transfer of shareholders’

JASDEC participants, indirect AMIs, and fund settlement

rights is also processed electronically based on the records incorporations, was 411. Under the system, foreign financial

the accounts. This dematerialization system applies not only

institutions designated by competent ministers can also taketo stock certificates, but also to bonds with share options,part in the system. As of March 2012, 53 foreign financial

share options, investment units of Real Estate Investment

institutions were participating as indirect AMIs.

Trusts (REIT), preferred equity investment of financial

JASDEC participants and indirect AMIs (as of March 31, 2012)

The Book-Entry Transfer System for Stocks, etc.

13

JASDEC Participants by Category

Shareholder registry
General Shareholders
Notification

Stock exchanges, etc.
10 (5%)JASDEC
Transfer
Account
Book

Book-entry
transfer

Direct AccountManagement Institution(securities companies, banks, etc.)

Indirect AMIs by Category

Transfer
Account
Book

Life & non-life
insurancecompanies
2 (1%)

Total

213

companies

Total

96

companies

Securities financecompanies
3 (1%)

Direct AccountManagement Institution(securities companies, banks, etc.)

Banks, etc.
16 (17%)Banks, etc.
23 (11%)

Securities companies, etc.
175 (82%)

Foreign indirect
AMIs
53 (55%)

Securities companies, etc.
27 (28%)Indirect AccountManagement Institution(securities companies, banks, etc.)

Participants(shareholders)Participants(shareholders)Note:	“Banks, etc.” include The Norinchukin Bank, Tokyo Shoken Shinyou Kumiai, and Japanese Banks’ Payment
Clearing Network.
	“Stock exchanges, etc.” include Japan Securities Dealers Association, Japan Securities Clearing Corporation,
JASDEC DVP Clearing Corporation, two securities agents and three Tanshi companies (which offer short-term credit
brokerage services)

Participants(shareholders)

Stock account balance and number of issues
Balance in custody (end of FY or month)
3,727(Billion shares)

3,948

420

3,839

Number of issues (end of FY or month)

3,640

3,581

3,630

3,622

3,621

3,615

3,605

3,601

3,598

3,600

3,593

3,591

3,581
(Issues)

413.3

412.9

411.7

411.8

411.6

412.3

406.8

4,000
405.7

403.7

403.6

405.5

405.4

405.6

406.8

394.8

400

0

3,603

418.6

3,500

320.0

(FY)

2007

2008

2009

2010

2011

2011.4*Figures include the Depository and Book-entry Transfer System for Stock Certificates.

5

6

7

8

9

10

11

12

2012.12

30

Annual Report 2012

Issuing company

Ongoing enhancements to increase user convenience
Since its introduction in January 2009, the dematerialized

began to handle foreign-issued exchange traded notes (ETNs)

Book-entry Transfer System for Stocks, etc. has been

under the Japanese Depositary Receipt (JDR) framework.

operating smoothly, with no major problems. JASDEC

In March 2012, the Book-entry Transfer System for Stocks,

has organized three subcommittees to examine further

etc. was further enhanced to allow the merger or splitting of

improvement of the new system: the Subcommittee forbeneficial rights for ETFs.

Stocks, the Subcommittee for Bonds with Share Options,

In addition, we are enhancing our system to support

and the Subcommittee for ETFs. These committees haveschemes based on commitment-type rights offerings inpromoted a number of initiatives.

relation to share options through the Book-entry Transfer

In fiscal 2011 (to March 31, 2012), we enhanced the

System for Stocks, etc.

usability of the system by improving temporary suspension

We will continue our efforts to communicate effectivelyfunctions in relation to requests for transfer. As in fiscal

with relevant parties, aiming to ensure stable operation

2010, we further reduced the number of days required towhile meeting the needs of the market for convenience andsend individual shareholder notifications. In August 2011, weuser-friendliness.

14
Bond with Share Option account balance and number of issues
Annual Report 2012

Balance in custody (end of FY or month)(Billion yen)

96

1,600

70

43

50

Number of issues (end of FY or month)

27

37

37

37

36

35

35

30

28

28

27

27

27

1,154.5 1,211.5 1,168.1

1,300

1,177.4 1,176.8 1,174.7 1,170.9 1,184.7
959.7

1,066.7 1,061.1 1,060.5 1,056.8
1,017.3 1,014.9

100
959.7

1,000
0

(Issues)150

1,408.1

50
(FY)

2007

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

105

105

108

109

2,288

2,363

2,334

2012.1

2

3

111

111

0

*Figures include the Depository and Book-entry Transfer System for Stock Certificates.

Exchange Traded Fund (ETF) etc. account balance and number of issues
Account unit balance (end of FY or month)(Million accounts)

2,563
93

4,000
3,000

2,306

1,873

2,009

Number of issues (end of FY or month)

111

2,339

93

95

95

95

97

2,397

2,418

2,368

2,179

2,337

110

2,379

2,355

2,331

2,339

2,000

90
60

1,000
0

(Issues)
120

38
(FY)

2007

66
2008

30

77
2009

2010

2011

2011.4*Figures include the Depository and Book-entry Transfer System for Stock Certificates.
*Figures include Japanese Depositary Receipts from July 2010.

5

6

7

8

9

10

11

12

2012.12

30

01 Book-Entry Transfer System for Stocks, etc.

Book-entry transfers
Stock-exchange transfers
607.7

Transfers between JASDEC participants

175.7(Billion shares)

670.1

677.4
695.1

718.0

600

180

300

369.0

345.1

321.0

2007

2008

2009

2010

44.0

59.9

59.7

58.2

45.5

47.4

40.8

57.4

75.5
76.2

28.0

0

2011

(FY)

24.1

27.2

5

6

2011.4

64.5

60.4

55.2

60

84.4
(FY)

50.9

67.3

120

308.5

378.0

48.3

(Billion shares)

119.8

900

0

64.2

652.5

669.4

1,400

Internal transfers within the same companies

60.8

58.0

56.7

49.6

41.5

39.6
31.2

25.9
7

25.7
8

23.4

9

23.6

22.9

10

11

12

38.9
34.4

31.7

22.4
2012.1

2

3*Figures include the Depository and Book-entry Transfer System for Stock Certificates.

General shareholders notifications
General shareholders notifications(Billion shares)

127,240

129,619

1,000

1,001.1

972.8

9,260

8,888

946.3

400
300

127,292(Notifications, in thousands)
46,339

8,723

385.5

1,067
739

2,735

976

175

881

1,212

45,722164

370.6

11,602

121

4,094

100

2,719

3,001

551

20.8

4.0

2008

3.6
2009

2010

2011

2011.4

83.0
5

6

283

17.4

5.2
7

8

9

1,129
11,587

2,972

862

12

2012.1

2

12,000

294

10.6

4.8
11

50,000

80.8

2.7
10

130,000

159

3*Figures are as of day of notification to issuers.
*FY2008 represents figures between January and March 2009.

Individual shareholder notifications

Information requests

Number of notices
Number of issues
72(Notifications)

448

401

412

2,656

3,000

1,958

(Issues)(Partial record) number of issues

27
16

314
302
87 1,857 77

212
79

2,000

1,589

1,500

400

2,000

(Total record) number of issues(Notifications)

600

2,428

(Total record) notifications(Partial record) notifications

359

0 (FY) 2008

2009

2010

2011

477

356

200

500

0

131

375

200
100

45

0 (FY) 2008

400
300

1,155

1,000
1,000

(Issues)

2009

2010

2011

0

*FY2008 represents figures between January and March 2009.

* Requests for information (total record)refer to requests for data recorded on
book-entry transfer registries of either
JASDEC participants (direct AMIs) orindirect AMIs where shareholders inquestion have opened accounts.
Requests for information (partial
record) refer to requests for data
recorded solely on book-entry
registries of JASDEC participants
where shareholders in question haveopened accounts.
*FY2008 represents figures between
January and March 2009.

Number of shareholders (Data for shareholders notifications)(Thousand notifications)
17,00016,287

16,45916,727

16,486

16,513

16,543

16,566

16,600

16,633

16,654

16,678

16,671

16,682

16,69816,7272011.4

5

6

7

8

9

10

11

12

2012.12

3

16,00014,93515,000
0

(FY)

2008

2009

2010

2011

*Number of shareholders (data for shareholders notifications) is comprised of participant information notified by AMIs.
*Figures are as of end of fiscal year or month.

5,000

15

2,500
0

Annual Report 2012

(FY)

192

940 138

3.8

50
0Total shareholders

Number of issues

Business
Overview

02

16

Book-Entry
Transfer System forCommercial Paper andCorporate Bonds

Annual Report 2012

JASDEC is maintaining the security of a CP
and corporate bond electronic book-entry
transfer system whose daily settlement value
typically surpasses the trading value per day at
the Tokyo Stock Exchange.

短期社債振替業務
一般債振替業務02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

Supporting seamless and secure CP and corporate bond settlement
In March 2003 JASDEC launched the Book-entry Transfer

Processing (STP), which fully automates the entire process,

System for Short-Term Corporate Bonds (dematerialized

including trade matching and fund/securities settlement.

CP), the first completely dematerialized financial instrument

As a means of managing participation in JASDEC’s book-in Japan, and in January 2006 this was extended to include

entry transfer system, we set up a multilayer holding structure

corporate bonds. In each system, custody procedures—for account management institutions (AMIs) to addressissuance, transfer (trading), and redemption—are conducted

the diverse needs of participating investors and financial

based on the balance electronically recorded in the transfer

institutions. Direct AMIs can open an account directly at

account books. In addition, all transactions related to

JASDEC, and indirect participation is possible by opening

issuance, transfer and redemption of CP and corporate bonds

an account at a direct AMI. Another option for indirect

can be processed by the DVP settlement link with the Bank

participation is through the opening of an account at anof Japan’s Financial Network System. By linking the book-indirect AMI. Principal and interest payments to bondholders

entry transfer system with its PSMS (Pre-Settlement Matching

are made by paying agents via AMIs, in accordance with the

System; see page 30), JASDEC has realized Straight-Throughmultilayered structure.

17
Flowchart for Book-Entry Transfer for CP/Corporate Bonds (in the case of DVP)

Seller
② Trade matching③ Notice of settlement
matching status

Settlement
parties

Buyer

JASDEC④ Notice of settlement status(Awaiting fund settlement)

Affirmation

Settlement matching
Pre-Settlement
Matching System

Securities transfers② Trade matching③ Notice of settlement
matching status④ Notice of settlement status(Awaiting fund settlement)

Settlement
partiesBook-entry Transfer
System for
CP/Corporate Bonds⑨ Notice of transfer
completion⑨ Notice of transfer
completion⑧ Notice of receipt completion

Fund
settlement
corporation⑤ Payment instruction⑥ Payment request⑧ Notice of receipt completion

Bank of Japan⑦ Payment instruction

Fund
settlement
corporation

Annual Report 2012

① TradeEnsuring continued CP transaction efficiency
Commercial paper (CP) currently refers to short-term

system nine years ago, almost all CP issued in Japan has been

corporate bonds in a dematerialized form issued by corporate

handled by this system.

entities as a means of procuring short-term funds. As CP was

During fiscal 2011 (to March 31, 2012), our accountpreviously drawn as a promissory note in physical form, therebalance rose to around the ¥16 trillion level, mainly due

was always some risk involved when notes were transferred or

to increased issuance by corporate entities. However, as ofdeposited, and transfers were also subject to a documentary

March 31, 2012, the total account balance had significantly

stamp tax. Accordingly, demand developed for an electronic

declined to ¥13,614 billion (a year-on-year decline of ¥418

book-entry system that would eliminate such risks. The

billion) because of a combination of special factors during theresult was the creation of our first fully electronic book-entry

month of March. Number of issues handled stood at 4,447

transfer system for dematerialized CP. Since the launch of theissues (a year-on-year increase of 55 issues).

Participants in Book-Entry Transfer System for CP (as of the end of March 2012)18
Issuers 497
Annual Report 2012

Issuing/
paying agents

21

JASDECJASDEC
Participants(Direct AMIs)

69
Fund settlement corporations 146

Indirect
AMIs

39

CP holders

02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

CP account balance (nominal value) and number of issues
Account balance (end of FY or month)

Number of issues (end of FY or month)(Issues)(Trillion yen)
30

5,759

7,000

5,869
4,730

20.2

18.7

20

14.1

4,392

4,447

14.0

13.6

4,510

4,340

4,499

4,581

14.8

15.1

15.4

16.1

4,386
16.0

4,324

4,451

14.4

15.0

4,544

4,873
16.5

16.0

4,589

4,491

16.7

16.0

6,000
4,447

5,000
4,000

13.6

3,000
10

2,000
1,000

0

(FY)

2007

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.12

30Nominal value is the value at time of issuance (based on the amounts for each bond)

19
Issuance, transfer and redemption of CP (daily average)
Issuance(Trillion yen)
6.0

0.7

0.6
0.4

4.1

4.3

4.0

0.4
4.0

0.4
3.8

4.2

0.5

0.4
4.0

0.4
4.1

4.2

0.4
4.0

0.4
4.1

0.5

0.4
3.8

4.0

0.4
4.1

0.4
4.0

0.5
3.9

0.5
3.9

0.4
3.8

2.0
0.7
0

(FY)

2007

0.6
2008

0.4
2009

0.5

0.4
2010

2011

0.5
2011.4

0.5
5

0.5
6

0.5
7

0.5

0.4

0.4
8

9

10

0.5
11

0.5
12

0.5
2012.1

0.4

0.4
2

3

Continually adapting to CP market needs
The settlement amount of issuance, transfer, and redemption

This huge settlement amount reflects the importance of CP,

of CP handled by JASDEC’s book-entry transfer system

which plays a crucial role in fund procurement by businessaverages ¥5 trillion per day, and in combination with month-

entities in Japan. As a provider of infrastructure for theend settlements of more than ¥10 trillion this means that

settlement of securities transactions, JASDEC fully recognizes

JASDEC settlements surpass the trading value per day at theits responsibility to secure a high level of reliability in theTokyo Stock Exchange. In fiscal 2011, the annual aggregate

book-entry transfer system. As the market for CP transactions

settlement amount was close to ¥1,000 trillion. Trading has

evolves, we will continue to make every effort to ensure thatbeen active since the start of the system.

our system remains responsive, reliable and up-to-date.

Annual Report 2012

Redemptions

Transfers

Security and reliability
JASDEC’s Book-entry Transfer System for Corporate Bonds

book-entry transfer foreign bonds) are subject to U.S.

handles various types of bonds, both through public offerings

withholding tax when newly issued as foreign-targeted bearer

and private placements. These include corporate bonds,

bonds under the TEFRA rules1. JASDEC has been negotiating

municipal bonds, bonds issued by investment firms, specified

with the U.S. Internal Revenue Service (IRS) since 2010bonds issued by special purpose companies (SPCs), bonds

concerning this matter. In March 2012, the IRS issued a noticeof special corporations such as quasi-government and local

stating that U.S. book-entry transfer foreign bonds issued ingovernment bodies, and Samurai bonds (yen-denominatedaccordance with the Foreign-Targeted Registered Obligation

bonds issued in the Japanese bond market by non-Japanese(FTRO2) rules would be exempted from U.S. withholding tax

entities or foreign governments) and others.

until the end of 2013.

In fiscal 2011, there was a dramatic year-on-year decline
1. The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (1) prohibits
sales to American citizens for a specific period after issuance, (2) prohibitsinterest payments within the United States and (3) requires tax restrictions
for American holders to be stated on the bond certificates.

in bond issuance, especially by electric power companies, asa result of the Great East Japan Earthquake. New issues werealso affected by the European debt crisis triggered by eventsin Greece. As of the end of March 2012, the number of bonds

2. The Foreign-Targeted Registered Obligations (FTRO) rules simplify
formalities for withholding agent subject to certain conditions, such as
certification by account management institutions either that there are no
American holders of the securities, or that notification will be provided in theevent that the securities are held by Americans.

eligible in the system was 60,701 issues (a year-on-year declineof 7,087 issues), and the issue balance stood at ¥252,439
20billion (a year-on-year increase of ¥2,365 billion).

Annual Report 2012

(FATCA), since March 19, 2012, Samurai bonds (U.S.

Under the U.S. Foreign Account Tax Compliance Act

Participants in Book-Entry Transfer System for Corporate Bonds (as of the end of March 2012)
Issuers 2,564*
Issuing/
paying agents

JASDEC
Participants(Direct AMIs)

JASDEC206

Indirect
AMIs

Bond holders

434

89

*Issuers do not include unlisted companies, etc. that issued private offering bonds only.

Fund settlement corporations 146

Outstanding balance of corporate bonds and number of issues
Outstanding balance (end of FY or month)(Trillion yen)

72,817300

73,298

Number of issues (end of FY or month)(Issues)

71,202

67,78860,701

67,461

66,757

66,16265,71665,31564,74364,51964,102

63,401

63,14961,79960,70180,00060,000

200

241.0

240.2

245.5

250.0

252.4

249.9

250.6

250.5

251.4

251.5

251.8

252.5

253.4

252.3

252.9

253.8

252.4
40,000100

020,000
(FY)

2007

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.12

30

02 Book-Entry Transfer System for Commercial Paper and Corporate Bonds

JASDEC now able to process sukuk transactions
Taxation measures relating to Islamic finance were included

system-related changes needed to create an environment inin a major tax reform package introduced in fiscal 2011

which J-Sukuk can be issued, traded and redeemed in thewith the aim of attracting money and issuers from Islamicsame way as corporate bonds. Since April 1, 2012, we havecountries into Japan’s financial and capital markets. Systems

been able to handle J-Sukuk transactions. As a result, it isbased on these measures have since been developed andnow possible for Japanese and foreign entities to raise funds

established to provide wide-ranging investment and financing

by issuing J-Sukuk in Japan. As with interest on corporate

opportunities. In response, the relevant laws have been

bonds, J-Sukuk dividends are exempted from taxation underamended to create a legal framework for the issuance ofthe tax exemption system for non-residents. JASDEC is now

sukuk in Japan (J-Sukuk) that comply with Islamic doctrine

anticipating handling the first J-Sukuk issues in cooperationand laws.

with all concerned, and is enhancing the convenience of theSince then, JASDEC has identified the administrative andsystem to attract wide use by foreign investors.

Conceptual Diagram of Issuance of J-Sukuk

21(3) J-Sukuk
Annual Report 2012

Entity seeking to raise funds (originator)(4) Payment(investment)(1) Entrustmentof assets(5) Leaseback(8) Buyback

Tax
exemption
Islamic investors(2) J-Sukuk(6) Leasepayments(9) Payment ofconsideration(7) Dividends
Special purpose trust (trustee)(10) Redemptionof principal

Business
Overview

03
Book-Entry
Transfer System for
Investment Trusts
22

Annual Report 2012

JASDEC is streamlining the process fortrustors, trustees and beneficiaries, ensuring
security and convenience for a system thatserves virtually all investment trusts in Japan.

投資信託
振替業務

03 Book-Entry Transfer System for Investment Trusts

A faster, safer approach to investment trust administration
The Book-entry Transfer System for Investment Trusts is

In the Book-entry Transfer System for Investment Trusts,

a computer system for managing beneficial rights of

the account management institutions (AMIs) and JASDEC

investment trusts.

participants are diverse, consisting of not only securities

The system covers investment trusts managed by trustors

companies but also entities such as banks, insurance(hereinafter, simply called “investment trusts”). These

companies, Shinkin banks, credit cooperatives, agriculturalinvestment trusts are contract-type investment trusts withcooperatives, and investment trust management companies

the involvement of three parties—a trustor, a trustee andengaged in direct marketing. The total number of AMIs anda beneficiary who is an investor in the investment trust.

JASDEC participants was 881 companies as of March 31, 2012.

(Exchange traded funds (ETFs) and investment trusts of

The Book-entry Transfer System for Investment Trusts

the non-trustor instruction type are outside the scope of theenables direct or indirect connection between trustors,

system.) Since the system was launched on January 4, 2007,

trustees, account management institutions, and JASDEC. This

all trustors and trustees involved in investment trusts haveensures greater security, accuracy, and speed of processing

participated in the system, and thus almost all investment

through the electronic management of the accounts oftrusts issued in Japan have been dematerialized.

investment trust beneficiaries.

23

Flow of funds
Flow of data

Investors(beneficiaries)

Private vendor financial network systems/fax

Fund
distributors

Issuers(trustors)(securities companies,
banks,
insurance companies,
etc.)

AMIs

Fund settlement
corporations(BOJ-NET Fund
settlement
corporations)

JASDECBank of Japan
Japanese Bankers
Association financial
network system

Trustees

Fund settlement
corporations(BOJ-NET Fund
settlement
corporations)

Annual Report 2012

Basic Model of Book-entry Transfer System for Investment Trusts

Strong support from users
The total number of investment trusts handled by JASDEC

in publicly offered and ¥30,712 billion in privately placed

as of March 31, 2012 was 6,868 trusts, representing a year-

investment trusts.

on-year increase of 293 trusts and comprising 4,166 publicly

Fund settlement systems in the Book-entry Transfer

offered and 2,702 privately placed investment trusts. The

System for Investment Trusts include DVP settlement (using

number of transactions undertaken for both new registrations

the Bank of Japan financial network system) and non-DVP(purchases) and deletions (cancellations and redemptions)settlement (using the Japanese Bankers Association financial

achieved new record highs, with the number of new

network system for online fund settlement between financial

registrations below that of deletions. Also, the principal

institutions). The use of DVP settlement, which involves

value of new registrations fell below that of deletions, alower settlement risk, has been increasing steadily among

reversal from fiscal 2010. As a result, the outstanding

system users. In fiscal 2011, the proportion of settlements

balance at the end of fiscal 2011 had decreased ¥2,409 billion

using DVP was 26% by number of transactions and 62% by

year on year to ¥112,507 billion, comprising ¥81,795 billion

principal value.

Book-entry Transfer System for Investment Trusts—account balance and number of issues
Account balance (end of FY or month)24(Trillion yen)

Annual Report 2012

200

5,906

150

105.5

Number of issues (end of FY or month)

6,297

6,575

6,868

6,596

6,597

6,636

6,671

6,685

6,727

6,731

6,774

6,814

6,846

6,863

6,868

110.2

114.9

112.5

115.5

116.5

116.7

117.0

117.2

117.0

116.2

115.2

114.7

114.1

113.4

112.5

100

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.1

2

6,517

6,319

6,975

6,841

6,815

6,703

7,510

3

Purchase and cancellation/redemption transactions (Daily average)
Purchases

5,131(Transactions)

Cancellations/Redemptions

5,423

6,294

6,904

7,161

6,518

6,385

6,734

9,000
5,686

5,118

4,769

6,058

5,895

6,294

6,423

6,155

5,866

6,087

5,771

5,745

5,688

5,713

8,378
6,908

6,153

3,000
0

(FY)

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.1

2

3

Principal values of investment trusts for purchases and cancellations/redemptions (Daily average)
Purchases

Redemptions(Billion yen)
261.4

600
400

260.3

282.8

301.9

289.4

288.6

311.0

322.7
355.8

282.4

278.2

277.1

280.1

262.7

259.6

254.0

277.0

264.1

273.4

320.0

404.7
363.8

333.2

291.3

293.5

272.1

255.8

247.9

238.5

229.4

217.7

289.8

200
0

6,000

2,000
(FY)

Account balances are calculated by multiplying the principal amounts for each issue by the number of accounts

6,000

8,000

4,000

50
0

(Issues)

(FY)

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.12

30

03 Book-Entry Transfer System for Investment Trusts

Participants in Book-entry Transfer System for Investment Trusts(as of March 31, 2012: Numbers in parentheses are for the previous year.)

Issuers 83

Trustees 11

JASDECJASDEC Participants 184

BOJ-NET Fund settlement corporations

47

Designated fund distributors 363
Indirect AMIs 697

Indirect AMIs

JASDEC Participants

Securities
Securities
companies
companies
78 78
(11%)
(11%)

Total
Total

697
697

Banks
Banks
97 97
(14%)
(14%)

OthersOthers1 (0%)
1 (0%)

Financial
Financial
institutions
institutions
for for
small
small
businesses
businesses
507507(73%)(73%)

Financial
Financial
institutions
institutions
for for
small
small
businesses
businesses
9 (5%)
9 (5%)
Investment
Investment
trust
trust
management
managementcompanies
companies
19 19
(10%)
(10%)

OthersOthers8 (4%)
8 (4%)

Total
Total

184
184

Securities
Securities
companies
companies
103103
(57%)
(57%)

Banks
Banks
39 39
(21%)
(21%)

*Others: Securities agents, securities exchanges, CCPs, call loan dealers, etc.

Dedicated to ongoing improvement
In fiscal 2011, in order to simplify procedures for transfer

studies, aiming for a scheme that would be suitable for the

between fund distributors, we investigated changes to ourwidest range of participants.

operating rules and other aspects to support systems. In

During fiscal 2012 (to March 31, 2013), we will continue

addition, we resolved various issues in preparation for theour studies of the operating rules and other factors relating

introduction of DVP settlement for redemptions. However,to simplification of procedures for settlement transfer

since such a scheme would have a major impact on the

between fund distributors. Along with work on other on-internal systems of market participants, we decided, instead,going projects, we will further our efforts to optimize theto treat this as a long-term goal and to carry out further

functionality and user-friendliness of the system.

Annual Report 2012

Investment
Investment
trust
trust
management
managementcompanies
companies
3 (0%)
3 (0%)LifeLife
andandnon-life
non-life
insurance
insurancecompanies
companies
11 11
(2%)
(2%)

25
LifeLife
andandnon-life
non-life
insurance
insurancecompanies
companies
6 (3%)
6 (3%)

Business
Overview

04
DVP
Settlement System
for NETDs
26

Annual Report 2012

JASDEC has combined delivery and payment
into a single, smooth reciprocal system,
reducing risk and raising convenience forcustomers on both sides of the trade.

一般振替
DVP業務

04 DVP Settlement System for NETDs

Providing safe, secure securities transactions
The Non-Exchange Transaction Deliveries (NETDs) refer to

JASDEC participants applying to make use of the system are

Book-entry Transfers for Stocks, etc., carried out by JASDEC

examined for their suitability in terms of financial condition,

for non-exchange transactions, and the majority of them

organizational structure and other such factors before

consist of such trades of domestic and overseas institutional

receiving authorization from JDCC.

investors buying and selling Japanese stocks, etc., through the
DVP settlement system for NETDs.

In order to ensure stringent risk management of allparticipants, JDCC secures collateral in advance, comprising

Previously, the delivery of the securities and the payment

assets (assurance assets) with the appraisal value thatof the settlement amounts for non-exchange transactions

exceeds the net debt (total payables – total receivables) ofhave mostly been processed separately, so the transactions

each participant, and sets an upper limit to the value of thehave been exposed to the risk (principal risk) that settlement

liabilities payable (the net debit cap) in proportion to thepayments may not be made even though the securities havetrading status of each participant.

been delivered. The use of the DVP settlement system for

Settlement within the DVP settlement system for NETDs is

NETDs links the delivery of the securities and the payment

conducted in accordance with the so-called Gross = Net DVPof the settlement amounts through the system, diminishingmodel system by which securities pass through the JDCC

the risk and making it possible for securities settlements to beaccount within JASDEC and the transfer of the securities fromconducted safely and reliably. To further support reliability,

the seller’s into the buyer’s account is conducted separately

the entire administrative process is handled automatically andfor each transaction (gross). Meanwhile, the settlement

electronically using Straight Through Processing (STP).

amounts pass through the JDCC’s account within the BOJNET funds transfer system and settlement is concluded byhas been administered by JASDEC’s wholly owned

the appropriate net calculated amount of funds being paid on

subsidiary, JASDEC DVP Clearing Corporation (JDCC).

each settlement date (net).

Reducing principal risk by using the DVP settlement method

Delivery of securities

Seller

Buyer

Transfer of securities and payment carried out separately
Payment of settlement amount

Use of DVP settlement
Account delivery through JASDEC
Seller’s
account

Securities
data

Account of JASDEC
DVP Clearing Corp.

Stocks data transfer and payments are linked on

Securities
data

Buyer’s
account

the system, enabling secure and reliable settlement

Provision/receipt of funds through current accounts at the Bank of Japan
Seller’s
account

Funding data

Account of JASDEC
DVP Clearing Corp.

DVP system is a system that links the delivery of stocks with payments, enabling secure settlement.

Funding data

Buyer’s
account

Annual Report 2012

Since May 2004, the DVP settlement system for NETDs

27

Establishing key settlement procedures on the customer side
The DVP settlement system for NETDs mainly deals with

In fiscal 2011, healthy growth in the use of the systemsecurities handled by JASDEC through its Book-entry

allowed us to rebate ¥8 out of the ¥20 DVP settlement fee per

Transfer System for Stocks, etc., such as shares and bonds

transaction, in accordance with the participant’s usage level.

with share options, etc.

Since April 2012, we have reduced the DVP settlement fee per

As of the end of March 2012, 54 companies (comprisingtransaction by ¥3 to ¥17.

12 banks and 42 securities companies) were participants inthe DVP settlement system for NETDs. Excluding internaltransfers within the same company, DVP transactions
accounted for more than 60% of NETD transactions—evidence that use of the system has become firmly established
as an important customer-side settlement method.

28
DVP Settlement for NETD Transactions (Daily average)
Annual Report 2012

Non-DVP transactions

DVP transactions(Transactions)
300,000
87,18596,301

84,883

83,29959,37456,18682,522

86,051

82,19971,68075,86388,15385,82688,70392,54379,70773,27380,13785,977

100,411200,000

67,25548,53754,85250,67055,43549,32348,451

6

7

49,536

46,846

41,864

43,15743,08047,25050,916

100,000

0

(FY)

2007

2008

2009

2010

2011

2011.4

5

DVP transactions are the number of transfers executed (transfer from DVP participants to JASDEC DVP Clearing Corporation)

8

9

10

11

12

2012.12

3

04 DVP Settlement System for NETDs

Reducing settlement risks for stock lending transactions
The Financial Services Agency identified a number of urgent

Based on this information, we are currently preparing

measures needed to strengthen the clearing and settlement

for the introduction of DVP settlements in January 2014

system for stock lending transactions in “Development ofwith the aim of reducing settlement risks for stock lending

Institutional Frameworks Pertaining to Financial and Capitaltransactions.

Markets,” published in January 2010.

29
DVP Settlement for NETD Fund Settlement (Daily average)
Total value of net settlement payments

Rate of reduction (Total value of net settlement payments/Total payments × 100)
(%)

2,500

50

2,000

1,804.740
1,294.7

1,500

30
963.7

948.5
1,000

10.4

500

0

(FY)

12.8

12.3

965.8

844.2
12.2

11.9

946.1
13.3

812.5

803.9
10.9

901.5

9.9

820.1

11.2
12.3

835.1

997.5

885.9

785.9

698.2

667.2

9.9

16.6

12.3

11.5

11.3

12.6

187.0

166.3

116.6

118.0

100.1

128.0

102.8

79.9

91.2

111.1

135.8

95.8

88.5

87.8

68.7

87.6

122.6

2007

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.1

2

3

Securities covered: Stocks, bonds with share options (convertible bonds), ETFs, REITs, share options (share subscription warrants), foreign stocks, etc.
Total payments is the total amount used for execution of securities transfers.
Total value of net settlement payments is the total amount used for account settlement on a net transaction basis.

10.3

20

10

0

Annual Report 2012

Total of payments(Billion yen)Business
Overview

05
Pre-Settlement
Matching System(PSMS)
30

Annual Report 2012

Amid steady growth, JASDEC is readying
the next-generation system with features for
global settlement support, including IS020022
standard and addition of the SWIFT network.

決済照合業務05 Pre-Settlement Matching System (PSMS)

The number of Straight Through Processing (STP) transactions via PreSettlement Matching System (PSMS) is increasing steadily.
Matching institutional investors’ transactions is a complex

Due to mergers and other factors, the number of registeredundertaking, due to the wide range of organizations

users as of the end of March 2012 was 691 companies, five

involved—including investment managers, securities

fewer than the number in the previous year. However, incompanies, trust banks and custody banks—and the hugefiscal 2011, because of the addition of high volume foreign-amount of transaction data exchanged between them. In

owned investment managers and life insurance companies,

the past, matching was done manually by fax or telephone.

the number of input/output transactions on a daily average

Now, the process has been modernized and automated,

increased to 1,360,262, which is 45,000 more than the number

with JASDEC providing centralized matching services using

in the previous year. In Japanese securities market, thesophisticated computer systems.

number of STP transactions via PSMS is increasing steadily.

Since launching the initial system in September 2001, we
have been increasing the range of asset classes and services
covered by the system.

31

Annual Report 2012

PSMS (for non-residents’ transactions)
Overseas

GlobalcustodiansJapan

Settlement
instruction

Investment
managers

Order
Notice of execution
Allocation, matching

Settlement Notice of
Order
instruction execution

Settlement instruction

Settlement
instruction

Subcustodians

Securities
companies

Notice ofmatching status

Pre-settlement
matching
systemSettlement
instruction
Notice ofmatching status

Request for DVP transfer

Linkage with book-entry transfer systems for stocks, etc. and CBs, corporate bonds and CP(excluding Japanese government bonds)

Securities
companies
Notice ofexecution

Order

Stock
exchanges

We are continually building conformity with international standards,
contributing to greater efficiency and reducing settlement risk in theJapanese securities market.
The securities market is continuing to internationalize, andwe recognize that our computer systems do not yet fully

This fiscal year, we have executed an implementation ofconform to recent developments in this field. Though we use

our new system, including generating the XML schemas that

ISO15022, the international standard for messaging,describe JASDEC’s message format specifications. It is based

when we adopted this standard we customized the formats

on the results of our study comparing the message formats

in order to satisfy unique requirements in the Japanese

we use with the ISO20022 message formats. The detailed

market community.

specification documents were released in March 2012.

In doing so, however, we thought that ultimately we would

32

be reflected in international standards.

Turning to our communication network, our aim is toneed to maximize user convenience by achieving the greatest

introduce the SWIFT network, used widely around thepossible degree of harmonization with international standards

world, while running our existing communication networkand connectivity with overseas systems. Therefore, we decided

in parallel, giving users greater choice. Introduction of theto bring our new system, scheduled for launch in January

SWIFT network will, we believe, enable smooth overseas

2014, into compliance with international standards.

connectivity—further increasing user convenience and the

In principle, we will use message formats that comply withnumber of participants.

Annual Report 2012

the new ISO20022 international standard, which defines

In addition to these projects, in order to improve

the ISO platform for the development of financial message

convenience and reduce settlement risk in the securities

standards and is scheduled to replace the current ISO15022

market, we will introduce several new functions shown on thestandard. We will continue to be a member of the ISO20022

following table.

Standards Evaluation Group for Securities within the

We are continually building conformity with international

International Organization for Standardization (ISO), andstandards, contributing to greater efficiency and reducing

will strive to ensure that the practices prevailing in Japan will

settlement risk in the Japanese securities market.

New Service/Function

Domestictransactions

Non-residents’transactions

Breakdown

Improvement of Net Asset Value Datarelated Functions

We will add an approval process to the current NAV data sending function.
We will also introduce a function for transmitting foreign investment account data (yenequivalent value of foreign-currency-denominated assets of investment trusts).

Mitigation of the Risk of Stock Lending
Settlement

We will introduce DVP settlement for stock lending and borrowing transactions (SLBtransactions). To realize this, we will add the following functions to the current DVP
settlement functions for NETDs:• Automatic calculation of the SLB settlement amount• Automatic generation of Settlement Instruction data with the use of the SSI database• Link up with Book-Entry Transfer System• Remodel the functions of “pledged securities” to handle securities used as collateral in
the current SLB market• Collateral Reconciliation service

Matching System for Stock
Transactions Among Dealers

We will introduce a Bilateral Central Matching function for stock trading.

Corresponding Function for Shorteningof the Settlement Cycle of JGB

In order to correspond to the shortening of the Settlement Cycle of JGB, we will introduce
a Tri-party Central Matching function for bond trading.

Tolerance Matching

We will introduce a Tolerance Matching function, commonly-used in foreign markets,
whereby when a discrepancy in the settlement amounts between the settlement
instructions sent by both delivering and receiving settlement agents is within thetolerance, the instructions are processed as matched.

05 Pre-Settlement Matching System (PSMS)

Centralized matching method for three parties (domestic transactions)
Stock exchanges

Notice of execution

Investment trust
management/
advisory
companies

Order

Order
Notice of execution
Allocation

Pre-settlement
matching system
Investment instruction

Trade report

Notice of matching status

Trade matching
Notice of matching status

Investment instruction andtrade report

Affirmation/
Disaffirmation

Trade report affirmation



Securities
companies

Notice of trade reportaffirmation status

Settlement
matching

Notice of matching status

Annual Report 2012

SSI

Trust banks

Notice of matching status

Request for DVP transfer

Linkage with book-entry transfer systems for stocks, etc. and CBs, corporate bonds and CP(excluding Japanese government bonds)

Total number of PSMS input/output instructions using the PSMS system (Daily average)(Thousand))
2,000
1,503
1,500

1,327

1,314

1,360

1,333

2009

2010

2011

2011.4

1,246

1,221

1,281

5

6

7

1,422

1,405

8

9

1,510

1,390

1,301

1,294

12

2012.1

1,422

1,482

1,000

500

0

(FY)

2008

Nominal value is the value at time of issuance (based on the amounts for each bond)

10

11

33

2

3

Business
Overview

06
Custody Services
for Foreign Stock
Certificates, etc.
34

Annual Report 2012

Making it easier for Japanese to invest
in foreign companies by handling thecomplicated procedures involved in transfers,
dividend payments and taxation.

外国株式等保管振替決済業務

06 Custody Services for Foreign Stock Certificates, etc.

Safe and secure settlement infrastructure and services for foreign stocks
In April 2006, JASDEC inaugurated services to process

Based on this information, the share-handling service

deposits, transfers and corporate actions for foreign stock

agents calculate the amount of dividends, which are then paid

certificates, etc., listed on Japanese stock exchanges.

directly to the beneficial shareholders from the dividend-

Although foreign stock certificates, etc. are generally

paying banks.

deposited with CSDs or custodians in the same countries as

JASDEC also undertakes the necessary procedures

the issuing companies, settlements of transactions at Japaneseregarding dividend taxation for local tax authorities and otherstock exchanges are conducted through book-entry transfers

such entities, to ensure reduced tax rates under tax treaties

in JASDEC.

with the countries concerned. Beneficial shareholders can also

JASDEC entrusts dividend payments to relevant
share-handling service agents. Information on beneficial

exercise their voting rights at general meetings of shareholders
through instructions issued to JASDEC.

shareholders at the dividend record date is transferred to

JASDEC therefore provides the infrastructure and services

the share-handling service organizations by the JASDEC

necessary for reliable settlement of trading activities in foreign

participants through JASDEC.

stock certificates, etc., smooth exercise of shareholder rights,
and error-free receipt of dividends and other payments.

35

Overseas CSDs
Share-handling service agents (trust banks)

Notice ofbeneficial
shareholders

Japan Securities Clearing Corporation

Stockexchange
DVP

Dividend
information

Shareholder notice host

Account transfer host(handling of information concerning beneficial
shareholders, dividends, etc.)

Collateralmatching

Beneficial
shareholder
reportDividend
information

Custodian banks

Notice ofbalance(settlement)

Non-DVP
transfer for
NETD

DVP transfer
for
NETD

AMIs (Securities companies and banks)

Beneficial shareholders of foreign stock certificates, etc.

Local custody/transfer

Communication
server with foreign
CSDs/banks

Annual Report 2012

Overview of the system relating to foreign stocks

Handling responses to various forms of corporate action
Foreign companies have carried out a variety of corporatetransfer. We are also considering handling various new

actions in recent years. For example, in fiscal 2011, we

products listed on domestic financial exchanges.

processed the distribution of investment unit dividends withAt present, foreign securities under the custody of the

cash dividend options, which are subject to a ceiling on the

Depository and Book-entry Transfer System for Foreign

cash dividend portion. We also carried out the necessary

Stock Certificates, etc. includes four categories: foreign stocks

processes relating to dividend payments to beneficial(including ADRs); overseas ETFs (including ETCs); country

shareholders, after completing checks related to tax matters,

funds; and foreign covered warrants. At the end of Marchas required. JASDEC is taking steps to improve services

2012, the number of different issues handled by JASDEC

offered to beneficial shareholders and JASDEC participants,in the three categories of foreign stocks, overseas ETFs andsuch as exchanging information with JASDEC participants

country funds stood at 38, while the number of foreign

through the encryptable Target-Hofuri website, which

covered warrants handled stood at 40.

improves the speed, reliability and security of information

36

Annual Report 2012

Foreign stocks, etc.—number of issues/balance in accounts (excluding foreign covered warrants)
Balance in accounts (end of month)

Number of issues (end of month)(Issues)(Thousand shares)
200,000

42

41

41

41

41

41

41

41

40

38

40

50

40

39

38

38
40

130,692

150,000

25
100,000

79,53189,90588,93095,73673,41673,561

76,00083,502

83,61083,311

83,174

83,19783,04989,28388,93030
20

50,000

0

10
(FY)

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.1203Foreign covered warrants—number of issues/balance in accounts
Balance in accounts (end of month)

Number of issues (end of month)(Issues)(Thousand warrants)

371,300

400,000

125

106
102,000

120,000

80
76,36065

80,00080

86,360105,560 105,560

87

76,100

78

78

100

86,900776756,10041,80040

54,00047

49

54,00065,000594975
41,80040

50

2640,000093,060105,560

25
(FY)

2008

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

2012.12

3

0

06 Custody Services for Foreign Stock Certificates, etc.

Number of shares deposited/withdrawn
Number of shares deposited(Thousand shares)
500,000

480,306

246,465

118,585

115,478

71,167

Number of shares withdrawn
1,520

425

1,341

801

419

25,651

174

313

10,0571,317

531

28,612

131,801

30,00016,52823,65016,382

17,762
10,976

7,917

7,788

10,00020,478

5,412

3,228
1,090
586

1,000

0

(FY)

2009

2010

2011

2011.4

5

6

7

8

9

10

11

12

9,903

18,580

7,663

6,480

5,603

6,850

2012.12

3

14,20019,532Book-entry transfers
Non-exchange transaction deliveries(Thousand shares)
500,000

274,119

158,573

133,511

Exchange transaction transfers
16,2008,927

258,701
300,000

10,31537
236,159

19,03020,000

(FY)

2009

2010

2011

2011.4

5

31,945

21,533
14,7396

20,704

13,209

7

8,138
8

9

7,555
10

11

25,401

9,548

12

2012.1

2

3

Annual Report 2012

31,86132,49040,00009,253

469,524

International
Relationships

国際関係
JASDEC is active year-round in international events to guidethe rational development of a global settlement infrastructure.
Research on overseas trends and information sharing are key
elements of a leadership role.
38

Annual Report 2012

Memorandums of understanding (MOUs) with overseas CSDs
As of the end of March 2012, JASDEC had signed MOUs with a total of 13 CSDs. We are strengthening our cooperative relationships
with our MOU partners through active initiatives.

International Relationships

Mutual cooperation with overseas institutions
JASDEC regards research on overseas trends and timely,

World Forum of CSDs (WFC), we also play a key role inaccurate information exchange with overseas institutions

administration. Through these activities, we aim to contributeas essential to its ongoing efforts to deal with the manyto the development of securities market infrastructure inissues that affect securities market infrastructure, such as

Japan and worldwide while also raising the profile of JASDEC.

the globalization of financial and capital markets and the

We are actively developing relationships with organizations

rapid growth of markets in Asia. We actively participate

with which we have signed memorandums of understanding

in international forums such as regular CSD meetings(MOUs), and we provide various forms of assistance inand seminars. And, by acting as secretariat for the Asia-

response to requests from CSDs of emerging nations.

Pacific Central Securities Depository Group (ACG) and theAsia-Pacific Central Securities Depository Groupof the Technical Task Force and China Securities Depository

information exchange and mutual cooperation among CSDs

and Clearing Corporation Limited as convenor of the Legalin the Asia-Pacific region. In December 2010, an Executive

Task Force. Central Depository Company of Pakistan Limited,

Committee was established at the 14th general meeting to plan

Singapore Exchange Limited and Vietnam Securities Depositoryand organize activities from medium- to long-term perspectives.

were also elected through a general vote. JASDEC Chairman

JASDEC was elected to the Executive Committee member as

Takeuchi became the first ACG Executive Committee Chairman.

convenor of the Exchange of Information Task Force, Korea

JASDEC is committed to demonstrating leadership in ACG

Securities Depository as convenor of the New Business Initiative

activities as Secretariat, and is making efforts to further invigorate

Task Force, National Securities Depository Limited as convenor

ACG.

World Forum of CSDs
The WFC was created in April 2011 at the 11th Conference ofby a 10-member board made up of chairs and vice-chairs from

CSDs (CSD11), after agreement was reached among leaders ofeach regional association. Mr. Mohamed Abdel Salam of Misr

the world’s five regional CSD associations. The WFC continues

for Central Clearing, Depository & Registry (MCDR), Egypt,

the collaborative activities undertaken by regional associations

representing AMEDA (Africa and Middle East Depositories

under the CSD Contact Group during the previous four years. Its

Association) was elected as the Forum’s Chairman, withfunction is to strengthen the influence of CSDs and disseminate

Chairman Takeuchi of JASDEC as Vice-Chairman. JASDEC istheir shared views as a forum of information exchange andacting as the secretariat.

debate on issues that affect all CSDs. The Forum is administered

MOUs on information exchange and mutual cooperation with overseas CSDs
As one element of our efforts to build collaborative relationships

are strengthening our cooperative relationships with our MOU

with CSDs around the world, JASDEC has been following apartners through active initiatives, including regular exchanges ofpolicy of signing MOUs on the exchange of information andinformation, cross-training programs involving trainee exchanges

mutual cooperation with overseas CSDs. As of the end of Marchand support for CSDs of emerging nations.

2012, JASDEC had signed MOUs with a total of 13 CSDs. We

39

Annual Report 2012

The ACG was established in November 1997 as a forum forMajor International Activities in Fiscal 2011

The 11th Conference of CSDs was held in Cape Town, South
Africa, hosted by the Africa and Middle East Depositories
Association (AMEDA). JASDEC gave a presentation

meeting under the MOU with SD&C
(China Securities Depository and Clearing

on the theme of “The nature of partnerships amongst
CSDs,” focusing in particular on information exchange andcooperation among CSDs and CCPs, and collaboration
initiatives in the Asia-Pacific region, such as ABMI and theASEAN Trading Link. Speaking as a panelist in a panel

Corporation Limited) and KSD (Korea
Securities Depository) held in Hong Kong.
The meeting provided an opportunity
for exchanges of views among senior

JASDEC signed a memorandum

management executives and information

discussion on the theme “The future of financial market
infrastructure and the effect on CSDs,” Chairman Takeuchi
discussed the standardization of CSD operations, theconcentration of information, shareholder structures andcorporate governance and other aspects and pointed out theof understanding with the Russia’s

exchange among working-level officials.

CSD, NSD (National Settlement

JASDEC also gave presentations on its
response to the Great East Japan Earthquakeand other topics.

Depository) to establish a basisof cooperation and sharing
of information towards the

11th Conference of CSDs

First trilateral meeting for
information exchange with
China’s SD&C and Korea’s
KSD

MOU with Russia’s
NSD

April 13–15

July 8September 18

pros and cons in conducting risk management.
Conference participants approved the establishment of theWorld Forum of CSDs (WFC).

40

JASDEC participated in the first trilateral

Annual Report 20122011.45

6

7

development of a closer working
relationship.

8

9

September 12

September 14

September 14-15

Symposium commemorating
150 years of Japan-Germany
friendship

JASDEC Seminar
JASDEC and the local banking association in

13th ACG Cross Training
SeminarLuxembourg co-hosted the JASDEC seminar.

The 13th ACG Cross Training Seminar was held

Held in Luxembourg, the event provided an

in Ulaanbaatar, Mongolia, hosted by MSCH&CD

introduction to JASDEC’s activities, especially(Mongolian Securities Clearing House & Central

book-entry transfer systems for stocks andDepository Co., Ltd). As convenor of thecorporate bonds, for an audience consisting

Exchange of Information Task Force, JASDEC

of people working in the custody and fundassisted MSCH&CD to run the event. At the

management areas.

seminar, presentations were made on the

JASDEC participated in a symposium hosted
by the Frankfurt School of Finance andManagement to commemorate 150 years offriendship between Japan and Germany. Heldin Frankfurt on September 12, the symposium
focused on the future of Japanese capital
markets and the prospects for German

results from an issuer services survey, on theinvestors. The event attracted a large number

current situation and future issues pertaining toof attendees representing financial institutions,

CSD linkage, on legal applications in cross-

universities and other organizations in Japanborder securities transactions, and on theand Germany. There was lively discussion on

responses to the Great East Japan Earthquake.

topics ranging from the development of legal
frameworks for Japanese capital markets toinvestment in Japanese securities. JASDEC
gave a presentation on its role and functions in
the financial system, including an overview ofthe securities settlement system in Japan.

International Relationships

JASDEC and KSD held the trainee exchange program
under their MOU on information exchange and mutual
cooperation. Both institutions accepted trainees,
who were mostly young employees. The program

ACG Secretariat, supported KSD, and decisions were made on ACG Activity Plan 2012-enabled better reciprocal understanding by providing

13, activities for each task force, website upgrading and other matters. At the CSD’s

the trainees with a general overview of the activities“Competing for Collaboration” panel, described JASDEC’s policy of expanding operationsof each institution, and better networking among

to meet participant demand in the context of our legal and governance framework.

employees.

15th ACG General Meeting

Trainee Exchange with KSD

November 2-4

November 14–18,
November 28–December 2

11

12

2012.12

3

October 4–5

March

Conference Hosted by
European Central Bank

Completion of Final Report for
ABMF Phase 1

Chairman Takeuchi was invited to

The ABMI (Asian Bond Markets Initiative), under the

ECB’s “Conference on Securities

Meeting of the Finance Ministers and Central Bank

Settlement in 2020: T2S and beyond”

Governors of the ASEAN+3 group, comprises four

(held in Frankfurt, Germany) as a

Task Forces (1: charged with promoting the issuancepanelist, and presented on themesof local-currency-denominated bonds, 2: facilitatingin recent trend in Asian Securities

the demand for local-currency-denominated bonds,3:Markets.

improving the regulatory framework and 4: improving therelated infrastructure of the bond markets). The ABMF
(ASEAN + 3 Bond Market Forum) was established under
Task Force 3 (improvement of regulatory frameworks),

September 18, September 19–23

and two sub-forums were held. Sub-Forum 1 sought to

1st WFC Meeting/Sibos 2011

in general, while Sub-Forum 2 was concerned primarily

identify regulatory barriers relating to bond transactions

The 1st World Forum of CSDs meeting was held in Toronto, Canada. JASDEC waswith identifying cross-border settlement operations. The

given responsibility for planning and administration as the secretariat of the WFC, andresults of these deliberations were compiled into a final

Chairman Takeuchi served as vice-chairman at the meeting. Updates on activities inreport, which was published in April 2012.

each regional CSD association were presented and the WFC’s work plan toward the

JASDEC has participated in the ABMF as the

12th Conference of CSDs (May 2013) were discussed. JASDEC also participated inJapanese representative, and is actively participating in

Sibos 2011 held in Toronto from September 19.

Sub-Forum 2 as the co-vice-chair.

41

Annual Report 201210

The 15th ACG General Meeting was held in Seoul, Korea, hosted by KSD. JASDEC, asAnalysis of Business Performance andFinancial Results
Fiscal year ended March 31, 2012 (Fiscal 2011)
In the following section, all comparisons are with the previous fiscal year unless stated otherwise.

Outline of Financial Results

42

Annual Report 2012

During the fiscal year ended March 31, 2012 (fiscal 2011),
the Japanese economy made gradual progress toward a
recovery, although conditions remained difficult because of
the Great East Japan Earthquake. However, in addition toworries that economic performance in Japan would comeunder pressure from the European debt crisis, there werealso concerns about the impact of power shortages, the deflationary effects of the present situation and the possibility thatthe employment situation would worsen.
In securities markets, the Nikkei Stock Average fell
sharply after the earthquake but then staged a moderate rally
after the decline prompted buying by foreign investors.
Between April and June, the Nikkei hovered in the mid¥9,000 range. Statistics released in July, including the Industrial Production Index, confirmed that the post-earthquake
recovery was moving forward faster than anticipated by themarket. This news, together with firm trends in U.S. stock
prices, took the Nikkei to around the ¥10,000 level. In
August, the Nikkei fell back to the mid-¥8,000 range andremained at that level until October, reflecting market
anxiety about a sharp correction in U.S. stock prices and acontinuing rise in the value of the yen. In late November, theNikkei hit a new low for the year, but it made consistent
gains between the start of the new year and March, after
firmer economic indicators and other factors prompted ageneral firming of U.S. stock prices. Another factor was a
downward trend in the yen’s value. By the end of March the
Nikkei was above ¥10,200 and had reached its highest level
since the earthquake.
In the year ended March 31, 2012, operating revenues
decreased by ¥28,671 thousand, or 0.2%, year on year to¥19,698,237 thousand. Selling, general and administrative
expenses were reduced by ¥1,080,392 thousand, or 6.3%, to¥15,988,063 thousand. Operating income was ¥1,051,721
thousand, or 39.6%, higher at ¥3,710,173 thousand, while
ordinary income increased by ¥1,026,127 thousand, or
38.4%, to ¥3,699,661 thousand. There was an extraordinary
loss of ¥1,073,148 thousand relating mainly to partial changes to our basic policy on system replacement, with the resultthat net income was ¥130,652 thousand (8.1%) lower year
on year at ¥1,478,259 thousand.

Book-Entry Transfer System for
Stocks, etc.
In this business segment, the number of issues handled by
JASDEC as of March 31, 2012 was 3,762, a reduction of 57
compared with the total as of March 31, 2011. Accountbalances included 406.8 billion shares, a year-on-year declineof 11.7 billion shares. The balance of bonds with share options
stood at ¥959.7 billion, which was ¥208.3 billion lower year on
year. There were 2,339.25 million account units for ETFs andbeneficial rights of trust issuing beneficial certificates, such as
JDRs, a year-on-year decline of 224.46 million units. Thebalance of account units for REITs was 2.64 million higher
year on year at 16.38 million, and account units for preferred
equity investments of financial institutions established bycooperative associations were unchanged at 700,000. The total
number of new registrations, book-entry transfers, obliterations and other transactions processed was 1,982,733 below
the total for the previous reporting year at 81,641,204.
Revenues from this business segment were ¥1,058,222
thousand, or 6.0%, lower year on year at ¥16,504,195 thousand. This includes refunds of ¥1,928,000 thousand on bookentry transfer commissions and account management fees.
Revenues after the deduction of these refunds amounted to¥14,576,195 thousand, a year on year increase of ¥31,777
thousand, or 0.2%.

Book-Entry Transfer System forCommercial Paper
The number of corporate issuers using this system increasedby nine to 497 as of March 31, 2012. Account balances fell by¥418.7 billion to ¥13,614.5 billion. The total number ofunderwriting, transfer and redemption transactions handledincreased by 5,564 year on year to 288,766. As a result,revenues from this segment were ¥6,565 thousand, or 1.4%,
higher year on year at ¥463,673 thousand.

Book-Entry Transfer System for
Corporate Bonds

DVP Settlement Services for
Non-Exchange Transaction Deliveries (NETDs)

In this business segment, JASDEC was handling a total of
60,701 issues as of March 31, 2012, a reduction of 7,087
issues compared with the position a year earlier. On a facevalue basis, the account balance increased by ¥2,365.2 billion
year on year to ¥252,439.1 billion as of March 31, 2012. The
total number of underwriting, transfer and redemption
transactions handled was 3,527 lower at 502,150. As a result,revenues from this business segment declined by ¥87,532
thousand, or 6.8%, to ¥1,201,016 thousand.

The number of NETD DVP settlements handled by JASDEC
during the year ended March 31, 2012 was 100,000 lower year
on year at 20.3 million. As a result, revenues from this segment
declined by ¥3,593 thousand, or 0.4%, to ¥939,531 thousand.

Pre-Settlement Matching System
Revenues from this segment increased by ¥23,577 thousand,or 1.2%, to ¥2,024,663 thousand in the year ended March 31,
2012. JASDEC pre-settlement matching fees totaling¥478,000 thousand, and revenues after the reduction of thatamount were ¥160,577 thousand, or 11.6%, higher at¥1,546,663 thousand.

Book-Entry Transfer System for
Investment Trusts

Custody Services for
Foreign Stock Certificates, etc.
As of March 31, 2012, there was an account balance of 88
million foreign stock certificates, etc., excluding foreign
covered warrants. There was no change from the level a year
earlier. The account balance for foreign covered warrants was
34 million warrants lower at 41 million. The total number ofbook-entry transfers, including foreign covered warrants,
declined by 14,128 to 138,279. As a result, revenues from thisbusiness segment were ¥25,576 thousand, or 11.2%, lower
year on year at ¥203,190 thousand.

Financial Results (consolidated)
Operating revenues
Ordinary income(Millions of yen)
30,00027,163
20,973

19,726(Millions of yen)

(Yen)

(Millions of yen)

3,000

300,000

80,000154,949.18

19,69810,000

1,608
1,317

1,000

3/20092,605
3/20102,673
3/2011

61,615200,000

1,333

0(FY ended)

173,912.87
189,283.71

2,000 156,934.33

20,0002,617

Total assets
Net assets

Net income
Net income per share

1,478
100,000

3,699
3/2012

0 3/2009(FY ended)

3/20103/20113/2012 059,92560,00057,454

61,57440,00018,89019,86821,13622,27520,0000(FY ended)

3/20093/20103/20113/2012

43

Annual Report 2012

As of March 31, 2012, JASDEC was handling a total of 6,868
issues in this business segment, including 4,166 publicly
offered investment trusts and 2,702 privately placed investment trusts. The total represents an increase of 293 issues
compared with the position as March 31, 2011. On a principal value basis, the account balance as of March 31, 2012 was¥2,409.9 billion below the level a year earlier at ¥112,507.1
billion, consisting of ¥81,795.0 billion for publicly offeredinvestment trusts and ¥30,712.0 billion for privately placed
investment trusts. The number of related registrations,cancellations, transfers and other transactions handled by
JASDEC in the year ended March 31, 2012 increased by
116,322 year on year to 4,201,075. This is reflected in revenues for this segment, which increased by ¥2,200 thousand,or 0.2%, to ¥1,064,454 thousand.

Consolidated
Financial Statements
Consolidated Balance Sheets (As of March 31, 2011 and 2012)¥ (thousands)

2012

2012

¥ 4,516,648
3,443,641
160,592
33,530,047
323,882(7,256)
41,967,555¥ 7,794,677
3,163,166
416,189
35,293,686
223,493(1,848)46,889,364$ 94,837
38,486
5,063
429,4152,719(22)570,499

Noncurrent Assets
Property and Equipment:
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Tools and furniture
Accumulated depreciation
Tools and furniture, net
Lease assets
Accumulated depreciation
Lease assets, net
Total Property and Equipment

859,474(369,694)
489,779
5,460,708(4,662,828)
797,879
93,323(40,823)
52,4991,340,158

926,465(440,666)
485,798
5,713,609(5,105,378)
608,230
93,323(59,488)
33,834
1,127,863

11,272(5,361)
5,910
69,517(62,116)
7,400
1,135
(723)
411
13,722Intangible Assets:
SoftwareConstruction in progress (Software)
Lease assets
Other intangible assets
Total Intangible Assets

12,218,911
346,479
6,468
17,923
12,589,781

8,365,514
3,796,200
3,771
17,80812,183,294

101,782
46,18845
216
148,233

Investment and Other Assets:
Investment securities (Note 2)Long-term prepaid expenses
Deferred tax assets
Long-term refundable lease deposits
Claims provable in bankruptcy, rehabilitation and other
OthersAllowance for doubtful accounts
Total Investment and Other Assets
Total Noncurrent Assets
Total Assets

414,128
18,265598,833
503,534
31,1141,000(10,181)
1,556,695
15,486,635¥ 57,454,190

429,980
10,970407,456
503,534
30,6201,000(9,934)
1,373,627
14,684,786¥ 61,574,151

5,231
133
4,957
6,126
372
12
(120)
16,712
178,668$ 749,168

ASSETS
Current Assets:
Cash and deposits
Accounts receivable—trade
Deferred tax assets
Designated assets for clearing funds (Note 1)
Other current assets
Allowance for doubtful accounts
Total Current Assets

44$ (thousands)

2011

Annual Report 2012

The accompanying notes are an integral part of these statements.

¥ (thousands)

LIABILITIESCurrent Liabilities:
Accounts payable—trade
Lease obligations
Income taxes payable
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Consumption tax payable
Deposits received for clearing funds (Note 1)
Allowance for loss on changes of system development policy
Other current liabilities
Total Current Liabilities

2012

849,724
23,207744,703
202,087
20,6002,575
35,293,686
700,592
964,159
38,801,335$ 10,338
282
9,060
2,458
250
31
429,415
8,524
11,730472,093

40,363311,333
30,00067,121
448,818
36,317,216

17,156383,304
30,00067,121
497,582
39,298,917

208
4,663
365
816
6,054
478,147

NET ASSETS
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Total Shareholders’ Equity
Total Net Assets
Total Liabilities and Net Assets

4,250,000
4,250,000
12,636,974
21,136,974
21,136,974¥ 57,454,190

4,250,000
4,250,000
13,775,233
22,275,233
22,275,233¥ 61,574,151

51,70951,709167,602271,021271,021$ 749,168¥

769,998
22,789894,525
183,096
20,500117,831
33,530,047—
329,60935,868,397¥

45Annual Report 2012

Noncurrent Liabilities:
Lease obligations
Allowance for employees’ retirement benefits
Allowance for executives’ retirement benefits
Long-term guarantee deposited
Total Noncurrent Liabilities
Total Liabilities$ (thousands)

2012

2011

Consolidated
Financial Statements
Consolidated Statements of Income and Comprehensive Income (For the years ended March 31, 2011 and 2012)¥ (thousands)

46

Annual Report 2012

Operating Revenue
Operating Expenses:
Executives’ compensations
Salaries
Allowance for bonuses
Allowance for executives’ bonuses
Retirement benefit expenses
Maintenance of systems
Outside services
Depreciation and amortization
Rent
Advertising
OthersTotal Operating Expenses
Operating Income
Non-Operating Income:Interest Income
Operational revenue on designated assets for clearing funds
Equity in earnings of affiliates
OthersTotal Non-Operating Income
Non-Operating Expenses:
Interest expenses
Commitment fees
Fees for fund operation of designated assets for clearing fund
OthersTotal Non-Operating Expenses
Ordinary Income$ (thousands)

2011¥ 19,726,909

2012¥ 19,698,237

2012$ 239,667

190,476
1,783,070
183,096
20,500102,322
6,779,277
2,350
5,725,759
551,479
78,4601,651,664
17,068,456
2,658,452

194,378
1,621,253
202,087
20,600121,514
6,130,854
2,702
5,341,802
546,867
46,283
1,759,720
15,988,063
3,710,173

2,364
19,725
2,458
250
1,478
74,59332
64,993
6,653
563
21,410
194,525
45,141

110
18,19062,2498,440
88,991

8
14,91020,151
6,323
41,393

0
181
245
76
503

20,812
42,678
7,790
2,628
73,9092,673,534

713
42,9748,035
182
51,906
3,699,661

8
522
97
2
631
45,013Extraordinary Income:Reversal of allowance for doubtful accounts
Total Extraordinary Income
Extraordinary Loss
Loss on disposal of fixed assets (Note 1)
Loss on changes of system development policy (Note 2)
Total Extraordinary Losses
Income before Income Taxes
Income taxes—current
Income taxes—deferred
Total Income Taxes
Income before Minority Interests
Net Income
Income before Minority Interests
Comprehensive Income

8,126
8,126

—
—

—
—

3,191
—
3,191
2,678,469
966,873
102,684
1,069,557
1,608,911
1,608,911
1,608,911¥ 1,608,911

5,763
1,067,384
1,073,148
2,626,513
1,212,473(64,219)
1,148,253
1,478,259
1,478,259
1,478,259¥ 1,478,259

70
12,986
13,056
31,956
14,752(781)
13,97017,985
17,985
17,985$ 17,985(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interest

1,608,911—

1,478,259—

17,985—The accompanying notes are an integral part of these statements.

Consolidated Statements of Changes in Net Assets (For the years ended March 31, 2011 and 2012)¥ (thousands)

The accompanying notes are an integral part of these statements.

2012

2012

¥ 4,250,000——
4,250,000¥ 4,250,000——
4,250,000$ 51,709——
51,7094,250,000——
4,250,000

4,250,000——
4,250,000

51,709——51,70911,368,062

12,636,974

153,753(340,000)
1,608,911
1,268,911
12,636,974(340,000)
1,478,259
1,138,259
13,775,233(4,136)
17,985
13,849167,602

19,868,062

21,136,974

257,172(340,000)
1,608,911
1,268,911
21,136,974(340,000)
1,478,259
1,138,259
22,275,233(4,136)
17,985
13,849271,021

19,868,062

21,136,974

257,172(340,000)
1,608,911
1,268,911¥ 21,136,974(340,000)
1,478,259
1,138,259¥ 22,275,233(4,136)
17,985
13,849$ 271,021

47

Annual Report 2012

Shareholders’ Equity
Common stock:
Balance at the beginning of current period
Change of items during the period
Total change of items during the period
Balance at the beginning of current period
Capital surplus:
Balance at the beginning of current period
Change of items during the period
Total change of items during the period
Balance at the end of current period
Retained earnings:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period
Total shareholders’ equity:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period
Total net assets:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period$ (thousands)

2011Consolidated
Financial Statements
Consolidated Statements of Cash Flows (For the years ended March 31, 2011 and 2012)¥ (thousands)

48

Annual Report 2012

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for employees’ bonuses
Increase (decrease) in allowance for executives’ bonuses
Increase (decrease) in allowance for employees’ retirement benefits
Increase (decrease) in allowance for executives’ retirement benefits
Interest income
Interest expenses
Equity in loss (earnings) of affiliates
Foreign exchange loss (earnings)
Loss on disposal of property and equipment
Loss on disposal of intangible assets
Loss on changes of system development policy
Decrease (increase) in accounts receivable—trade
Increase (decrease) in accounts payable—trade
OthersSub-totalInterest and dividends received
Interest paid
Income taxes paid
Income taxes paid for prior years
Income taxes refunded
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchase of property and equipment
Payments for purchase of intangible assets
Proceeds from repayment of lease deposits
Payment of lease deposits
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings—net
Repayment of lease obligations
Cash dividends paid
Net Cash Used in Financing Activities
Effect of exchange rate changes on cash and cash equivalents
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (Note 1)
The accompanying notes are an integral part of these statements.

$ (thousands)

2011

2012

2012

¥ 2,678,469
5,725,759(5,664)861(200)
54,610(11,160)(110)
20,812(62,249)
2,607
3,000
190
—
(112,274)(53,305)(372,907)
7,868,440
4,410(22,167)(197,796)(59,016)
233,786
7,827,657¥ 2,626,513
5,341,802(5,655)18,990100
71,970—(8)713(20,151)(1,254)
4,911
852
1,067,384
280,969
79,726
6,104
9,472,968
4,308
(713)
(1,361,122)——
8,115,440$ 31,956
64,993
(68)
231
1
875
—
(0)
8
(245)
(15)
59
10
12,9863,418
970
74
115,25652(8)(16,560)——
98,739(66,637)(1,551,786)
4,128(1,380)(1,615,676)(284,317)(4,191,558)——(4,475,876)(3,459)(50,998)——(54,457)(4,800,000)(21,600)(340,000)(5,161,600)(2,607)
1,047,772
3,468,876¥ 4,516,648—(22,789)(340,000)(362,789)
1,254
3,278,029
4,516,648¥ 7,794,677—(277)(4,136)(4,414)15
39,883
54,953$ 94,837

Note on Going Concern’s Premise
None.

Basis of Preparation of the Consolidated
Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements havebeen compiled from the accounts maintained by Japan
Securities Depository Center, Inc. (“the Company”) and its
subsidiary in accordance with the provisions set forth in the
Financial Instruments and Exchange Act in conformity withaccounting principles and practices generally accepted inJapan, which are different in certain respects as to theapplication and disclosure requirements of International
Financial Reporting Standards.

3. Application of the Equity Method(1)	Number of associated companies accounted for by theequity method: One(2)	Name of the associated company accounted for by theequity method: Tosho System Services Co., Ltd.
(hereafter, “TSS”)(3)	The Company does not have any other associatedcompanies to which the equity method is not applied.
4. Fiscal Year of the Consolidated Subsidiary
The fiscal year-end of the consolidated subsidiary is the samedate as the consolidated balance sheet date.
5. Significant Accounting Policies(1) Depreciation and amortization of major depreciable assets
q Property and equipment (excluding lease assets)	Depreciation for buildings, excluding improvements, iscalculated using the straight-line method. Depreciationfor other property and equipment is calculated using thedeclining-balance method.
		 The major estimated useful lives are as follows:
			 Buildings and structures 3–50 years
			 Tools and furniture 2–15 years

e Leased assets
	The straight-line method is applied to the depreciation ofassets leased under finance leases without ownershiptransfer, over their respective lease term with zero
residual value.
		 The Company accounts for finance leases withoutownership transfer as operating leases if their transactioncommenced before March 31, 2008.
(2) Provision of major allowancesq Allowance for doubtful accounts
	Allowance for doubtful accounts is provided at an
amount determined based on the Company’s historical
average charge-off ratio for ordinary receivables, andestimates of uncollectible amounts determined byreference to specific doubtful receivables from customers
which are experiencing financial difficulties.
w Allowance for employees’ bonuses	Allowance for employees’ bonuses is provided forbonuses attributable to each fiscal year based on theestimated amount of the respective payments.
e Allowance for executives’ bonuses	Allowance for executives’ bonuses is provided forbonuses attributable to each fiscal year based on theestimated amount of the respective payments.
r	Allowance for loss on changes in system development
policies	The allowance is provided, based on the development
contract amount, for expenditures incurred due tochanges in the development policies of the nextgeneration system which was being developed.
t Allowance for employees’ retirement benefits	Allowance for employees’ retirement benefits is provided
at the amount that would be payable by the Company if
all eligible employees voluntarily terminated theiremployment at the balance sheet dates.

49

Annual Report 2012

2. Consolidation
The accounts of all subsidiaries are included in the
consolidated financial statements.
(1) Number of consolidated subsidiaries: One(2)	Name of the consolidated subsidiary: JASDEC DVP
Clearing Corporation (“JDCC”)

w Intangible assets (excluding lease assets)
	Amortization of intangible assets is calculated using thestraight-line method.
		 Costs of software for internal use are capitalized andamortized over an estimated useful life of 5 years.

Consolidated
Financial Statementsy Allowance for executives’ retirement benefits	Allowance for executives’ retirement benefits is provided
at the amount that would be payable by the Company if
all eligible executives terminated their appointment at thebalance sheet dates.
		 As of June 20, 2006, the executives’ retirement benefit
scheme has been abolished. Thus the balance of allowancefor executives’ retirement benefits represents the payableamount for executives who were appointed when thescheme existed, attributable to the period from their
appointment to the date of abolishment of the scheme.
(3)	Scope of cash and cash equivalents for the consolidated
statements of cash flows
	Cash and cash equivalents include cash on hand, deposits
at demand, and short-term investments with a maturityof three months or less carrying insignificant risk of any
fluctuation in market value.
50(4) Consumption taxes
	Consumption taxes are excluded from income or expenses.

Annual Report 2012

6. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of ¥82.19=US$1, the rate of exchange as of March 31, 2012 has been usedin translation. The inclusion of such amounts is not intended
to imply that Japanese yen have been or could be readily
converted, realized or settled in U.S. dollars at this or any
other rate.

Accounting Changes
None.

Accounting Standards Applicable after theConsolidated Balance Sheet Date
None.

Changes in Presentation
None.

Changes in Accounting Estimates
None.

Additional Information
For the accounting changes and corrections of prior period
errors that are made on or after April 1, 2011, the Company
has applied the Accounting Standard for Accounting
Changes and Error Corrections (Accounting Standard Boardof Japan Statement No. 24, December 4, 2009) and the
Guidance on Accounting Standard for Accounting Changes
and Error Corrections (Accounting Standard Board of Japan
Guidance No. 24, December 4, 2009).

Notes to the Consolidated Financial Statements[Notes to the Consolidated Balance Sheets]
1. Assets and Liabilities Held forSound Settlement System Operation and Management
In order to secure the Delivery Versus Payment (“DVP”) for
Non-Exchange Transaction Deliveries (“NETDs”) settlement
system, JDCC, a consolidated subsidiary of the Company,
receives cash or securities as collateral from the DVP
participants whom JDCC officially acknowledge as parties
who undertake securities obligations in accordance with theprovisions set forth in JDCC’s general provisions inaccordance with Article 156, Paragraph 7-1, of the Financial
Instruments and Exchange Act (Law No. 25, 1948).
JDCC manages cash and securities entrusted by the DVP
participants as clearing funds defined in Article 156-11 of the
Financial Instruments and Exchange Act separately fromother assets in accordance with JDCC’s general provisions
and Article 7 of the Cabinet Office Ordinance on Financial
Instruments Clearing Organization (Cabinet Office
Ordinance No. 76, 2002).
(1)	Participant fund specified assets and participant funds
under management
	Under the DVP for NETDs settlement system, when
JDCC accepts DVP participants’ obligations tocounterparties, the DVP participants involved in thetransactions shall assume the same obligations to JDCC.
		 JDCC requires each DVP participant to establish aparticipant fund in excess of the minimum amount set
forth in JDCC’s general provisions to ensure that therespective obligations of DVP participants are covered.

(The aggregate amount of minimum participant funds
required by JDCC’s general provisions as of March 31,
2012 was ¥15,000,000 thousand ($182,503 thousand)).
In the event a DVP participant defaults on the required
payment obligations of the DVP for the NETDs
settlement system, JDCC shall take deposits from theparticipant fund of this DVP participant to fulfill its
obligations to other DVP participants.
		 The participant funds entrusted to JDCC will be
managed as money trusts, in line with the stated generalprovisions of JDCC.
		 These money trusts are evaluated at cost, as availablefor-sale securities with no market value.
		 Assets and liabilities pertaining to participant funds
are presented as Designated assets for clearing assets andDeposits received for clearing funds, respectively.

The market value of collateral securities entrusted to JDCC
as of March 31, 2011 and 2012 was as follows:¥ (thousands)

2011

2012

2. Accounts Relating to the Associated Company
Accounts and their amounts relating to the associatedcompany were as follows:¥ (thousands)
As of March 31

Investment securities(shares)

2011

2012

Aggregate maximum
amount of overdraft and ¥ 52,000,000 ¥ 52,000,000
commitment line amounts
Amount used——
Unused balance¥ 52,000,000 ¥ 52,000,000$ (thousands)

2012$632,680—$632,680[Notes to the Consolidated Statements of Income andComprehensive Income]1. Loss on Disposal of Noncurrent Assets
The following table shows details of loss on disposal of
noncurrent assets:¥ (thousands)
For the years ended March 31

Buildings and structures
Tools and furniture
Software
Total

2011
¥ 1,633
1,367
190¥ 3,191

2012
¥ 894
4,016
852
¥ 5,763$ (thousands)

2012
$ 10
48
10
$ 70

$ (thousands)

2012
Market value of collateral¥ 84,977,948 ¥ 91,472,213 $ 1,112,936
securities entrusted to JDCC
As of March 31¥ (thousands)
As of March 31$ (thousands)

2011

2012

2012

¥ 414,128¥ 429,980$ 5,231

2. Loss on Changes in System Development Policies
The amount represents the loss incurred due to changes inthe development policies of the next-generation system
which was being developed.

51

Annual Report 2012

(2) Collateral securities	Under the DVP for NETDs settlement system, DVP
participants are able to entrust marketable securities
listed in JDCC’s general provisions (“collateral
securities”) to ensure that obligations to JDCC are met.
		 When a DVP participant fails to meet its obligations
to JDCC, JDCC is authorized to dispose of the entrusted
collateral securities by selling them in securities markets
or through other methods deemed appropriate by JDCC.

3. Overdraft Contracts and Commitment Line Agreements
To ensure agile and stable fundraising, the Company has
concluded overdraft contracts with four banks. To prepare
for a possible deficiency of funds due to a default by DVP
participants, JDCC has concluded commitment line
agreements with three banks, as part of a liquid fund forcompleting fund settlement on the required day. The unusedbalances of these overdraft contracts and commitment line
agreements were summarized as follows:Consolidated
Financial Statements[Notes to the Consolidated Statements of Changes in Net Assets]
For the year ended March 31, 2011
1. Outstanding SharesClass of Share

Ordinary shares

March 31, 2010

Increase

Decrease

March 31, 2011

8,500

—

—

8,500

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000¥40,000

2. Treasury Stock
Not applicable.
3. Stock Subscription Rights and Other Securities
Not applicable.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders Meeting (June 21, 2010)

52

Record Date

Effective Date

March 31, 2010 June 22, 2010(2)	Dividends for which the record date is in the year ended March 31, 2011 and for which the effective date is in the year ended
March 31, 2012

Annual Report 2012

Resolution

Ordinary General
Shareholders Meeting (June 20, 2011)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000¥40,000

March 31, 2011

Increase

Decrease

March 31, 2012

8,500

—

—

8,500

Record Date

Effective Date

March 31, 2011 June 21, 2011

For the year ended March 31, 2012
1. Outstanding SharesClass of Share

Ordinary shares

2. Treasury Stock
Not applicable.
3. Stock Subscription Rights and Other Securities
Not applicable.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders Meeting (June 20, 2011)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000($4,136 thousand)¥40,000($486)

Record Date

Effective Date

March 31, 2011 June 21, 2011(2)	Dividends for which the record date is in the year ended March 31, 2012 and for which the effective date is in the year ending
March 31, 2013
Resolution

Ordinary General
Shareholders Meeting (June 18, 2012)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000($4,136 thousand)¥40,000($486)

Record Date

Effective Date

March 31, 2012 June 19, 2012

[Notes to the Consolidated Statements of Cash Flows](2) Minimum lease payment including interest thereon

1. The Balance of Cash and Cash Equivalents and Its
Reconciliation to the Balance of Cash and Deposits in theConsolidated Balance Sheets

As of March 31

As of March 31

Cash and deposits
Cash and cash equivalents¥ (thousands)$ (thousands)

2011
2012
¥ 4,516,648 ¥ 7,794,677
4,516,648 7,794,677

2012$ 94,837
94,837¥ (thousands)

Due within one year
Due over one year
Total

2011
¥ 423,950
218,847¥ 642,797

2012¥ 218,847—¥ 218,847¥ (thousands)[Lease Transactions]1. Finance Lease Transactions
Finance lease transactions that do not transfer the ownershipof the leased assets to the lesseeq Leased assetsa) P roperty and equipment: Mainly backup system
hardwareb) Intangible assets: Mainly backup system software

Finance lease charges
Depreciation expenses
Interest portions(1)	Acquisition cost, accumulated depreciation and net
book value¥ (thousands)
As of March 31

2011

2012

Tools and furniture:
Acquisition cost
¥ 1,882,666 ¥ 1,882,666
Accumulated depreciation (1,311,729) (1,688,262)
Net book value¥ 570,936 ¥ 194,403
Software:Acquisition cost
¥ 216,774 ¥ 216,774
Accumulated depreciation(151,739) (195,094)
Net book value¥ 65,034 ¥ 21,679
Total:¥ 2,099,440 ¥ 2,099,440
Acquisition cost
Accumulated depreciation (1,463,468) (1,883,356)
Net book value¥ 635,971 ¥ 216,083$ (thousands)

2012$ 22,906(20,540)$ 2,365$ 2,637(2,373)$263$ 25,543(22,914)$ 2,6292011¥ 426,663
419,887
5,359

2012¥ 426,663
419,887
2,713$ (thousands)

2012$ 5,1915,10833(4)	Methods applied in calculating depreciation expenses andinterest portions
	Methods applied in calculating depreciation expenses:
Straight-line method with zero residual value over thelease contract period.
		 Methods applied in calculating interest portions:
Computed as the difference between the lease obligations
and the acquisition cost equivalents, allocated over therespective lease term based on the interest rate method.
Loss on impairment of leased assets
There was no impairment loss allocated to leased assets forthe years ended March 31, 2011 and 2012.
2. Operating Lease Transactions
Minimum lease payment on the operating lease transactions
that are not cancellable
None.

53

Annual Report 2012

Finance lease transactions other than those in which theownership of the leased assets is transferred to the lessee thatcommenced before March 31, 2008 continue to be accounted
for as operating lease transactions. The followings are theamounts which would have been recorded as finance leases
as of March 31, 2011 and 2012 and for the years then ended:2012$ 2,662—$ 2,662(3)	Finance lease charges, depreciation expenses andinterest portions
For the years ended March 31

w Depreciation method
	As described in Basis of Preparation of Consolidated
Financial Statements, 5. Significant Accounting
Policies, (1) Depreciation and amortization of major
depreciable assets.

$ (thousands)

Consolidated
Financial Statements[Fair Value Measurements for Financial Instruments]
1. General Information on Financial Instruments(1) Basic policies for financial instruments
	The Company limits financial investment to short-term deposits, and fund raising to borrowings from banks and others.
(2)	Details and risks of financial instruments and the risk control system	Accounts receivable-trade are subject to credit risks of participants in the book-entry transfer system. The Company
continuously monitors the financial conditions of the participants.
		 Designated assets and deposits received for clearing funds are assets and liabilities that are held to secure the DVP for
NETDs settlement system.
		 Most of the accounts payable—trade are due within 3 months.
2. Estimated Fair Value of Financial Instruments
The following table presents carrying amount on the balance sheet, fair value and difference between carrying amount and fairvalue as of March 31, 2011 and 2012. It does not, however, include those for financial instruments for which the fair value isextremely difficult to estimate (see Note 2).
For the year ended March 31, 2011
¥ (thousands)

54

Carrying amounton the balance sheet

Annual Report 2012

(1) Cash and deposits(2) Accounts receivable—trade
Allowance for doubtful accounts*(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds
Liabilities total¥

4,516,648
3,443,641(7,021)
3,436,620
33,530,047¥ 41,483,315¥(769,998)(33,530,047)¥ (34,300,045)

Fair value¥

Difference

4,516,648—

3,436,620
33,530,047¥ 41,483,315¥(769,998)(33,530,047)¥ (34,300,045)

—
—
—
—
—
—

*Allowance for doubtful accounts is deducted from Accounts receivable-trade.

For the year ended March 31, 2012
¥ (thousand)$ (thousand)¥ (thousand)Carrying amount on the balance sheet(1) Cash and deposits(2) Accounts receivable—trade
Allowance for doubtful accounts *(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds
Liabilities total¥

7,794,677
3,163,166(1,845)
3,161,320
35,293,686¥ 46,249,684¥ (849,724)(35,293,686)¥ (36,143,410)* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

$

94,83738,486(22)
38,463
429,415$ 562,716$ (10,338)(429,415)$ (439,754)$ (thousand)Fair value¥

7,794,677

3,161,320
35,293,686¥ 46,249,684¥ (849,724)(35,293,686)¥ (36,143,410)$

Difference

94,837—38,463
429,415$ 562,716$ (10,338)(429,415)$ (439,754)

—
—
—
—
—
—

Notes:
1. Calculation methods for fair value of financial instruments(1) Cash and deposits, (2) Accounts receivable—trade, and(4) Accounts payable—trade:	The book value was deemed to be fair value for these
items since the book value approximates fair value
because of the short settlement period.
(3) Designated assets for clearing funds, and(5) Deposits received for clearing funds:
	The book value was deemed to be fair value since these
items represent assets and liabilities reflecting their roles
in maintaining a stable securities trading environment for
the DVP for NETDs settlement system.
2. Financial instruments, the fair value of which is extremely
difficult to estimate(As of March 31)
Category

Affiliated companies’ stocks¥ (thousands)

2011¥ 414,1282012¥ 429,980$ (thousands)

2012$ 5,231

3. Net Periodic Benefit Costs(Years ended March 31)
Category

Service cost
Other *Net periodic benefit costs¥ (thousands)

2011¥ 58,002
44,319¥ 102,322$ (thousands)

2012¥ 74,157
47,356¥ 121,514* “Other” represents the amount of contribution to the defined contribution
pension plan.

4. Actuarial Assumptions
Not applicable.

[Stock Options]Not applicable.

[Income Taxes]
1. Breakdown of Deferred Tax Assets¥ (thousands)

3. Estimated redemptions for monetary claims and securities
with maturities after the consolidated balance sheet date
All deposits and accounts receivable—trade in the abovetable have settlement dates within one year.

[Securities]
Not applicable.

[Derivative Transactions]
The Company and its consolidated subsidiary did not engage
in derivative transactions.

[Allowance for Employees’ Retirement Benefits]
1. Outline of Retirement Benefit Schemes Adopted
The Company and its subsidiary adopt a lump-sum retirement
allowance scheme and a defined contribution pension plan.
2. Retirement Benefit Obligation(As of March 31)
Category

Retirement benefit obligation
Allowance for employees’
retirement benefits¥ (thousands)$ (thousands)

2011¥ 311,333

2012¥ 383,304

2012$ 4,663¥ 311,333¥ 383,304$ 4,663

As of March 31

2011

Deferred tax assets—current:
Accrued business tax¥ 71,133
Allowance for
74,337
employees’ bonuses
Business facility taxes
4,131
Accrued social
10,100insurance premiums$ (thousands)

2012¥ 56,458$

686

76,813

934

3,961

48

10,513

127—

266,295

3,239

888
Other
Subtotal¥ 160,592
Deferred tax assets—
non-current:
Allowance for employees’
126,401
retirement benefits
Allowance for executives’
12,180retirement benefits
Excess depreciation of
470,774
noncurrent assets
Excess amortization ofdeferred charges for
1,657
tax purposes
Other—(12,180)
Valuation allowance
Subtotal¥ 598,833
Total deferred tax assets ¥ 759,425

2,146¥ 416,189

26$ 5,063

136,609

1,662

10,692

130

257,231

3,129

9,839

119

3,776
(10,692)¥ 407,456¥ 823,645

45(130)$ 4,957$ 10,021

Allowance for loss onchanges in systemdevelopment policies

55

2012
Annual Report 2012

These financial instruments are excluded from the abovetable because their market quotes are not available thus theirfair value is deemed to be extremely difficult to estimate.

2012
$ 902
576
$ 1,478

Consolidated
Financial Statements
2. Reconciliation between the nominal statutory income tax
rate and the effective income taxes rate
The effective tax rate for the year ended March 31, 2012
differs from the Company’s statutory tax rate for thefollowing reasons:
For the years ended March 31

Statutory tax rate
(Reconciliation)
Entertainment expenses and otheritems not deductible permanently
Inhabitants’ per capita taxes
Other
Reduction of deferred tax assets due tochanges in statutory tax rate
Effective tax rates

2011
—
—

2012
40.7%

—

0.6

—
—

0.2
(0.3)

—

2.5

—

43.7%

Note: T he reconciliation of the difference between the statutory tax rate and theeffective tax rate for the year ended March 31, 2011 is not presented becausesuch difference did not exceed 5% of the statutory tax rate.

56

Annual Report 2012

3. Adjustment of Deferred Tax Assets Following the Change
in the Statutory Tax Rates
The “Act for Partial Revision of the Income Tax Act, etc. for
the Purpose of Creating Taxation System Responding toChanges in Economic and Social Structures” (Law No. 114,
2011) and the “Act on Special Measures for Securing
Financial Resources Necessary to Implement Measures for
Reconstruction following the Great East Japan Earthquake”(Law No. 117, 2011) were promulgated on December 2,
2011. As a result, the statutory tax rates will be lowered, while
the special corporate tax for reconstruction will be levied,from the consolidated fiscal year beginning on or after April
1, 2012. Accordingly, the statutory tax rate for calculating
deferred tax assets will be changed from 40.7% to 38.0% withregard to temporary differences that are expected to berealized on or after April 1, 2012 and before April 1, 2015. It
will also be changed to 35.6% with regard to temporary
differences that are expected to be eliminated on or after
April 1, 2015.
As result of these changes, net deferred tax assets
recorded in the fiscal year ended March 31, 2012 decreasedby ¥66,060 thousand ($803 thousand), while income taxesdeferred increased by the same amount.

[Business Combinations]
None.

[Asset Retirement Obligations]
None.

[Investment and Rental Property]
None.

[Segment Information]
Segment Information
The Company and its subsidiary have one business segmentof Book-entry Transfer of Securities, therefore omitted thesegment information.
Related Information
For the year ended March 31, 2011
1. Information by Product or Service
The Company omitted information by product or service
because operating revenues from external customers in one
business product or service exceeded 90% of total operating
revenues recorded in consolidated statements of income andcomprehensive income.
2. Information on Geographic Areas(1) Operating revenues	Disclosure is omitted because the Company had no
operating revenues from external customers in overseas.
(2) Property and equipment
	Disclosure is omitted because the Company had noproperty and equipment in overseas.
3. Information by Major Customers
Name of the customers

Operating revenues¥ (thousands)

Related segment

Japan Securities
Clearing Corporation¥2,195,894

Book-entry Transfer
of Securities

For the year ended March 31, 2012
1. Information by Product or Service
The Company omitted information by product or service
because operating revenues from external customers in one
business product or service exceeded 90% of total operating
revenues recorded in consolidated statements of income andcomprehensive income.
2. Information on Geographic Areas(1) Operating revenues	Disclosure is omitted because the Company had no
operating revenues from external customers in overseas.
(2) Property and equipment
	Disclosure is omitted because the Company had noproperty and equipment in overseas.

3. Information by Major Customers
Name of the customers

Operating revenues¥ (thousands) $ (thousands)

Japan Securities¥2,163,412
Clearing Corporation$26,322

Related segment

Book-entry Transfer
of Securities

Disclosure of Information on Impairment Loss on Noncurrent Assets by Reportable Segment
None.
Disclosure of Information on Amortization and Year-end Balance of Goodwill by Reportable Segment
None.
Disclosure of Information on Gain on Negative Goodwill by Reportable Segment
None.

Related Party Information
1. Transactions with Related Parties(1)	Transactions between the Company and the related partiesa) Unconsolidated subsidiaries and associated companies
For the year ended March 31, 2011
Names ofcompanies

Address

Capital¥ (thousands)

Principal
business

Percentage ofownership withvoting right

Tosho
Design and
Associated System Chuo-ku,¥100,000 development
company Service Tokyoof software
Co. Ltd.

20%
directly
held

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment of
Accounts
Purchasing
computer¥1,960,369¥173,220
payable—trade
software and maintenance fee
systemOther current
maintenance Purchase of¥373,488¥26,132
softwareliabilities

For the year ended March 31, 2012Type

Names ofcompanies

Address

Capital¥ (thousands)

Principal
business

Percentage ofownership withvoting right

Tosho¥100,000 Design and
Associated System Chuo-ku,($1,216 development
company Service Tokyo
thousand) of software
Co. Ltd.

20%
directly
held

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment of¥1,777,388¥145,541
Accounts
computer($21,625($1,770
Purchasing
payable—trade
thousand)software and maintenance fee thousand)system¥1,376,281¥170,247
Other current
maintenance Purchase of($16,745($2,071
softwareliabilities
thousand)thousand)b) Corporations that share the same parent company with the Company, subsidiaries of other affiliated companies of theCompany, and others
For the year ended March 31, 2011Type

Names ofcompanies

Address

Capital¥ (thousands)

Percentage ofPrincipal
ownership withbusinessvoting right

SubsidiaryJapanof other
Securities Chuo-ku,
Clearing¥2,600,000
affiliatedClearingTokyo
securities
companies Corporation—

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Commission Commission
Accounts¥2,195,894¥304,962
incomeincomereceivable—trade

Annual Report 2012

Type

57

Consolidated
Financial Statements
For the year ended March 31, 2012Type

Names ofcompanies

Address

Capital¥ (thousands)

Percentage ofPrincipal
ownership withbusinessvoting right

SubsidiaryJapan¥4,850,000
of other
Securities Chuo-ku,
Clearing($59,009
affiliatedClearingTokyo
securities
thousand)companies Corporation—

BusinessrelationshipTransactions

Commission Commission
incomeincomeAmount¥ (thousands)

Descriptions¥2,163,412¥255,871
Accounts($26,322($3,113
receivable—trade
thousand)thousand)

Notes: 1. The transaction amounts in a) and b) above exclude consumption taxes. However, end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.

(2)	Transactions between consolidated subsidiary of the Company and the related parties
None.
2. Notes on the Parent Company and Important Affiliated Companies
None.

[Special Purpose Entities Subject to Disclosure]
None.
58

[Per Share Information]
Annual Report 2012

As of years ended March 31

Net assets per share
Net income per share

¥

$

2011
2012
¥ 2,486,702.88 ¥ 2,620,615.75¥ 189,283.71 ¥ 173,912.87

2012$ 31,884.84$ 2,115.98

Notes:
1. Diluted net income per share is not presented because no shares with potential dilutive effect were outstanding.
2. The basis for calculating net assets per share as of March 31, 2011 and 2012 is as follows:¥ (thousands)
As of years ended March 31

Total net assets as reported in the consolidated balance sheets
Amount to be deducted from total net assets
Net assets pertaining to common stock shareholders
Number of common stock shares outstanding as of the consolidatedbalance sheet dates used to calculate net assets per share (in shares)$ (thousands)

2011¥ 21,136,974—¥ 21,136,974

2012¥ 22,275,233—¥ 22,275,233

2012$ 271,021—$ 271,021

8,500

8,500

—

3. The basis for calculating net income per share for the years ended March 31, 2011 and 2012 is as follows:¥ (thousands)
As of years ended March 31

Net income as reported in the consolidated statements of income
Net income not pertaining to common stock shareholders
Net income pertaining to common stock shareholders
Weighted-average number ofcommon stock shares outstanding during the period (in shares)[Subsequent Events]
None.

Balance at
end of period¥ (thousands)$ (thousands)

2011¥ 1,608,911—¥ 1,608,911

2012¥ 1,478,259—¥ 1,478,259

2012$ 17,985—$ 17,985

8,500

8,500

—

Independent
Auditor’s Report59

Annual Report 2012

History

1984

Relevant
Legislation

1985

1991

1992

2000

2001

2002

May 15thJune 27th

Law Concerning Central Securities
Depository and Book-Entry Transfer ofStock Certificates and Other Securities(CSD Law) was promulgated (effective
on November 14th)

The Law for Partial Amendments to the Law Concerning Central Securities
Depository and Book-Entry Transfer of Stock Certificates and Other Securities
as well as the Act on Transfer of Short-term Bonds, etc. were promulgated(fully effective on April 1st, 2002)

June 12th
The Act on Improvements, etc., of the Laws Related to the Improvements of the Securities Market
through a Reform of the Securities Settlement System, etc. was promulgated (the Act on Transfer
of Short-term Bonds, etc. was amended to the Act on Transfer of Bonds, etc. The Securities andExchange Act was amended upon the establishment of the clearing organization system)

Dec. 6th

Organization of
JASDEC and
its Subsidiary

May 27th

Japan Securities
JASDEC was designated as
Depository Center the depository organization(JASDEC), wasunder the CSD Law
established as afoundation

Nov. 2nd

Jan. 4th

Detailed plan forconversion of
JASDEC to a
joint-stock company
was announced

Japan Securities
Depository Center,
Inc. was established

June 17th
Japan Securities Depository Center, Inc.
took over all depository and book-entry
transfer operations from the JASDEC
Foundation, which was dissolved

60

Annual Report 2012

Sept. 10th

Operation of
the System

Social Contribution
JASDEC operates a Social Contribution Selection Committee toselect the company’s CSR activities, and has provided support in
the following areas.

Pre-Settlement Matching System (PSMS)
started

Oct. 9th

Oct. 9th

Nov. 26th

Depository and book-entry
transfer business started(initially for 50 listed
stocks on the TSE)

Full-scale depository andbook-entry transfer
business started

Handling of convertible bonds started

Oct. 9th

May 8th

May 1stComputer system fordepository and book-entry
transfer began operation

New depository andbook-entry transfer
system launched

JASDEC launched proprietarysystem for DVP settlement of
exchange trades

Environmental protection

Social welfare

JASDEC supported “Suigen Shinrin
Tsukuri,” a movement operated by
Kanagawa Prefecture to maintain thehealth and vitality of forestry around ourwater catchment areas.

JASDEC contributed to the Japan Guide
Dog Association, supporting its aim of
reducing the waiting time forpeople who require a guide dog fromseveral years to within one year.

2003

2004

2005

2006

2007

2008

2009

2010

June 9th

Jan. 5th

The Law for Partial Amendments to the Act on
Transfer of Bonds, etc. for the Purpose of
Streamlining the Settlement for Trades ofStocks and Other Securities (Securities Trade
Settlement Streamlining Law) was promulgated

The Securities Trade Settlement Streamlining
Law was enacted (the Act on Transfer ofBonds, etc. was amended to the Act on
Transfer of Bonds, Shares, etc.), and the Law
Concerning Central Securities Depository
and Book-Entry Transfer of Stock Certificatesand Other Securities was abolished

2011

Jan. 10th
JASDEC received official designation as
Book-Entry Transfer Institution under
the stipulations of the Act on Transfer
of Bonds, etc.

June 6th

April 6th

JASDEC DVP
Clearing Corporation (JDCC) wasestablishedJDCC obtained a license for securities
obligation assumption business to act
as a clearing organization in line with
the Securities and Exchange Act

61

Jan. 10th

JASDEC inaugurated Short-Term Corporate Bonds(Commercial Paper) Book-entry Transfer System

JASDEC inaugurated Book-entry Transfer
System for Corporate Bonds

May 17th

Jan. 4th

DVP settlement system for Non-Exchange
Transaction Deliveries (NETDs) started

JASDEC inaugurated Bookentry Transfer System for
Investment Trusts

Feb. 14th

Annual Report 2012

March 31st

JGB repo and gensaki (transactions
with repurchase agreement) wereadded to the list of targets of PSMS

May 1stJan. 4th

Jan. 5th

July 1st

JASDEC inaugurated
Custody services for
Foreign Stocks

JASDEC inaugurated Book-entry
Transfer System for
Investment Trusts
listed on the stock
exchanges, i.e. for
Exchange-Traded
Funds (ETFs).

JASDEC inaugurated Book-entry
Transfer System for
Stocks, etc.

JASDEC inaugurated
Japanese Depository
Receipts in Book-entry
Transfer System for
Stocks, etc.

Jan. 4th
JASDEC launched Securities
Information Tracing System(SITRAS) for lost stocks

Jan. 4th

Operations of SITRAS
were terminatedMedical careInternational cooperation

Charity events

JASDEC contributes to the Children’s
Cancer Association of Japan, an organization that supports children with cancer,
provides grants for child cancer research,and conducts educational campaigns.

JASDEC provided support to Médecins
Sans Frontières Japan, an organizationthat primarily provides emergency medicalcare to people in distress.

JASDEC participated in the FIT Charity
Run, an event which contributes to society
by bringing together financial service companies to donate to worthy organizations
that, due to lack of public awareness ofother reasons, have insufficient funding.

Corporate Data
(As of March 31, 2012)

Profile of the company

62

Corporate NameJapan Securities Depository Center, Incorporated

Registered Office Address

1-1 Nihombashi-Kayaba-cho, 2-chome, Chuo-ku, Tokyo, Japan

Established

January 4, 2002

Representative

President and CEO Haruhiko Kato

Major Businesses(1) Book-entry transfer for stocks, etc.
(2) Book-entry transfer for commercial paper(3) Book-entry transfer for corporate bonds(4) Book-entry transfer for investment trusts(5) DVP settlement services for NETDs(6) Pre-settlement matching system(7) Custody services for foreign stocks, etc.
(8) Other businesses

Operational Office

Tokyo

Consolidated Subsidiary

JASDEC DVP Clearing Corporation (Chuo-ku, Tokyo)

Number of Employees

222

Annual Report 2012

Board Members and Auditors (As of June 29, 2012)
Chairman

Yoshinobu Takeuchi
President & CEO

Haruhiko KatoManaging Director

Seikichi Ihara
Managing Director

Yoshinori Seyama
Managing Director

Munetaka Saito
DirectorMoriyuki Iwanaga
Executive Officer,
Tokyo Stock Exchange, Inc.

Director

Akira Uchida
Senior Vice President (Member of the Board)
Toray Industries, Inc.

Director

Masakazu Kubota
Senior Managing Director,
KEIDANREN (Japan Business Federation)

Director

Director

Ritsuro Koza

Masayuki Hoshi

Senior Managing Director,
Nomura Securities Co., Ltd.

Managing Executive Officer,
Mizuho Corporate Bank, Ltd.

Director

Director

Masahiko Koyanagi

Shigeyuki Maeda

Executive Director,
Japan Securities Dealers Association

Professor of Law,
Professional School of Law (Law school),
Gakushuin University

Director

Yasushi Tachihara
Executive Officer,
SMBC Nikko Securities Inc.

Director

Ayumi Tomoda
Operations Head,
Citigroup Global Markets Japan Inc.

Director

Masahisa Nakagawa
Senior Managing Director,
Daiwa Securities Co. Ltd.

Director

Director

Kanetsugu Mike
Managing Director, Chief Executive,
Information Systems & Operations
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Director

Kaoru Wachi
Deputy President,
Mitsubishi UFJ Trust and Banking Corporation

Standing Auditor

Hiroshi Kitta
AuditorKunihisa Hama

Kenzo Ohara

LawyerSenior Executive Officer,
Tokai Tokyo Securities Co., Ltd.

Director

Hideki Hiraki
Managing Executive Officer,
Sumitomo Mitsui Trust Bank, Limited

Auditor

Masaki Tachibana
Managing Director,
Sumitomo Mitsui Banking Corporation

Profile
SharesMajor shareholders
Number of
Stake inshares held Company (%)

Total shares approved for issue

10,000Total issued shares

8,500

Tokyo Stock Exchange Group, Inc.

1,930

22.70

Japan Securities Dealers Association

1,050

12.35

Nomura Holdings, Inc.

485

5.70

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

425

5.00

Mizuho Corporate Bank, Ltd.

425

5.00

and by continually implementing reforms and innovations based on the

Mitsubishi UFJ Trust and Banking Corporation

424

4.98

perspectives of investors, issuers, market intermediaries and other users.

Trust & Custody Services Bank, Ltd.

340

4.00

Citigroup Global Markets Japan Inc.

321

3.77

Japan Trustee Services Bank, Ltd.

320

3.76

Daiwa Securities Capital Markets Co. Ltd.

230

2.70

JASDEC is determined to maintain high standards of reliability,
usability and efficiency in its settlement infrastructure by monitoring

Paid-in capital¥4,250,000,000

environmental and structural changes affecting capital markets in Japan

Shareholders

149

and overseas, by ensuring that its systems and services operate reliably,

63

Organization structure

Our Business2

Management Message

4

Corporate Governance8

Business Continuity Plan of JASDEC

10Business Overview

11

01 Book-Entry Transfer System for Stocks, etc.

1202	Book-Entry Transfer System forCommercial Paper and Corporate Bonds

16

03 Book-Entry Transfer System for Investment Trusts

22

04 DVP Settlement System for NETDs

26

05 Pre-Settlement Matching System (PSMS)

30

06 Custody Services for Foreign Stock Certificates, etc.

34

International Relationships

38

Analysis of Business Performance and Financial Results

42

Consolidated Financial Statements

44

Independent Auditor’s Report

59

History

60

Corporate Data

62

Meeting of
Shareholders

Board ofDirectors
Board of Auditors
Auditors Office

President &CEO

Compliance Office
General Administration Department
Corporate Planning Department
Equity Department
Shareholders Notification Office
Fixed Income and Investment Trust Department
International Department
Post–trade Services Department
Information Services Department
First Systems Department
Second Systems Department

Annual Report 2012

Contents

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Annual Report 2012

Reliability
withInnovation
Annual Report 2012