Moving
ForwardAnnual Report 2014

Annual Report 2014

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/

Shares
Total shares approved for issue

10,000Total issued shares

8,500

Paid-in capital¥4,250,000,000

Shareholders

129

Number of
Stake inshares held Company (%)

Japan Exchange Group, Inc.

2,073

24.38

Japan Securities Dealers Association

1,067

12.55

Nomura Holdings, Inc.

485

5.70

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

425

5.00

Mizuho Bank, Ltd.

425

5.00

Mitsubishi UFJ Trust andBanking Corporation

424

4.98

Daiwa Securities Co. Ltd.

360

4.23

Trust & Custody Services Bank, Ltd.

340

4.00

Citigroup Global Markets Japan Inc.

321

3.77

Japan Trustee Services Bank, Ltd.

320

3.76

Organization structure
Meeting of
Shareholders

Board ofDirectors

President &CEOInternal Audit Office
Corporate Administration Group

Audit & Supervisory Board
Audit & Supervisory Board
Member’s Office

General Administration Department
Risk Management Department
Corporate Strategy Group

Corporate Strategy Department
Office of International Research and Relations
IT Strategy Department
Business Operations Group

Equity Department
Shareholders Notification Office
Fixed Income and Investment Trust Department
Post–trade Services Department
IT System Group

System Development Department
System Services Department

67
Annual Report 2014

Helping to Smooththe Operation ofJapan’s Capital Markets

Major shareholders

Profile

Contents
Our Priorities	

02

JASDEC is a central securities depository in Japan designated under the Act on

Our Commitment	

04

Transfer of Bonds, Shares, etc. JASDEC was established as a not-for-profit foundation

Our Vision06

in 1984 and incorporated as a stock company in 2002.

Management Message

08

Corporate Governance

12

In Jan. 2009, JASDEC accomplished dematerialization of stock certificates issued
by all listed companies. With this step, new Book-entry Transfer System for stocks,

Business Continuity Plan 15

corporate bonds and other securities has been fully established. JASDEC also provides

Business Overview	

17

pre-settlement matching system. JASDEC DVP Clearing Corporation, wholly owned byInternational
RelationsHIPS

38

Analysis of Business
Performance andFinancial Results	

42

JASDEC, operates DVP settlement system for non-exchange transaction deliveries.
JASDEC is determined to maintain high standards of reliability, usability andefficiency in its settlement infrastructure by monitoring environmental and structuralchanges affecting capital markets in Japan and overseas, by ensuring that its systems
and services operate reliably, and by continually implementing reforms and innovations
based on the perspectives of investors, issuers, market intermediaries and other users.

At a Glance

Consolidated Financial
Statements	44
Independent Auditor’sReport	62
History64

Corporate Data	

66

FY2012FY2013773 trillion¥

Total Account Balance¥

Number of Issues Handled

73,314

Number of Transactions

86.0 million

Number of Transactions per Day

351 thousand

838
70,835104.3
424
trillion

millionthousandOur PRIORITIES

Reliability
By providing highly reliable services, JASDEC aims to contribute to
growth and development on behalf of investors, issuers and market
intermediaries in financial and capital markets, while reducing therisks and costs associated with the settlement and management of
securities.

02
Annual Report 2014

Convenience
JASDEC has continually improved its systems for the user’s convenience, including
the implementation of Straight Through Processing (STP) at all stages from trading tosettlement and the introduction of Delivery Versus Payment (DVP) settlement. We aredetermined to achieve further improvements in convenience by providing services from theuser’s perspective.

Efficiency
JASDEC’s efforts to provide efficient and reliable services have included the progressive
dematerialization of securities, starting with short-term bonds in 2003. In 2009, weconcluded with the dematerialization of stock certificates. We will continue our efforts toimprove the efficiency of various aspects of users’ administrative processes and securities
settlement systems.

Working hard to assure the high reliabilityof processes from securities trading
to settlement

Our Commitment

Cutting
Edge
Five years after the dematerialization of stocks, JASDEC upgradedto a new state-of-the-art system in January 2014. In addition tostrengthening our systems infrastructure, this move coincided with theaddition of new services, such as DVP settlement for stock lendingtransactions. We will continue to maintain and enhance our systems
while exploring options for the next-generation system.

04
Annual Report 2014

Strengthening Foundation
JASDEC is working to enhance the robustness of its business infrastructure and contributeto market development and the reduction of risks through efforts in three areas. First, weare strengthening our organizational structures. Second, we are reinforcing our systems
infrastructure. And third, we are enhancing our business continuity plan. We will continue
to improve the quality of our operational base as vital settlement infrastructure for financial
and capital markets.

Ensuring BusinessContinuity
JASDEC is determined to ensure that its operations can be restored quickly in the eventof a disaster or system failure and remains committed to the ongoing improvement of its
business continuity systems.

Improving business infrastructure andreducing risk by retaining the latest
cutting-edge systems

Our VisionServe
markets
JASDEC is continually pursuing global best practice for settlement
systems and has worked quickly and flexibly to enhance its operations
with the aim of providing world-standard services. We will continue
to contribute to the sound development of financial and capital
markets worldwide while also reliably fulfilling our role as settlement
infrastructure for financial and capital markets in Japan.

06
Annual Report 2014

global standards
We are working to improve market functions, including the application of international
standards to communication systems used in securities settlements in Japan. JASDEC
also supports efforts to vitalize Japan’s financial and capital markets. We cooperate closelywith institutions and supervisory agencies on initiatives to develop and vitalize financial andcapital markets in Japan.

International Cooperation
There is a global trend toward cross-border financial and capital transactions. JASDEC hassigned memorandums of understanding about information exchanges and cooperation
with 18 CSDs, etc. It is also an active participant in international organizations, including
the Asia-Pacific Central Securities Depository Group (ACG), the World Forum of CSDs
(WFC), and the ASEAN+3 Bond Market Forum (ABMF). We will continue to contribute
through these activities to the development and vitalization of financial and capital markets
in Asia and throughout the world.

Developing securities settlement systems with
global standards in Japan and cooperating withcentral securities depositories (CSDs) worldwide

Management Message

08
Annual Report 2014

Haruhiko Kato
President & CEOJapan Securities Depository Center, Inc. (JASDEC) plays a vital role in financial and capital
markets as a provider of securities settlement infrastructure. We are determined to earn
and maintain the confidence of users by working to improve our systems and services.
We continually strengthen our capabilities in order to offer world-class functions based oninternational standards for settlement systems.

Initiatives in FY2013
Our ongoing efforts in FY2013 (the year to March 31, 2014) under our Medium-Term Business Plan
(FY2013–2015) focused primarily on the following measures.

09

Launch of New System

Annual Report 2014

Enhancement of Corporate Action Information Dissemination Service

JASDEC launched its new system in January 2014
under close cooperation with various organizations.

JASDEC and the Tokyo Stock Exchange (TSE) have

The new system resulted from a review of our system

jointly developed enhanced information services,

structure to enhance our capability to provide highincluding corporate action (CA) information. The newstandards of security and efficiency. We also took thissystem is based on the Tokyo Market Information

opportunity to introduce functional enhancements(TMI) system operated by the TSE and combinesand system improvements, including DVP settlement

both companies’ data and expertise. It has been fully

for stock lending and borrowing transactions, andoperational since February 2014.

tolerance matching for non-residents’ transactions.

This new service provides an expanded range of
information created by adding information handled

Implementation of International Standards—
adoption of ISO 20022 and SWIFTNet

by JASDEC, including basic information about
corporate bonds, investment trusts, and foreign
stocks. CA information about Japanese stocks is

To coincide with the launch of our new system, we

disseminated under the ISO 20022 standard. Users

also adopted a next-generation messaging system

now have one-stop access to electronic data,

based on ISO 20022 to apply international standards

including CA information about Japanese securities

to non-resident transactions. We also configured ain an international format by means of highly efficient

new system to allow connection via SWIFTNet, which

straight through processing (STP).

is used by financial institutions globally.

Management Message

Support for the Social Security and Tax
Number System

event of a disaster, systems failure or other contingency.
In FY2013 we conducted drills more practically than everbefore with the aim of strengthening our BCP structure.

In May 2013, the Japanese government promulgated the
Law Concerning the Use, etc., of Numbers to Identify

International Activities

Specific Individual for Official Administrative Procedures.
The Social Security and Tax Number system will be

At the international level, we are actively involved in

introduced in January 2016, and in July 2013 JASDEC

information exchange and other networking initiatives

issued outline requirements for these systems in relation

with overseas Central Securities Depositories(CSD),

to the Book-Entry Transfer System for Stocks, etc.

etc. As secretariat for the Asia-Pacific Central Securities
Depository Group (ACG), JASDEC provided planning

Risk Management Activities

and administrative support for the organization until the
17th ACG general meeting in October 2013, at which

10
Annual Report 2014

JASDEC has introduced various measures to control

Mr. Takeuchi Yoshinobu became honorary chairman

operational and system risks. These activities arefollowing his chairmanship of ACG. JASDEC also

coordinated by the Risk Management Committee.

participated in discussions at the Conference of CSDs

In FY2013, we also renewed our certification under

and the World Forum of CSDs (WFC) about issues

ISO 27001, the standard for information security

affecting CSDs, including adaptation to “Principles

management systems (ISMS).

for financial market infrastructures” (PFMI) which

Because of the public importance of securities

were announced by CPSS-IOSCO in April 2012 as asettlement infrastructure provided by JASDEC, our

response to the global trend toward tighter regulation

Business Continuity Plan (BCP) is designed to ensureof financial markets.

the continuity or rapid restoration of our services in the

Priorities for the Future
Outlined below are our basic management policies and main priorities for FY2014 under our MediumTerm Business Plan (FY2014–2016).

Organizational Reinforcement Based on
PFMI, etc.

and Book-entry Transfer Institutions, which were
promulgated by Japan’s Financial Services Agency
in December 2013. We will also intensify our efforts

JASDEC will continue to strengthen its businessto control operational risks and system risks. At thefoundation, its organization, financial administration

same time, we will further strengthen our businesssystems and human resource development systems,

continuity structure to improve our readiness in thein accordance with PFMI, and the Comprehensive

event of a disaster or systems failure. In addition, we

Guidelines for Supervision of Clearing Organizations

will continue to enhance our systems infrastructure,including the introduction of advanced technology andand gains. In October 2015, the new BOJ-NET (Bankthe formulation of IT plans.

of Japan Financial Network System) will become

In FY2014, we are making a number oforganizational changes based on these commitments.

operational. We will steadily develop the systems
needed to adapt effectively to these changes.

Specifically, we have created the Risk Management
Department and the IT Strategy Department. The main

Reinforcement of System Infrastructuretask of the Risk Management Department is grouplevel risk management and comprehensive planningWe will continue to strengthen our operation andrelating to the business continuity management. The

management structures to ensure that the new systemtasks of the IT Strategy Department are the overall

launched in January 2014 continues to operate

planning of our IT strategy and the reinforcement of

reliably. We will also start to explore approaches toour system risk management structures.

the achievement of further improvements, through theWe will enhance our risk management capabilities

planning of a next-generation system.

and strengthen our initiatives in this area by developing
a company-wide risk management structure centering

Enhancement of BCP

on the Chief Risk Officer (CRO) and Integrated Risk
Management Council.

We are now looking at ways to strengthen our businesstsunami and nuclear accidents, based on lessons learned
from the Great East Japan Earthquake. We will also
undertake a comprehensive review of our contingency

In January 2016, the Social Security and Tax Number

planning and continually implement practical drills to

System will take effect and the government will also

ensure the prompt and reliable restoration of our services

introduce integrated taxation on financial incomein the event of a system failure.

We remain committed to the reliable operation of our systems and the provision of services,
including adaption to structural changes in the domestic and international markets, andchanges in users’ needs. We will also continue to review our administrative systems andimprove our operations with the aim of providing our services at the lowest possible cost. We
look forward to continuing support and cooperation with all concerned.

Haruhiko Kato, President & CEO

Annual Report 2014

continuity plan to reflect new risk factors, such as

Appropriate Response to New Systemic
Reforms

11

Corporate GovernanceOur basic policy on corporate governance
JASDEC fully recognizes its social obligation as the central body for the provision of the infrastructure
for securities clearing and settlement, which is an important base of the capital markets. Accordingly,
JASDEC has determined a basic management policy of providing a highly secure, convenientand efficient service. To this end, we ensure that our system meets the needs of users, including
investors, issuing companies and market intermediaries. We also make sure that our activities promote
corporate transparency and that our business operates with fairness and accountability, in line withthe public needs of our function. Our commitment to corporate governance is to earn and maintaina solid reputation for reliability as the central organization responsible for creating and operating theinfrastructure for securities clearing and settlement in Japan.

12
Annual Report 2014

Overview of JASDEC’s management structure and corporate governance framework

General Shareholders’ Meeting

Business Operations Committee

Appointments/Dismissals

Appointments/
Dismissals

Appointments/
Dismissals

Subcommittees
Auditing

Audit & Supervisory Board

Board of Directors(Three including one Audit &Supervisory Board Member
serving on a full-time basis)
Reporting

Auditing(Five full-time, fourteen external)
Opinions, reports

Auditing

Appointment/
Supervision

Audit & Supervisory
Board Member’s Office

Accounting auditors

Consultation

President & CEO

Integrated Risk
Management
CouncilMonitoring

Stock
Bond with share option
ETF
Foreign stock
Corporate bondCP
Investment trust
PSMS (Domestic Trade)
PSMS (Non-Residents’ Trade)ISO 20022

Internal Audit
OfficeConveying
information

Internal
audit
AdviceDepartments

Advisory Committee

Overview of implementation of corporate governance practices
Framework for management structure and corporate governance to exercise business judgments,
manage operations and implement audits.
Corporate Structure• Board of Directors

work closely with Board Members and conduct regular

The Board of Directors is composed of 19 members,

exchanges of opinions, including through meetings withand is basically structured to achieve a balanced

the representative directors.

approach to business with user-oriented views, as well
• Business Operations Committee

neutrality and fairness. To fully reflect the opinions

Separately from the Board of Directors and theof users in our operations, nine of the 14 external

Audit & Supervisory Board, JASDEC has set up

directors are selected from JASDEC participants. The

the Business Operational Committee to fully reflectremaining five external directors come from an issuingthe needs of system users in our operations. The

company and a related organization, or from theCommittee examines important issues related toJapan Securities Dealers’ Association, academia andthe business of JASDEC, based on queries from thethe legal profession, enabling the Board to conduct

Board of Directors, and has ten subcommittees undervigorous discussions from a broad perspective

its control. Each subcommittee is responsible for ain consideration of the public good. In principle,

specific segment of operations, and is composed

the Board meets once a month to decide basic

of members who are actually involved in the field.

management policies and discuss other key issues.

JASDEC applies the opinions provided by eachsubcommittee to various operational issues. JASDEC• Audit & Supervisory Board

discloses summaries of discussions and other

JASDEC employs the Audit & Supervisory Board

information by the committees to relevant parties for

system for corporate governance instead of thegreater operational transparency.

committee system, as provided for in the Companies
Act. The Audit & Supervisory Board is made up of three

As the provider of key infrastructure elements for

Audit & Supervisory Board Members, two of whom are

the securities market, we are required to operate theselected from eligible participants (one each from asystem with an extremely high level of fairness andsecurities company and a bank) and all three (including

accountability. To achieve this end, we have establishedan Audit & Supervisory Board Member who is serving

the Advisory Committee, which is composed of experts

on a full-time basis) are external Audit & Supervisory

in financial and securities systems. The committee

Board Members. In principle, the Audit & Supervisoryadvises JASDEC’s president from a broad perspective

Board holds a regular meeting each month. In line with

about wide-ranging issues relating to securities clearing

auditing plans and the basic policies established byand settlement system operations.

the Audit & Supervisory Board, Audit & Supervisory
Board Members audit the performance of the Board

JASDEC DVP Clearing Corporation (JDCC), JASDEC’s

Members by attending important meetings, including

wholly owned subsidiary, operates in accordance

those of the Board of Directors and assessing thewith a business philosophy similar to that of JASDEC.

status of operations and assets. To ensure that audits

JDCC has also set up a committee for reviewing

are effective, Audit & Supervisory Board Members

important issues regarding DVP operations to reflect

13
Annual Report 2014as business-oriented ideas on maintaining operational

Corporate Governancethe needs of users of the DVP settlement system

Directors and monitor its members’ execution of

for non-exchange transaction deliveries (NETDs).

their duties. They also assess the legality of businessIn addition, JASDEC’s Board of Directors receives

operations by reviewing reports on auditing activities

reports regarding issues decided by JDCC’s Board offrom the Standing Audit & Supervisory Board Member.

Directors to ensure consistency in the activities of the

JASDEC assigns staff specifically to assist Audit &two companies.
An outline of JASDEC’s management structure andSupervisory Board Members in their audits.
Audit & Supervisory Board Members perform

corporate governance systems is presented on theaudits in close cooperation with the Company’s

previous page.

accounting auditors. This includes hearing reports
from the accounting auditors on auditing plans and the

Risk Management System

results of the audits.

As a result of organizational enhancement

LLC, audits financial documents and other information

implemented for FY2014, the supreme responsibility

as required under the Companies Act. We believe that nofor general risk management now rests with the Chiefparticular concerns, such as serious irregularities or illegal

Risk Officer (CRO). The Integrated Risk Management

actions, have been detected as a result of these audits.

The accounting auditor, Deloitte Touche Tohmatsu

14

Council, which is chaired by the CRO, is responsible
for the development of risk management systems
throughout the JASDEC organization.

Annual Report 2014

Internal Audit, Audit & Supervisory Board
Member’s Audit, and Accounting Audit

Board of Directors and Audit & Supervisory
Board Members’ Limit of Liability
We expect Board of Directors and Audit &Supervisory Board Members to fully demonstrate
the skills involved in successfully executing their

JASDEC has established the Internal Audit Office,responsibilities. Additionally, to retain top-level

and internal auditing accomplished primarily throughprofessionals, we have set limits on liability for

onsite surveys based on the audit plan, to assess

damages incurred by Board of Directors and Audit &the effectiveness of operational procedures. For

Supervisory Board Members.

Audit & Supervisory Board Member’s audit, an Audit& Supervisory Board Member serving on a full-timebasis routinely attends important meetings, such as

Resolutions on Election/Dismissal of
Board of Directors

those of the Board of Directors and the Executive
Committee (comprised of executive managing

The election of Board of Directors by resolution at thedirectors serving on a full-time basis) and examines

general meeting of shareholders is conducted in thecirculars intended to obtain approvals of decisions bypresence of shareholders representing no less than one-

persons in charge. The Standing Audit & Supervisory

third of voting rights held by eligible shareholders, andBoard Member performs audits in accordance

Board of Directors are elected by a majority vote of said

with the auditing plans established by the Audit &shareholders.

Supervisory Board, and provides the other Audit &The dismissal of Board of Directors by resolution at

Supervisory Board Members with updates on thea general meeting of shareholders is conducted in the

progress of auditing activities at the meeting of Audit

presence of shareholders representing no less than one-& Supervisory Board, which takes place monthly.

third of voting rights held by eligible shareholders, andAudit & Supervisory Board Members serving on
a part-time basis attend meetings of the Board of

Board of Directors are dismissed on a vote of no less than
two-thirds of voting rights held by said shareholders.

Business Continuity Plan

Our approach
JASDEC has regularly structured itself so that, in the event of a disaster or other emergency, it would be
able to continue operations to the extent possible or promptly resume business operations according to
its Basic BCP policy. This is to minimize the effect of such an emergency on JASDEC participants andrelated entities as a settlement infrastructure.
The specific measures taken by JASDEC include formulating concrete action plans in advance.
JASDEC has defined actions to be taken in the event of a disaster or other emergency, established BCP
Countermeasure Office, 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, and our coresystems are based on a redundant configuration. Furthermore, we have built a backup center in a remotelocation to be prepared in case the main center becomes unusable.

15

Users

Bank of Japan (BOJ)• JASDEC Participant
Information Network• ISDN• JASDEC Integrated Network• arrownet (offered by TSE)
• ISDNSWIFTNet

BOJ-NET<Gateways>
JEX GW(JASDEC Extensible
Gateway)

Integrated Channel
Gateway

File Transfer
Gateway

Integrated Web
Terminal

Participant
Information Web
Terminal

BOJ’s
Gateway
System<Subsystems>
Pre-Settlement Matching System

StocksParticipant Information

Foreign Stocks

Corporate Bonds (SB) &Commercial Papers (CP)Investment Trusts

Main Center
Backup Center

SwitchAnnual Report 2014

JASDEC system

Business Continuity Plan

IT backup system
Operations data of the main center is reflected at the backup center almost in real time. In cases where
the main center becomes unusable due to a disaster, infrastructure failure (excluding software failure) orother such event, and the restoration task is deemed to be time-consuming, the systems will be switchedover to the backup center. Switchover to backup systems will take about 90 minutes. Furthermore,
to prepare for the prospect of the head office building becoming unusable, we have established analternative office where we can execute operations as necessary.

Main initiatives in FY2013
JASDEC continued its efforts to ensure the availability of the management resources needed to maintain16

operations in the event of a disaster leading to reduced lifeline functionality and other problems. The main
initiatives undertaken in fiscal 2013 are outlined below.

Annual Report 2014

Development of Contact and Assembly Systems,
Implementation of Exercises

Diversification of Communication Systems
One of the lessons to emerge from the Great East

In case of a disaster leading to the shutdown of public

Japan Earthquake is the need to diversify methods oftransportation systems, we checked and confirmed

communication. JASDEC is working to create internalthat we could set up a BCP Countermeasure Office andand external communication systems based onassure the effectiveness of that procedure, including themethods other than telephones.

safety of staff and the communication with our related
institutions.

BCP Exercises, Review of BCP

We also implemented exercise with the designatedstaff members to check and confirm the effectivenessWe implemented several company-wide exercises,of the assembly system.

including an employee safety confirmation exercise,a BCP Countermeasure Office establishment exercise,and an assembly exercise. We also conducted asystems switchover test from main center to backup
center with users.

Revenues by Operation
Year ended March 31, 2014

■ Book-Entry Transfer System for Stocks, etc.

¥13,070 million■ Book-Entry Transfer for Commercial Paper¥443 million■ Book-Entry Transfer System for Corporate Bonds¥1,238 million■ Book-Entry Transfer System for Investment Trusts¥1,117 million■ DVP Settlement System for NETDs¥645 million■ Pre-Settlement Matching System (PSMS)¥1,358 million■ Custody Services for Foreign Stock Certificates, etc.

¥128 million

Business
Overview

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.

P29

P32

P35

P18

P22

P26

Business Overview

01

Book-Entry
Transfer System
for Stocks, etc.
Ongoing enhancements to this allelectronic record system are bringing
greater convenience, speed, and flexibility
to stock ownership transfers.

18
Annual Report 2014

The Book-entry Transfer System for Stocks, etc.

Issuing company
Shareholder registry
General Shareholders
Notification

JASDEC
Transfer
Account
Book

Book-entry transfer

Direct AccountManagement Institution

Transfer
Account
Book

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

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

Participants(shareholders)Participants(shareholders)Participants(shareholders)01 Book-Entry Transfer System for Stocks, etc.

The Book-entry Transfer System
for Stocks, etc., has been operating smoothly
JASDEC launched its Book-entry Transfer System for
Stocks, etc., under the Act on Book-Entry Transfer
of Company Bonds, Shares, etc. in January 2009.
Under this system, JASDEC or Account Management
Institutions (AMIs) such as securities companies andbanks open accounts for their clients, and each of them
manages accounts by electronic records registered intheir computer systems. The Book-entry Transfer System
has a variety of features that contribute to the security
and convenience of securities settlement systems.
• ‌Only the electronic records noted above determine
the vesting of rights pertaining to stocks, etc.; and therewriting of those records transfers those rights. This
reduces the cost of printing, storing and transporting
securities in physical form, along with the risk of loss
or theft.
• ‌JASDEC provides issuing companies with allshareholder information as of the record date
(General Shareholder Notifications), which is needed
to compile shareholder registries. To ensure that
information is supplied efficiently, JASDEC maintains
centralized management of shareholder information.
For example, JASDEC preliminarily obtains andintegrates names, addresses and other shareholder
information from AMIs.
The dematerialization system applies not only tostocks, but also to bonds with share options, shareoptions, investment units of Real Estate Investment

Trusts (REITs), preferred equity investment ofcooperative financial institutions, Exchange Traded
Funds (ETFs), Japanese Depositary Receipts (JDRs,etc.), and other negotiable securities.
	As of March 2014, the total number of issues
handled was 3,795, including 3,548 share issues,
22 bonds with share options, 24 share options, 46
investment units, 1 preferred share issue, 118 ETFs,
and 36 JDRs. The number of companies participatingin the Book-entry Transfer System, including JASDEC
participants (direct AMIs), indirect AMIs, and fundsettlement corporations, etc., was 380, including 60
foreign financial institutions that are indirect AMIs.
19(Billion shares)
400

369.0

396.7
345.1

321.0

■S
 tock-exchangetransfers

335.7

300

200

100

0

(FY) 2009

2010

2011

2012

2013

*Figures include the
Depository and Bookentry Transfer System
for Stock Certificates.

JASDEC participants and indirect AMIs (as of March 31, 2014)
JASDEC participants by category
Securities financecompanies
2 (1%)

Indirect AMIs by category

Banks, etc.
17 (16%)

Total

Total

108

181

Life & non-life
insurancecompanies
1 (1%)
Banks, etc.
20 (11%)

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

Stock exchanges, etc.
11 (6%)

companies

companies
Securities
companies, etc.
147 (81%)

Securities
companies, etc.
31 (29%)Foreign indirect
AMIs
60 (56%)

Annual Report 2014

Book-entry
transfers

Ongoing enhancements
to increase user convenience

20
Annual Report 2014

JASDEC is continually developing a variety of systemenhancements to improve the usability of the Bookentry Transfer System for Stocks, etc., and to ensure
the smooth operation of the system. We also implement
programs to inform users about these improvements.
	Until recently, newly created ETFs were difficult totransfer on the date when the ETFs were recorded in an
account because the administrative procedures for the
new record required the new record to be completed
up to 15:30 on the new record date. In October 2013,
JASDEC therefore adopted a new administrative
process that requires new records to be completed bynoon, provided that the creation of ETFs meets withcertain conditions with regard to the contribution of
their trust property.
JASDEC has taken steps to encourage rights
offerings. In September 2013, we created anenvironment in which the mediation status of demands

Book-entry
transfers

Stock account balance andnumber of issues■ Transfers between
JASDEC participants■ Internal transfers
within the same
companies(Billion shares)
1,241.8

2,000

1,500

718.0

695.1

797.2

669.4

1,000
677.4

670.1

(FY) 2009

2010

2011

732.4

656.8

652.5

2012

(Billion yen)

2013

(Issues)

1,500

80
1,211.5

1,168.1

50400(FY) 2009

2010

406.8

3,640

0

(FY) 2009

2011

2012

2010

3,561

2011

*Figures include the
Depository and Bookentry Transfer System
for Stock Certificates.

2012

3,600
3,548
*Figures include the
Depository and Bookentry Transfer System
for Stock Certificates.

0

2013

(Million accounts)(Issues)
3,409

3,500

2,306

22 20

2013

3,800

Exchange Traded Fund (ETF) etc., account balance andnumber of issues

1,400

0

3,581

■B
 alance in custody(end of FY)●N umber of issues(end of FY)

3,400

2,563

2,791
2,339

154

■A
 ccount unit balance(end of FY)●N umber of issues(end of FY)

150

111

100

93
77

50

700
0

200

126

40

133.4

404.6

3,727

2,800

499.6
16

4,000

431.0

418.6

412.9

2,100
27

500

■ Balance in custody(end of FY)● Number of issues(end of FY)

60

959.7
43

0

(Issues)

450300*Figures include the
Depository and Bookentry Transfer System
for Stock Certificates.

Bond with share option account balance andnumber of issues

1,000(Billion shares)

350

500

0

for the exercise of options can be viewed on our
website so that share option holders can check theexercise status of their options. In January 2014, we
also expanded our statistical information by adding
market capitalization and the distribution of shareholder
by category to the information of account balances andaccount transfers relating to transfers of stocks, etc.
In January 2016, Japan will introduce the Social
Security and Tax Number System under the Law
Concerning the Use, etc., of Numbers to Identify
Specific Individual for Official Administrative
Procedures, which will be promulgated in May 2014.
Issuing companies will need the numbers of theirshareholders in order to process withholding tax
payments. We are currently preparing enhancements toour systems to create a scheme to allow shareholders’numbers to be supplied from AMIs to issuing
companies through JASDEC.

(FY) 2009

2010

2011

2012

2013

0

*Figures include the
Depository and Bookentry Transfer System
for Stock Certificates.

01 Book-Entry Transfer System for Stocks, etc.

General shareholder
notifications

Number of issues andtotal shareholders■ General shareholder
notifications(Notifications, in billion)
1,000

1,001.1

946.3

972.8

961.8

947.3

(Thousand shares)
150,000

800

127,240(Issues)
15,000129,619 127,292

125,694

127,032

8,888

8,597

8,715

120,000

12,000
9,260

8,723

600

90,000400

60,0006,000

200

30,0003,000

0(FY) 2009

2010

2011

2012

2013

*Figures are as of
day of notification toissuers.

Individual shareholder
notifications(Issues)
2,697

2,656

810

1,958

■ Number of notices● Number of issues

2010

2011

2012

2013

0

(Thousand notifications)
18,000

1,000

2,649

2,428

2,100

(FY) 2009

9,000

800

16,287

16,45916,727

17,063

17,547

9,000

448
400

401

412
700

4,500

200

(FY) 2009

2010

2011

2012

2013

0

0

(FY) 2009

Information requests(Notifications)(Notifications)
4,969

5,000

■ (Total record) notifications■ (Partial record) notifications

4,000
3,069

3,000
2,000
1,000

1,589

1,857

1,155
356

0

3,252

(FY) 2009

477
2010

375
2011

521
2012

2013

*Requests for information (total record) refer to requests fordata recorded on book-entry transfer registries of either
JASDEC participants (direct AMIs) or indirect AMIs where
shareholders in question 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 have opened accounts.

Information requests(Number of issues)(Issues)580

600● (Total record) number of issues● (Partial record) number of issues

482
400

314
302

212
200

0

114

79

87

77

57

(FY) 2009

2010

2011

2012

2013

*Requests for information (total record) refer to requests fordata recorded on book-entry transfer registries of either
JASDEC participants (direct AMIs) or indirect AMIs where
shareholders in question 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 have opened accounts.

2010

2011

2012

2013

*Number ofshareholders (datafor shareholder
notifications) iscomprised ofparticipant information
notified by AMIs.
*Figures are as of endof fiscal year.

21
Annual Report 20140■N umber ofshareholders

13,500

720
600

1,400

*Figures are as of
day of notification toissuers.

Number of shareholders(Data for shareholder notifications)(Notifications)
2,800

0

●N
 umber of issues●T otal shareholders

Business Overview

02

Book-Entry
Transfer System forCommercial Paper andCorporate Bonds
JASDEC is maintaining the security of CP
and corporate bond book-entry transfer
system whose daily settlement value typicallysurpasses the trading value per day at theTokyo Stock Exchange.

22
Annual Report 2014

Flowchart for Book-entry Transfer for CP/Corporate Bonds (DVP)① TradeSeller
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 transfer② 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 securities
transfer completion⑨	Notice of securities
transfer completion⑧ Notice of payment completion

Fund
settlement
corporation⑧ Notice of payment completion⑤ Payment instruction

Bank of Japan⑥ Payment request⑦ Payment instruction

Fund
settlement
corporation

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

Supporting seamless and secure CP
and corporate bond settlement
automates the entire process through trade matching
to settlement of securities and fund.
	As a means of managing participation in JASDEC’s
book-entry transfer system, we set up a multilayer
holding structure for Account Management Institutions(AMIs) to address the diverse needs of participating
investors and financial institutions. For example, direct
AMIs can open an account directly at JASDEC andindirect participation is possible by opening an accountat a direct AMI. Another option for indirect participationis through the opening of an account at an indirect AMI.
Upon the payments of principal and interest of corporate
bonds to bondholders, AMIs receive principal andinterest from paying agents or their upper AMIs throughthe multilayered structure on behalf of their bondholders.

In March 2003, JASDEC launched the Book-entry
Transfer System for Short-Term Corporate Bonds(dematerialized CP), and this was followed by
the launch of the Book-entry Transfer System for
Corporate Bonds in January 2006. In each system,
settlement procedures—issuance, transfer (trading),
and redemption—are conducted based on the balance
electronically recorded in the transfer account books.
In addition, at all stages of issuance, transfer, andredemption of CP and corporate bonds, DVP settlement
is available by the linkage between JASDEC’s bookentry transfer system and the Bank of Japan Financial
Network System. Furthermore, interfacing the bookentry transfer system to its PSMS (Pre-Settlement
Matching System; see page 32), JASDEC has realized
Straight Through Processing (STP), which fully

Annual Report 2014

Participants in Book-entry Transfer System for CP (as of the end of March 2014)
Issuers 496

Issuing/
paying agents

18

JASDECJASDEC
Participants(Direct AMIs)

65

Fund settlement corporations 139

23

Indirect
AMIs

45

CP holders

The Book-entry Transfer System
for Commercial Paper continues to operate efficiently.
Commercial Paper (CP) currently refers to short-term
corporate bonds in a dematerialized form issued bycorporate entities as a means of procuring short-term
funds. As CP was previously drawn as promissory notesin physical form, there were always some risks of theft orloss when notes were transferred or deposited, as wellas costs of a documentary stamp tax upon transfers.
To eliminate such risks and costs, the fully electronic
book-entry transfer system for dematerialized CP waslaunched in 2003. More than ten years after the launch,almost all CP issued in Japan is handled by this system.
The outstanding issue of financial institutions andother financial companies’ CP increased in fiscal
2013 (to March 31, 2014), but the outstanding issueof business companies (excluding other financial
companies) and SPCs’ CP remained low due tostagnating demand for funds. As a result, the total
account balance held at around the ¥15 trillion level
throughout the year but fell dramatically to ¥12.6 trillion
as of March 31, 2014 (a ¥1.1 trillion decrease fromthe end of FY2012), in part because of special factors
relating to the end of the financial year. The number ofissues stood at 3,552 issues (a 374 issues decrease
from the end of FY2012).

24
Annual Report 2014

CP account balance (nominal value) andnumber of issues(Trillion yen)
25

4,730

(Issues)
4,392

15

5,000

4,447
3,926

20
14.1

14.0

13.6

13.7

3,552
12.6

2,000
1,000

2010

2011

2012

2013

0

*Nominal value isthe value at time ofissuance (based on
the amounts for each
bond)

■R
 edemptions■T ransfers■ Issuance(Trillion yen)
6.0
0.4
4.2

4.0

3,000

5

(FY) 2009● Number of issues(end of FY)■ Account balance(end of FY)

4,000

10

0

Issuance, transfer andredemption of CP (daily average)

0.4
3.8

0.5
4.0

0.4
4.1

0.4
4.1

0.5

0.4
2012

0.4
2013

2.0

0

0.4
(FY) 2009

0.4
2010

2011

Continually adapting to
CP market needs
The total settlement amount of issuance, transfer,and redemption of CP handled by JASDEC’s bookentry transfer system averages ¥5 trillion per day. In
combination with month-end settlements of more than
¥10 trillion, the settlement value of CP at JASDEC
surpassed the daily trading value at the Tokyo Stock
Exchange. In fiscal 2013, the annual aggregate settlement
amount of transfer surpassed ¥1,000 trillion, marking
active trading at the highest level as good as fiscal 2012.

This huge settlement amount reflects theimportance of CP in the Japanese financial market.
JASDEC is willing to continue maintaining a high levelof safety in the Book-entry transfer system for CP, amatter of critical importance for securities settlement
infrastructure, while rapidly reflecting market needs inthe system.

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

The Book-entry Transfer System for Corporate Bonds
operates with security and reliability.
In January 2014, JASDEC began to provide
dematerialized balance certificates, etc. for theBook-entry Transfer System for Corporate Bonds,
Commercial Paper and Investment Trusts. Throughthis service, AMIs can request and receive theirtransfer account book registration certificates, etc.,
via the JASDEC “Target” website which reduces theprocessing time and enhances user convenience.
In January 2016 the Japanese government will
introduce integrated taxation of financial income andgains. JASDEC is making preparations to ensure asmooth transition to the new taxation rules, including
the publication of system requirements.

JASDEC’s Book-entry Transfer System for Corporate
Bonds handles various types of bonds, both throughpublic offerings and private placements. These include
bonds issued by business companies, municipal bonds,
bonds issued by investment firms, specified bonds
issued by special purpose companies (SPCs), bondsof special corporations, such as quasi-government andlocal government bodies, and Samurai bonds (yendenominated bonds issued in the Japanese bond market
by foreign governments or entities), J-Sukuk (Islamic
financial instruments similar to bonds) and others.
In fiscal 2013, based on the continuously excellent
issuing conditions such as extremely low interest
rates, the level of new issuance was in the same rangeof fiscal 2012. At the same time, in part because of
the slow pace of redemptions, the account balancereached ¥256.8 trillion on December 19, 2013—thehighest since the launch of the system. As of March
31, 2014, the number of bonds eligible in the system
was 55,595 issues (a 2,891-issue decline from the endof FY2012), and the nominal account balance stood at¥253.2 trillion (a ¥0.4 trillion increase from the end of
FY2012). There was also a significant increase in newissues of U.S. dollar-denominated bonds, reflecting
growth in recent demand for foreign currency finance.
In face value terms, the account balance as of March
31, 2014 was $3.4 billion (a $1.8 billion increase fromthe end of FY2012).

25(Trillion yen)
400

(Issues)

71,20275,00067,78860,701

300
245.5

250.0

58,486

252.4

252.7

●N
 umber of issues(end of FY)■O utstanding balance(end of FY)

55,595253.2

50,000200
25,000100

0(FY) 2009

2010

2011

2012

2013

0

Participants in Book-entry Transfer System for Corporate Bonds (as of the end of March 2014)
Issuers 2,637*

Issuing/
paying agents

197

JASDECJASDEC
Participants(Direct AMIs)

85

Fund settlement corporations 139

Indirect
AMIs

433

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

Annual Report 2014

Corporate Bonds account balance andnumber of issues

Business Overview

03

Book-Entry
Transfer System for
Investment Trusts
JASDEC is streamlining the process
for trustors, trustees and beneficiaries,
ensuring security and convenience for asystem that serves virtually all investment
trusts in Japan.

26
Annual Report 2014

Basic Model of Book-entry Transfer System for Investment Trusts

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 Banks’
Payment Clearing
Network

Trustees

Fund settlement
corporations(BOJ-NET Fund
settlement
corporations)

03 Book-Entry Transfer System for Investment Trusts

A faster, safer approach toinvestment trust administration
The Book-entry Transfer System for Investment Trusts
is a computer system for managing beneficial rights ofinvestment trusts.
The system covers contract-type investment
trusts (hereinafter, simply called “investment trusts”),
which involve three parties—a trustor, a trustee, and abeneficiary who is an investor in the investment trust.
(Exchange Traded Funds (ETFs) and investment trustsof the non-trustor instruction type are outside thescope of the system.) Since the system was launched
on January 4, 2007, all trustors and trustees involved ininvestment trusts have participated in the system, andthus almost all investment trusts issued in Japan havebeen dematerialized.
In the Book-entry Transfer System for Investment
Trusts, participants are diverse, consisting of not

only securities companies, but also entities such as
banks, insurance companies, Shinkin banks, credit
cooperatives, agricultural cooperatives, and investment
trust management companies engaged in direct
marketing. The total number of AMIs and JASDEC
participants was 840 companies as of March 31, 2014.
The Book-entry Transfer System for Investment
Trusts enables direct or indirect connection between
trustors, trustees, AMIs and JASDEC. This ensures
greater security, accuracy, and speed of processing
through the electronic management of the accounts ofinvestment trust beneficiaries.

27
Annual Report 2014

Participants in Book-entry Transfer System for Investment Trusts (as of the end of March, 2014)
Issuers 84

Trustees 10

JASDECJASDEC Participants 173

BOJ-NET Fund settlement corporations

Designated fund distributors 348

43

Indirect AMIs 667

Indirect AMIs

JASDEC ParticipantsLife and non-life
insurance companies
10 (2%)

Others1 (0%)

Securities companies
70 (10%)Banks
95 (14%)

Investment
trust managementcompanies 3 (0%)

Others7 (4%)

Investment trust
management companies
21 (12%)

Total

667

Financial institutions
for small businesses
10 (6%)

Total

173

Financial institutions
for small businesses
488 (73%)Banks
36 (21%)*Others: Securities agents, securities exchanges, CCPs, call loan dealers, etc.

Life and non-life
insurance companies
5 (3%)

Securities companies
94 (54%)

03 Book-Entry Transfer System for Investment Trusts

Strong support from users

28
Annual Report 2014

The total number of investment trusts handled by
JASDEC as of March 31, 2014 was 7,940 issues (a828-issue increase from March 31, 2013), comprising
4,962 publicly offered and 2,978 privately placed
investment trusts. The number and balance of new
trusts registered (purchases) remained high, reflecting
a favorable investment environment. Throughout theentire business year, the account balance increased
consistently. As a result, the outstanding balance asof March 31, 2014 had increased ¥9.1 trillion year
on year to ¥124.5 trillion, comprising ¥89.3 trillion in
publicly offered and ¥35.1 trillion in privately placed
investment trusts.
Fund settlement systems in the Book-entry Transfer
System for Investment Trusts include DVP settlement(using the Bank of Japan Financial Network System)and non-DVP settlement (using the Japanese Bankers
Association’s financial network system for online fundsettlement between financial institutions). In fiscal 2013,
the proportion of settlements using DVP was 25% bytransaction volume and 62% by principal value.

Investment trusts account balance andnumber of issues(Trillion yen)

7,940

150
6,575

6,297
110.2

100

114.9

7,112

6,868
112.5

115.3

(Issues)
8,000

124.5

●N
 umber of issues(end of FY)■A ccount balance(end of FY)

6,000

4,000
50
2,000
0

(FY) 2009

2010

2011

2012

2013

0

Account balances
are calculated bymultiplying the principal
amounts for eachissue by the number ofaccounts

Purchase and cancellation transactions(Daily average)(Transactions)
9,000
7,634
6,906 6,710
6,293
6,064
5,417 5,685
5,118

6,000

8,619
8,119

■P
 urchases■C ancellations

3,000

0

(FY) 2009

2010

2011

2012

2013

Principal values of investment trusts for purchases andcancellations (Daily average)■P urchases■C ancellations(Billion yen)
479.2

400

Dedicated to ongoing improvement

439.1
300
301.9

289.6
311.0
288.5 282.5
280.0

341.5 326.7

200

In January 2014, we added transfer (change of fund
distributors) and notification functions to the Book-entry
Transfer System for Investment Trusts. Advantages
for users of this function include the elimination of
documentary procedures between distributors andissuers for transfers between distributors.
JASDEC will continue to implement measures thatenhance the user-friendly Book-entry Transfer System
for Investment Trusts, while maintaining the high levelof safety required for settlement infrastructure.

1000(FY) 2009

2010

2011

2012

2013

Business Overview

04

DVP
Settlement System
for NETDs
JASDEC has combined delivery andpayment into a single, smooth reciprocalsystem, reducing risk and raisingconvenience for participants on both sidesof the trade.
29
Annual Report 2014

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

Providing safe,
secure securities transactions

30
Annual Report 2014

The Non-Exchange Transaction Deliveries (NETDs)
refer to Book-entry Transfers for Stocks, etc., carriedout by JASDEC for non-exchange transactions, andthe majority of them consist of such trades of domestic
and overseas institutional investors buying and sellingJapanese stocks, etc., through the DVP settlement
system for NETDs.
Previously, the delivery of the securities and thepayment of the settlement amounts for non-exchangetransactions have mostly been processed separately,
so the transactions have been exposed to the risk(principal risk) that settlement payments may not bemade even though the securities have been delivered.
The use of the DVP settlement system for NETDs links
the delivery of the securities and the payment of thesettlement amounts through the system, diminishing
the risk and making it possible for securities settlements
to be conducted safely and reliably. To further support
reliability, the entire administrative process is handled
automatically and electronically using Straight ThroughProcessing (STP).
Since May 2004, the DVP settlement system for
NETDs has been administered by JASDEC’s wholly
owned subsidiary, JASDEC DVP Clearing Corporation(JDCC). JASDEC participants applying to make use of
the system are examined for their suitability in termsof financial condition, organizational structure andother such factors before receiving authorization from
JDCC. In order to ensure stringent risk managementof all participants, JDCC secures collateral in advance,
comprising assets (assurance assets) with the appraisal
value that exceeds the net debit (total payables - total
receivables) of each participant, and sets an upper limit
to the value of the liabilities payable (the net debit cap)
in proportion to the trading status of each participant.
Settlement within the DVP settlement system for
NETDs is conducted in accordance with the so-called“Gross - Net DVP model” system by which securities
pass through the JDCC account within JASDEC andthe transfer of the securities from the seller’s into thebuyer’s account is conducted separately for eachtransaction (gross). Meanwhile, the settlement amounts

pass through the JDCC’s account within the BOJ-NET
funds transfer system, and settlement is concluded by
the appropriate net calculated amount of funds being
paid on each settlement date (net).
The DVP settlement system for NETDs mainly deals
with securities handled by JASDEC through its Bookentry Transfer System for Stocks, etc., such as sharesand bonds with share options, etc. As of the end of
March 2014, 53 companies (comprising 12 banks
and 41 securities companies) were participants in the
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. In fiscal 2013, in consideration of steady
growth in the use of the system, we refunded ¥7 of the¥17 DVP settlement fee per transaction for the period
from April 2013 to February 2014 in accordance withthe participant’s usage level.

DVP settlement for NETD transactions(Daily average)(Transactions)
160,000

59,37456,18652,591
48,537■N on-DVP
transactions■D VP transactions

45,570120,000

80,00098,68984,883

83,29982,52280,23540,0000(FY) 2009

2010

2011

2012

2013

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

04 DVP Settlement System for NETDs

Reducing settlement risks
for stock lending transactions
The Financial Services Agency identified a number ofurgent measures needed to strengthen the clearing
and settlement system for stock lending transactionsin “Development of Institutional Frameworks Pertaining
to Financial and Capital Markets,” published in January

2010. Based on this information, we introduced DVP
settlements for stock lending transactions in January
2014 with the aim of reducing settlement risks for stock
lending transactions.

DVP settlement for NETD fund settlement(Daily average)(Billion yen)

(%)

2,000

15
12.3

12.2

948.5

963.7

11.9

1,500

1,000

12.7

12.2

1,498.5

844.2

10

876.2
5

500
116.6
0

(FY) 2009

118.0
2010

100.1
2011

111.3
2012

■ Total of payments■ Total value of net settlement payments● Rate of reduction (Total value of net settlement payments/
Total payments × 100)

183.5
2013

0

31
Annual Report 2014

Securities covered: Stocks, bonds with share options(convertible bonds), ETFs, REITs, share options (sharesubscription 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 amountused for account settlement on a net transaction basis.

Business Overview

05

Pre-Settlement
Matching System(PSMS)In January 2014, JASDEC launchedbrand new services in PSMS for
further enhancement of STP, including
introduction of the ISO 20022 standard
and SWIFTNet.

32
Annual Report 2014

Figure 1. PSMS for non-residents’ transactions
Overseas
Order

Investment
managers

Securities
companies

Notice of execution
Allocation, matching

Settlement instruction

GlobalcustodiansJapan

Settlement
instruction

Settlement instruction

Settlement
instruction

Subcustodians

Notice ofmatching status

Pre-Settlement
Matching System*

Settlement
instruction
Notice ofmatching status

Request for DVP transfer

Linkage with book-entry transfer systems for stocks, etc., corporate bonds and CP(excluding Japanese government bonds)* From January 2014, on, “Tolerance Matching” function is available.

Notice ofexecution

Order

Securities
companies
Notice ofexecution

Order

Stock
exchanges

05 Pre-Settlement Matching System (PSMS)

Pre-Settlement Matching System (PSMS)—
for smooth and secure matching infrastructure in Japanese securities market
Followed by the booming stock market in Japan, in
fiscal 2013, the number of input/output transactions of
PSMS significantly increased to 1,731 thousands on adaily average. Furthermore, 676 users are utilizing PSMS
as a primary matching infrastructure in Japanese market.

Total number of PSMS input/output instructions
using the PSMS system (Daily average)(Thousand)
2,000
1,731
1,500

1,327

1,315

1,360

1,353

1,000

500

0

33
(FY) 2009

2010

2011

2012

2013

Brand-new services launched in January 2014
A number of new and useful services have been
implemented in PSMS, along with the replacement of
our information systems in January 2014. Among all,three items below are primarily important.
1) Tolerance matching (see Figure 1.)
PSMS has introduced ‘Tolerance Matching’ function
into non-residents’ transactions. With this function,
when there is a slight discrepancy in settlement amountbetween settlement parties, which is under JPY 100,
PSMS will assume the amounts to be ‘matched’ without
any exception, and the transaction will be settled withthe amount of the securities’ deliverer.
Previously, settlement amounts sometimes
became ‘unmatched,’ mainly due to various calculation
approaches to the amount (rounding up/down, etc.).
Tolerance matching has decreased the number of‘unmatched’ transactions by more than 90 percent, andcontributes to more and more rapid post-trade processes.

2) DVP‌
settlement for Stock Lending and Borrowing(SLB) transactions (see Figure 2.)
Since 2008’s financial crisis, more and more people
have been discussing further mitigation of settlement
risk. JASDEC has added SLB transactions into the lineof DVP-eligible products by providing automatic data
linkage from PSMS to BETS for Stocks, etc. (see also
Chapter 04.).
Since January 2014, 21 major players in Japanese
SLB market have made use of this service.
3) More‌
standardized communication—
ISO 20022 and SWIFT Network
Now that more than a half of stock transactions are
conducted by non-residents, this move is expected
to improve accessibility to the Japanese market. To
achieve easier access in terms of system connectivity,
JASDEC has leveraged the ISO 20022-based message
format as one of the pioneers in the global securities

Annual Report 2014

It is crucial for financial institutions to smoothly andsecurely complete the settlement process of huge numberof transactions. While our Book-Entry Transfer Systems(BETS) realize secure settlement, PSMS, on top of that,helps, additionally, to make settlement go smoothly.
Since the launch of PSMS in September 2001,
JASDEC has promoted Straight Through Processing (STP)in Japanese securities market, by providing matching
function of trade and settlement information to institutional
investors and others. PSMS has three basic concepts
below, as a bridge between trades and settlements.
1) Rapid post-trade process2) ‌Automatic data linkage to Central Clearing Party(CCP) and BETS for Delivery Versus Payment (DVP)
settlement3) Globally standardized protocol suitable both todomestic and non-residents’ transactions

05 Pre-Settlement Matching System (PSMS)

Group (SMPG).
JASDEC participants are required to migrate fromthe ISO 15022-based message format to ISO 20022
by the end of 2018. It already has a good start; as ofJanuary 2014, about 40 percent of relevant data was
exchanged via the ISO 20022-based format.

market, and has enabled the connection via SWIFT
network as well.
Furthermore, ISO 20022 will bring compatibilityof Japanese market practices with the global ones.
JASDEC is actively participating and offering comments
in consultations of International Organization forStandardization (ISO) and Securities Market Practice

Further actions for ongoing progress

34
Annual Report 2014

JASDEC has already kicked off some projects forcontribution of making the Japanese securities market
much more efficient.
During the autumn of 2015 and the beginning of
2016, the Japanese Securities Dealers Association(JSDA) is supposed to begin disclosing transaction
information of specific corporate bonds, in orderto stimulate the Japanese bond market. JASDEC

will cooperate closely with JSDA to realize smooth
operation of JSDA’s system, leveraging transaction
data of corporate bonds reported to PSMS.
	Along with this, JASDEC is participating in
consultation among market players, regarding
settlement cycle shortening of Japanese Government
Bonds (JGB) to ‘T+1’ (one business day after a trade is
executed) for outright transactions.

Figure 2. PSMS for domestic stock transactions (Centralized matching for three parties)

Stock exchanges
Notice of execution

Investment trust
management/
investment
advisory
companies

Order

Order
Notice of execution
Allocation

Pre-Settlement
Matching System (PSMS)
Investment instruction
Investment instruction andtrade report

Trade matching

Trade report

Trade report affirmation

Trust banks

SSI

Settlement
matching
Request for DVP transfer*1

Linkage with book-entry transfer systems for stocks, etc., corporate bonds and CP(excluding Japanese government bonds)*1 From January 2014 on, DVP settlement for Stock Lending and Borrowing (SLB) transactions is available.

Securities
companies

Business Overview

06

Custody Services
for Foreign Stock
Certificates, etc.
Making it easier for Japanese investors toinvest in foreign companies by handling thecomplicated procedures involved in transfers,
dividend payments and taxation.
35

Share-handling service agents (trust banks)

Notice ofbeneficial
shareholders

Dividend
information

Custodian banks

Stockexchange
DVP

Shareholder notice host

Beneficial
shareholder
reportJapan Securities Clearing Corporation

Dividend
information(handling of information concerning beneficial
shareholders, dividends, etc.)

Collateralmatching

Overseas CSDs

Notice ofbalance

Account transfer host(settlement)

Non-DVP
transferfor 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 2014

Overview of the system relating to foreign stocks

Safe and secure settlement infrastructure andservices for foreign stocks

36
Annual Report 2014

In May 2006, JASDEC inaugurated services to process
deposits, transfers, and corporate actions for foreign
stock certificates, etc., listed on Japanese stock
exchanges. Although foreign stock certificates, etc.,
are generally deposited with CSDs or custodians in thesame countries as the issuing companies, settlementsof transactions at Japanese stock exchanges are
conducted through book-entry transfers in JASDEC.
JASDEC entrusts dividend payments to relevant
share-handling service agents. Information on beneficial
shareholders at the dividend record date is transferredto the share-handling service organizations by the
JASDEC participants through JASDEC.
Based on this information, the share-handlingservice agents calculate the amount of dividends, which
are then paid directly to the beneficial shareholders
from the dividend-paying banks.

Foreign stocks, etc. account balance andnumber of issues (excluding foreign covered warrants)(Thousand shares)
150,000

42(Issues)50
41

120,000
90,00079,53189,90538
88,93037
86,57739
92,42240■ Balance in accounts● Number of issues

JASDEC also undertakes the necessary procedures
regarding dividend taxation for local tax authorities andother such entities, to ensure reduced tax rates undertax treaties with the countries concerned. Beneficial
shareholders can also exercise their voting rights at
general meetings of shareholders through instructions
issued to JASDEC.
JASDEC therefore provides the infrastructure andservices necessary for reliable settlement of trading
activities in foreign stock certificates, etc., smooth
exercise of shareholder rights, and error-free receipt ofdividends and other payments.

Number of sharesdeposited/withdrawn■N umber of sharesdeposited■N umber of shares
withdrawn(Thousand shares)
500,000

480,306

300,000
246,46530
200,000

118,585 131,801
115,478

20

60,00030,00010

100,000

71,16759,727
22,628 16,863

15,6500(FY) 2009

2010

2011

2012

2013

0

0

(FY) 2009

2010

2011

2012

2013

06 Custody Services for Foreign Stock Certificates, etc.

Service improvements for beneficial
shareholders and participantsBook-entry
transfers(Thousand shares)
500,000

300,000

469,524

274,119

200,000

365,437
302,746
258,701

236,159

158,573

163,944
133,511

100,0000(FY) 2009

2010

2011

115,001

2012

2013

■ Non-exchangetransaction deliveries■ Exchangetransaction transfers

services offered to beneficial shareholders and JASDEC
participants, such as considering handling products
listed in various foreign countries with prospects forlisting on Japanese stock exchanges.
	At present, foreign securities under the custodyof the Depository and Book-entry Transfer System
for Foreign Stock Certificates, etc., include three
categories: foreign stocks (including ADRs), overseas
ETFs (including ETCs), and country funds. At the endof March 2014, the total number of issues handled by
JASDEC in the three categories stood at 39.

37
Annual Report 2014

In January 2014, we introduced Straight ThroughProcessing (STP) for the cancellation of deposit anddelivery requests to foreign depositories, for which
paper documents were previously required. We also
introduced a system to allow JASDEC participants tobe notified of schedules for corporate actions by meansof file transmissions, in addition to the existing system
of notices on the website.
Systems to prevent tax avoidance have been
introduced in a number of foreign countries in recent
years, and JASDEC is responding appropriately on thebasis of cooperation with the competent authorities
and involved organizations to ensure that beneficial
shareholders are not treated disadvantageously withrespect to foreign tax and that participants are notsubject to excessive administrative workload.
In addition, JASDEC has worked to improve

International Relationships

JASDEC engages in international activities
to guide the rational development of a global
settlement infrastructure. Research on
overseas trends and information sharing are
key elements of a leadership role.
Honorary Chairman

Yoshinobu Takeuchi

38
Annual Report 2014

JASDEC conducts research on overseas trends
and frequent information exchange with overseas
institutions as essential to its ongoing efforts to deal
with the many issues that affect securities market
infrastructure, such as the globalization of financial andcapital markets and the global tightening of regulations.
We participate in regular CSD meetings, seminars andother international conferences and maintain active
exchange programs with institutions with which wehave signed memorandums of understanding (MOUs).
JASDEC is also contributing to the improvementof securities market infrastructure in Japan andinternationally and raising its global presence byplaying an important role in the administration of the
Asia-Pacific Central Securities Depository Group (ACG)
and the World Forum of CSDs (WFC), and by providing
various forms of support and assistance in response torequests from emerging countries.

Mutual cooperation with overseas institutions
ACG (Asia-Pacific Central Securities Depository Group)
The ACG was established in November 1997 as a forum for
information exchange and mutual cooperation among CSDs in
the Asia-Pacific region. The ACG has for many years carried out
surveys or other activities through task forces (TFs). In addition
to TFs, the Executive Committee with three-year term wasformed to plan and administer the activities of the ACG frommedium-to long-term perspectives at the 14th General Meetingin December 2010. This committee consists of all TF conveners,
together with representatives of three organizations chosen
through a general vote. Mr. Yoshinobu Takeuchi of JASDEC
served as the first ACG Executive Committee Chairman, while
JASDEC acted as Executive Committee Secretariat until the
17th General Meeting.
	At the 17th General Meeting in October 2013, the Executive
Committee was renewed upon the expiration of the first
three-year term. The new Executive Committee consists ofeight organizations. The five organizations represented on

the committee through the convener of TFs are JASDEC(Exchange of Information TF), Korea Securities Depository (KSD,
New Business Initiative TF), National Securities Depository
Limited (NSDL, Technical TF), China Securities Depository
and Clearing Corporation Limited (CSDC, Legal TF), and theCentral Depository Company of Pakistan Limited (CDC, Risk
and Recovery Management TF). The three organizations
elected to membership through the general vote are Singapore
Exchange (SGX), China Central Depository & Clearing Co.,
Ltd. (CCDC) and Central Depository Services (India) Limited(CDSL). Mr. Muhammad Hanif Jakhura of CDC was appointed
as the new Chairman among representatives of the above eightorganizations and CDC as the new Secretariat. Mr. Yoshinobu
Takeuchi of JASDEC was appointed ACG Executive Committee
Honorary Chairman. JASDEC will continue to provide leadershipin initiatives to expand and energize ACG activities.

39

WFC (World Forum of CSDs)
information exchange and discussion on issues that affect all
CSDs. The WFC is administered by a 10-member board madeup of two representatives from each regional association.
JASDEC participates on behalf of the ACG. Mr. Yoshinobu
Takeuchi of JASDEC served as Vice-Chairman until November
2012 and was then appointed Honorary Chairman.

MOUs on Information Exchange and Mutual Cooperation with Overseas CSDs, etc.
JASDEC has been working to develop collaborative
relationships with overseas institutions by signing MOUs on
the exchange of information and mutual cooperation withoverseas CSDs, etc. As of the end of March 2014, JASDEC isin bilateral cooperation with a total of 18 institutions by signing

MOUs. With MOU partners, we are actively implementing
initiatives, including regular exchanges of information, crosstraining programs involving trainee exchanges, and support for
CSDs of emerging nations.

ABMF (ASEAN+3 Bond Market Forum)
The ABMI (Asian Bond Markets Initiative), under the Meetingof the Finance Ministers and Central Bank Governors of theASEAN+3 group, comprises four Task Forces (1: charged withpromoting the issuance of local-currency-denominated bonds,
2: facilitating the demand for local-currency-denominated bonds,
3: 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 framework), and two sub-forums were
held. Sub-Forum 1 sought to identify regulatory barriers relating

to bond transactions in general and the creation of the ASEAN+3
Multi-Currency Bond Issuance Framework (AMBIF), while SubForum 2 was concerned primarily with identifying cross-border
settlement operations. The results of these deliberations werecompiled into a Phase 2 final report, which was published in April
2014. Furthermore, Phase 3 studies are currently in progress, andthe final report will be released next year.
JASDEC has participated in the ABMF as the Japanese
representative, and is actively participating in Sub-Forum 2 as theco-vice-chair.

Annual Report 2014

The WFC was created in April 2011 at the 11th Conferenceof CSDs, after agreement was reached among leaders of theworld’s five regional CSD associations. The WFC took over thecollaborative activities among regional associations from theCSD Contact Group, which had been engaged in them during
the previous four years. Its function is to strengthen the influenceof CSDs and disseminate their shared views as a forum ofInternational Relationships

Major
International
Activities in
Fiscal 2013

May 14–15

15th ACG Cross-Training Seminar
The Cross-Training Seminar is a conference for the exchange of information mainly among working
level staff of ACG member institutions. The 15th Seminar was held in Hangzhou, China, hosted
by China Central Depository & Clearing Co., Ltd. (CCDC), a Chinese CSD for bonds. JASDEC as
convener of the Exchange of Information TF assisted the host, and ran the Exchange of Information
TF session and the General session. The topic for the Exchange of Information TF session was“Comparison of risk management measures against fail-to-deliver/participant default”. In the session,
the risk management methods employed by various
institutions were compared, and JASDEC also madea presentation about the DVP settlement system for
non-exchange transaction of JASDEC DVP Clearing
Corporation. In the General session, there was an
exchange of views on governance and initiatives
relating to the CPSS-IOSCO “Principles for financial
market infrastructures” (PFMI). Furthermore, in the New
Business Initiative TF session, JASDEC introduced theenhancement of corporate action information services/
implementation of ISO 20022.

40
Annual Report 20142013.45

6

7

8

May 29–31, May 29

September 18

12th Conference of CSDs and4th WFC Board Meeting

5th WFC Board
Meeting /Sibos 2013

The 12th Conference of CSDs was hosted by the Associationof Eurasian Central Securities Depositories (AECSD) in SaintPetersburg, Russia. Participants representing CSDs fromall over the world attended presentations and took part indiscussions about various themes. Key topics included
issues arising from the global tendency toward more
stringent regulation of financial markets, and the response of
CSDs to those issues, actions relating to the CPSS-IOSCO’s
PFMI, and initiatives in new areas of business.
In closing, the top management of CSDs from Japan, theUnited States, Europe, Russia and South Africa took part in apanel discussion about the future of the world CSD industry.
One of the panelists was Mr. Yoshinobu Takeuchi of JASDEC,
who emphasized the importance of macro-prudence acrossall financial and capital markets and spoke about the potential
to use data held by CSDs for this purpose.
The 4th WFC Board meeting was held at the sametime. JASDEC took part as the ACG representative, andMr. Yoshinobu Takeuchi of JASDEC, was appointed as
Honorary Chairman.

JASDEC participated onbehalf of the ACG in the
5th WFC Board meeting,which was held in Dubai,
the United Arab Emirates.
Topics discussed included
the establishment of a new
WFC working group for theapproach to the CPSSIOSCO’s PFMI.

9

October 20–21

March 717th ACG General Meeting

Conclusion of an MOU withKPEI of Indonesia

The 17th ACG General Meeting was held in Dhaka, Bangladesh and was hosted
by Central Depository Bangladesh Limited (CDBL), the Bangladeshi CSD. JASDEC
served in its role as the Secretariat for the Executive Committee including a reporton activities during its three-year tenure. Then, eight organizations including
JASDEC were appointed the Executive Committee members, and among them, Mr.
Muhammad Hanif Jakhura of the Central Depository Company of Pakistan Limited(CDC) became Chairman of the Executive Committee. CDC took over the Secretariat
role within the Executive Committee from JASDEC, and Mr. Yoshinobu Takeuchi
of JASDEC was appointed as ACG Executive Committee Honorary Chairman. In
addition, some action plans
were adopted, notably thecontinuation of the four TFs,
including the Exchange ofInformation TF chaired by
JASDEC, and the establishmentof the Risk and Recovery
Management TF.

JASDEC signed an MOU with Kliring
Penjaminan Efek Indonesia (KPEI), a
clearing house in Indonesia, with theaim of developing cooperative relations
via information exchange and mutual
cooperation.

41

11

12

2014.1

2

September 6

November 19–22, December 3–6

3rd Trilateral Meeting for Information Exchangewith China’s CSDC and Korea’s KSD

Trainee Exchange with KSD

JASDEC participated in the 3rd trilateral meeting held in Jeju,
Korea under the MOU with CSDC (China Securities Depository
and Clearing Corporation Limited), a Chinese CSD for listed
securities and KSD (Korea Securities Depository). The meetingprovided an opportunity for the three companies to share
information about their approach to the CPSS-IOSCO’s
PFMI, about their emergency business continuity plans, etc.
JASDEC representatives raised the topics of introduction of
ISO 20022/SWIFTNet, and adaptation to the Foreign AccountTax Compliance Act.

JASDEC and KSD held the 3rd trainee exchange
program under their MOU on informationexchange and mutual cooperation. Bothinstitutions accepted trainees, who were mostly
young and mid-tier employees. The program
enabled better reciprocal understanding by
providing the trainees with a general overview
of the activities of each institution, and better
networking among employees.

3

Annual Report 201410

Analysis of Business Performance and Financial Results
Fiscal year ended March 31, 2014 (Fiscal 2013)
In the following section, all comparisons are with the previous fiscal year unless stated otherwise.

42

Outline of Financial Results

Book-Entry Transfer System for Commercial Paper

In March 2013, the securities market reached its highest levelin four-and-a-half years. Stock prices positively reflectedarising market in the United States and Europe and reaction to
the weakening of the yen, and by May 2013, the Nikkei Stock
Average had risen from the low end of the ¥12,000 range tothe mid-¥15,000 level. There was little significant movement in
the remainder of the fiscal year, and after a repeated cycle ofrises and falls, the Nikkei was in the low end of the ¥14,000
range at the end of March 2014.
In the year ended March 31, 2014, operating revenues
increased by ¥682,839 thousand, or 3.9%, year on year to¥17,998,860 thousand, while selling, general andadministrative expenses increased by ¥56,729 thousand, or
0.4%, to ¥14,979,445 thousand. Operating income increasedby ¥626,109 thousand, or 26.2%, to ¥3,019,414 thousand,ordinary income increased by ¥600,149 thousand, or 25.7%,
to ¥2,939,660 thousand, and net income increased by¥261,724 thousand, or 17.2%, to ¥1,784,092 thousand.

The number of corporate issuers using this system increasedby two to 496 as of March 31, 2014. Account balances roseby ¥1,150.5 billion to ¥12,609.7 billion. The total number ofissuance, transfer and redemption transactions decreased by
4,506 year on year to 288,572. As a result, revenues from thissegment were ¥19,535 thousand, or 4.2%, lower year on yearat ¥443,310 thousand.

Book-Entry Transfer System for Corporate Bonds
In this business segment, JASDEC was handling a total of
55,595 issues as of March 31, 2014, a reduction of 2,891
issues compared with the position a year earlier. On a facevalue basis, the account balance increased by ¥416.1 billion
year on year to ¥253,200.1 billion as of March 31, 2014. The
total number of issuance, transfer and redemption transactions
was 36,845 lower at 495,755. As a result, revenues from thisbusiness segment increased by ¥26,313 thousand, or 2.2%,
to ¥1,237,963 thousand.

Annual Report 2014

Book-Entry Transfer System for Stocks, etc.
In this business segment, the number of issues handled by
JASDEC as of March 31, 2014 was 3,795, a increase of 42
issues compared with the total as of March 31, 2013. Accountbalances included 431.0 billion shares, a year-on-year increaseof 26.4 billion shares. The balance of bonds with share options
stood at ¥133.4 billion, which was ¥366.2 billion lower year on
year. There were 3,409.25 million account units for ETFs andbeneficial rights of trust issuing beneficial certificates, such as
JDRs, a year-on-year increase of 618.26 million units. Thebalance of account units for REITs was 13.56 million higher
year on year at 36.94 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 18,550,575
above the total for the previous reporting year at 102,742,698.
As a result, revenues from this business segment were
¥1,684,218 thousand, or 10.8%, higher year on year at¥17,293,167 thousand. This includes refunds of ¥4,223,000
thousand on book-entry transfer commissions and accountmanagement fees. Revenues after the deduction of theserefunds amounted to ¥13,070,167 thousand, a year-on-yearincrease of ¥467,218 thousand, or 3.7%.

Financial Results(consolidated)■O perating revenues■O rdinary income(Millions of yen)
25,00020,97320,00019,726

19,69817,31617,99915,00010,000
5,000

2,605

0
(FY ended) 3/2010

2,673
3/20113,699

3/20122,340
3/20132,940
3/2014

Book-Entry Transfer System for Investment Trusts

Pre-Settlement Matching System

As of March 31, 2014, JASDEC was handling a total of 7,940
issues in this business segment, including 4,962 publicly
offered investment trusts and 2,978 privately placed
investment trusts. The total represents an increase of 828
issues compared with the position as of March 31, 2013. On a
principal value basis, the account balance as of March 31,
2014 was ¥9,157.1 billion above the level a year earlier at¥124,504.6 billion, consisting of ¥89,381.1 billion for publicly
offered investment trusts and ¥35,123.4 billion for privately
placed investment trusts. The number of related registrations,deletions, and transfers in the year ended March 31, 2014
increased by 774,168 year on year to 5,399,029. As a result,revenues for this segment increased by ¥61,944 thousand, or
5.9%, to ¥1,116,897 thousand.

Revenues from this segment increased by ¥284,809 thousand,or 14.3%, to ¥2,270,430 thousand in the year ended March
31, 2014. This includes refund of ¥911,999 thousand on
JASDEC pre-settlement matching fees, and revenues after the
reduction of that amount were ¥36,809 thousand, or 2.8%,
higher at ¥1,358,430 thousand.

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

Custody Services for Foreign Stock Certificates, etc.
As of March 31, 2014, the account balance stood at 92.42
million foreign stock certificates, etc., an increase of 5.84
million from the position as of March 31, 2013. The total
number of book-entry transfers increased by 3,773 to 113,536.
However, because the average month-end account balancesin each month were lower than in the previous fiscal year,
revenues from this business segment were ¥23,833 thousand,or 15.7%, lower year on year at ¥128,211 thousand.

Financial Results(consolidated)

Financial Results(consolidated)(Millions of yen)

(Yen)

2,400

240,000

209,893.23
189,283.71

1,800 154,949.18
1,200

173,912.87 179,102.15

1,608

Annual Report 2014

In the year ended March 31, 2014, JASDEC handled 24.17
million NETD DVP settlements, a year-on-year increase of 4.52
million. Operating revenues from this segment increased by¥134,029 thousand, or 26.3%, to ¥644,597 thousand, while
operating expenses were ¥37,636 thousand, or 11.0%, higher
at ¥379,747 thousand. Operating income increased by¥96,393 thousand, or ¥57.2%, year on year to ¥264,849
thousand, and ordinary income by ¥101,218 thousand, or
77.6%, to ¥231,693 thousand. Net income amounted to¥142,861 thousand, a year-on-year increase of ¥62,157
thousand, or 77.0%.

1,478

1,784

1,522

180,000■ Net income● Net income per share■T otal assets■N et assets(Millions of yen)
75,00060,00067,78359,92557,45430,00060,0003/201157,451

120,000

600

0(FY ended) 3/2010

61,57445,0001,317

3/20123/20133/20140

43

19,86821,13622,27523,45824,902

15,0000(FY ended) 3/2010

3/20113/20123/20133/2014

Consolidated Financial Statements
The accompanying consolidated financial statements expressed in Japanese yen are the translation of those issued domestically.
The amounts expressed in U.S. dollars are not included in the original audited consolidated financial statements. Such U.S. dollar
amounts are translated in accordance with the basis stated in Note 1 to the consolidated financial statements, are additionallypresented herein solely for the convenience of readers outside Japan, and are not subject to audit.

Consolidated Balance Sheet (As of March 31, 2014)¥ (thousands)44$ (thousands)

Annual Report 2014

2013

2014

2014

ASSETS
Current Assets:
Cash and deposits
Accounts receivable—trade
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Designated assets for clearing funds (Note 1)
OthersAllowance for doubtful accounts
Total Current Assets¥ 5,433,419
3,146,777
180,864
240,051
134,935
28,935,881
30,745(6,767)38,095,907¥ 6,262,876
3,160,922
126,624
166,976
169,855
30,819,217
7,867(6,765)40,707,573$ 60,851
30,712
1,230
1,622
1,650
299,44876(65)
395,526

Non-current Assets:
Property and Equipment:
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Tools and furniture
Accumulated depreciation
Tools and furniture, net
Lease assets
Accumulated depreciation
Lease assets, net
Total Property and Equipment

957,512(498,484)
459,028
7,717,751(5,460,153)
2,257,598
93,323(82,145)
11,1772,727,803

832,971(442,192)
390,779
5,159,436(3,433,798)
1,725,638———
2,116,417

8,093(4,296)
3,796
50,130(33,363)
16,766———
20,563

Intangible Assets:
Software
Software in progress
Lease assets
OthersTotal Intangible Assets

3,632,949
11,438,204
902
17,692
15,089,748

23,203,230
418,564—
17,577
23,639,373

225,449
4,066—
170
229,686

428,237
79,589519,615
503,534
32,1381,000(26,318)
1,537,797
19,355,349¥ 57,451,257

427,474
129,805
257,824
497,970
27,7471,000(22,021)
1,319,801
27,075,591¥ 67,783,165

4,153
1,261
2,505
4,838
269
9
(213)
12,823
263,074$ 658,600

Investment and Other Assets:
Investment securities (Note 2)Long-term prepaid expenses
Deferred tax assets
Long-term refundable lease deposits
Claims probable in bankruptcy, rehabilitation and other
OthersAllowance for doubtful accounts
Total Investment and Other Assets
Total Non-current Assets
Total Assets
The accompanying notes are an integral part of these statements.

¥ (thousands)

LIABILITIESCurrent Liabilities:
Accounts payable—trade
Lease obligations
Accounts payable—other
Income taxes payable
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Consumption taxes payable
Deposits received for clearing funds (Note 1)
Allowance for asset removal
OthersTotal Current Liabilities¥$ (thousands)

2013

2014

865,312
10,462
976,411
209,735
219,297
21,800—28,935,881—
83,90731,322,808¥ 1,011,031
5,880
72,360572,372
209,106
23,0009,856
30,819,217
84,08370,18632,877,095

2014

$

9,823
57
703
5,561
2,031
223
95
299,448816
681
319,44345

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

2,000,000
6,693
442,447
30,000124,585—
67,1212,670,846
33,993,655

9,400,000
812—
30,000—510,867
62,69410,004,375
42,881,470

91,333
7
—
291
—
4,963
609
97,205
416,648

4,250,000
4,250,000
14,957,602
23,457,602
23,457,602¥ 57,451,257

4,250,000
4,250,000
16,401,694
24,901,694
24,901,694¥ 67,783,165

41,294
41,294
159,363
241,951
241,951$ 658,600

Annual Report 2014

Non-current Liabilities:
Long-term loans payable (Note 3)
Lease obligations
Allowance for employees’ retirement benefits
Allowance for executives’ retirement benefits
Allowance for asset removal
Liability for retirement benefits
Long-term guarantee deposits received
Total Non-current Liabilities
Total Liabilities

Consolidated Financial Statements

Consolidated Statement of Income and Comprehensive Income (For the year ended March 31, 2014)¥ (thousands)46$ (thousands)

Annual Report 20142013
¥ 17,316,021

2014¥ 17,998,860

2014$ 174,882

196,847
1,608,082
219,297
21,800126,242
5,273,956
5,085,062
547,025
124,585
1,719,815
14,922,715
2,393,305

196,952
1,657,727
209,106
21,800127,053
5,440,639
4,877,326
552,123
30,666
1,866,049
14,979,445
3,019,414

1,913
16,106
2,031
211
1,234
52,86247,3895,364
297
18,131
145,544
29,337

6
11,878
537
2,150
3,874
18,447

5
9,294
2,036
11,92011,17834,435

0
90
19
115
108
334

349
42,936
21,5007,443
1272,242
2,339,510

57,872
48,205—7,580
530
114,1892,939,660

562
468
—
73
5
1,109
28,562

Operating Revenue
Operating Expenses:
Executives’ compensations
Salaries
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Retirement benefit expenses
Maintenance of systems
Depreciation and amortization
Rent
Allowance for asset removal
OthersTotal Operating Expenses
Operating Income
Non-operating Income:Interest income
Operational revenue on designated assets for clearing funds
Equity in earnings of an affiliate
Registered members’ information disclosure claim charges
OthersTotal Non-operating Income
Non-operating Expenses:
Interest expenses
Commitment fees
Commission fees
Fees for fund operation of designated assets for clearing fund
OthersTotal Non-operating Expenses
Ordinary Income
Extraordinary Gain:
Reversal of allowance for loss on changes of system development policy
Total Extraordinary Gain
Extraordinary Losses:
Loss on disposal of non-current assets (Note 1)
Total Extraordinary Losses
Income before Income Taxes and Minority Interests
Income taxes—current
Income taxes—deferred
Total Income Taxes
Income before Minority Interests
Net Income
Income before Minority Interests
Comprehensive Income

216,433
216,433————

62,66962,6692,493,274
801,811
169,094970,906
1,522,368
1,522,368
1,522,368¥ 1,522,368

2,350
2,350
2,937,310
926,346
226,871
1,153,217
1,784,092
1,784,092
1,784,092¥ 1,784,092

22
22
28,5399,000
2,204
11,204
17,334
17,334
17,334$ 17,334(Details of Comprehensive Income)Comprehensive income attributable to shareholders of the parent company
Comprehensive income attributable to minority interests¥ 1,522,368—¥ 1,784,092—$ 17,334—

The accompanying notes are an integral part of these statements.

Consolidated Statement of Changes in Net Assets (For the year ended March 31, 2014)
For the year ended March 31, 2013¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 13,775,233¥ 22,275,233¥ 22,275,233———¥ 4,250,000———¥ 4,250,000(340,000)
1,522,368
1,182,368¥ 14,957,602(340,000)
1,522,368
1,182,368¥ 23,457,602(340,000)
1,522,368
1,182,368¥ 23,457,602

For the year ended March 31, 2014¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 14,957,602¥ 23,457,602¥ 23,457,602———¥ 4,250,000———¥ 4,250,000(340,000)
1,784,092
1,444,092¥ 16,401,694(340,000)
1,784,092
1,444,092¥ 24,901,694(340,000)
1,784,092
1,444,092¥ 24,901,694$ (thousands)

Shareholders’ Equity
Total Shareholders’EquityTotal Net Assets$ 145,332$ 227,920$ 227,920(3,303)
17,334
14,031$ 159,363(3,303)
17,334
14,031$ 241,951(3,303)
17,334
14,031$ 241,951

CommonStockCapitalSurplusRetained
Earnings$ 41,294$ 41,294———$ 41,294———$ 41,294

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period
The accompanying notes are an integral part of these statements.

Annual Report 2014

47

Consolidated Financial Statements

Consolidated Statement of Cash Flows (For the year ended March 31, 2014)¥ (thousands)

48
Annual Report 2014

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization(Decrease) increase in allowance for doubtful accounts(Decrease) increase in allowance for employees’ bonuses
Increase (decrease) in allowance for executives’ bonuses(Decrease) increase in allowance for employees’ retirement benefits(Decrease) increase in allowance for asset removal
Increase (decrease) in liability for retirement benefits
Interest income
Interest expenses
Equity in (earnings) loss of affiliates
Foreign exchange (gains) losses
Reversal of allowance for loss on changes of system development policy
Loss on disposal of property and equipment
Loss on disposal of intangible assets(Increase) decrease in accounts receivable—trade
Increase (decrease) in accounts payable—trade
OthersSub-totalInterest and dividends received
Interest paid
Settlement money paid
Income taxes paid
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 refund of refundable lease deposits
Payments for refund of guarantee deposits received
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from long-term loans payable
Repayment of lease obligations
Cash dividends paid
Net Cash Provided by Financing Activities
Effect of exchange rate changes on cash and cash equivalents
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 1)
The accompanying notes are an integral part of these statements.

$ (thousands)

2013

2014

2014

¥ 2,493,274
5,085,062
21,303
17,2101,200
59,142
124,585
—
(6)
349
(537)
(582)
(216,433)
12,53650,132
14,86915,587(301,878)
7,375,817
2,286
(349)
(484,159)(1,331,530)
5,562,065¥ 2,937,310
4,877,326(4,298)(10,191)
1,200(442,447)(40,501)
510,867(5)
57,872(2,036)(1,588)—2,156
193(9,753)
145,719
87,616
8,109,440
2,805(57,872)—(567,912)
7,486,460(2,270,330)(7,290,367)——(9,560,698)(191,579)(13,512,223)
100(4,426)(13,708,129)(1,861)(131,288)0(43)(133,192)

2,000,000(23,207)(340,000)
1,636,792
582(2,361,257)
7,794,677¥ 5,433,419

7,400,000(10,462)(340,000)
7,049,537
1,588
829,457
5,433,419¥ 6,262,876

71,900(101)(3,303)68,49515
8,059
52,79260,851$$

28,53947,389(41)(99)
11(4,298)
(393)
4,963
0
562
(19)
(15)
—
20
1
(94)
1,415
851
78,79327(562)—(5,517)72,740NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note on Going Concern’s Premise
None.

Basis of Preparation of the Consolidated
Financial Statements

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”)
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. (“TSS”)(3)	The Company does not have any other associatedcompanies to which the equity method is applied.

5. Significant Accounting Policies(1) Depreciation and amortization of major depreciable assets
q Property and equipment (excluding lease assets)
Depreciation of property and equipment excluding leaseassets is calculated using the straight-line method.
The major estimated useful lives are as follows:		 Buildings and accompanying facilities: 3—50 years
		 Tools and furniture: 2—15 years
w Intangible assets (excluding lease assets)
Amortization of intangible assets is calculated using thestraight-line method.
Software for internal use is amortized over an estimateduseful life of 5 years.
e Lease assets
The straight-line method is applied to the depreciation ofassets leased under finance leases without ownership transfer,over their respective lease term with zero residual value.
The Company accounts for finance leases withoutownership transfer as operating leases if their transactioncommenced before April 1, 2008.
(2) Provision of major allowancesq Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amountdetermined based on the Company’s historical averagecharge-off ratio for ordinary receivables, and estimates of
uncollectible amounts determined by reference to specificdoubtful receivables from customers which are experiencing
financial difficulties.
w Allowance for employees’ bonuses
Allowance for employees’ bonuses is provided for bonuses
attributable to each fiscal year based on the estimated amountof the respective payments.
e Allowance for executives’ bonuses
Allowance for executives’ bonuses is provided for bonuses
attributable to each fiscal year based on the estimated amountof the respective payments.

49
Annual Report 2014

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 theJapanese Financial Instruments and Exchange Act and its
related accounting regulations, and in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥102.92 to $1, the approximate rateof exchange at March 31, 2014. Such translations should not
be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any
other rate.

4. Fiscal Year of the Consolidated Subsidiary
The fiscal year-end of the consolidated subsidiary is the samedate as the consolidated balance sheet date.

Notes to the Consolidated Financial Statementsr Allowance for asset removal
Allowance for asset removal is provided at the amountestimated to be incurred for the anticipated asset
dismantlement.
t Allowance for executives’ retirement benefits
Allowance for executives’ retirement benefits is provided at
the amount that would be payable by the Company if alleligible executives terminated their appointment at the balance
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 the scheme
existed, attributable to the period from their appointment to
the date of abolishment of the scheme.

50
Annual Report 2014(3)	Scope of cash and cash equivalents for the consolidated
statement of cash flows
Cash and cash equivalents include cash on hand, deposits at
demand, and short—term investments with a maturity of threemonths or less carrying insignificant risk of any fluctuation inmarket value.
(4) Accounting policy for retirement benefits
Liability for retirement benefits is provided at the amountthat would be payable by the Company if all eligible
employees voluntarily terminated their employment at thebalance sheet dates.
(5)	Other significant accounting policies for preparation of
consolidated financial statements
Consumption taxes
Consumption taxes are excluded from income or expenses.

Notes to the Consolidated Balance Sheets
1. ‌Assets and Liabilities Held for Sound Settlement System
Operation and Management
In order to secure the Delivery Versus Payment (“DVP”) for the
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 156-7, Paragraph 1 of the Financial
Instruments and Exchange Act (Act 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 from otherassets in accordance with JDCC’s general provisions andArticle 18 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 to counterparties, the
DVP participants involved in the transactions shall assume thesame 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 the respective
obligations of DVP participants are covered (the aggregate
amount of minimum participant funds required by JDCC’s
general provisions as of March 31, 2014 was ¥15,000,000
thousand ($145,744 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 fromthe participant 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 general provisions of JDCC.
These money trusts are evaluated at cost, as available-forsale securities with no market value.
Assets and liabilities pertaining to participant funds arepresented as designated assets for clearing funds anddeposits received for clearing funds, respectively.

(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 thatobligations 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.

(2) Commitment line agreements
q The Company¥ (thousands)

2013

As of March 31

Aggregate amountof credit limit$ (thousands)

2014¥ 3,500,000

2014
—

—

Amount used

2,000,000——

Unused balance¥ 1,500,000——

w JDCC¥ (thousands)

The market value of collateral securities entrusted to JDCC asof March 31, 2013 and 2014 was as follows:¥ (thousands)
As of March 31

Market value of collateral
securities entrusted
to JDCC2013$ (thousands)

2014

2014

¥ 92,917,708 ¥ 85,979,672$ 835,402

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

2013

2014

2014

¥ 428,237¥ 427,474$ 4,153(1) Overdraft contracts¥ (thousands)

Aggregate maximum
amount of overdraft
amounts
Amount used
Unused balance¥ 45,000,000 ¥ 45,000,000

Amount used
Unused balance

2014

—

$ (thousands)

2013

2014

2014

¥ 7,000,000¥ 7,000,000$ 68,013———¥ 7,000,000¥ 7,000,000$ 68,013$ 437,232——¥ 45,000,000 ¥ 45,000,000$ 437,232

Notes to the Consolidated Statement of
Income and Comprehensive Income

51

1. Loss on Disposal of Non-current Assets
The following table shows details of loss on disposal of
non-current assets:¥ (thousands)

3. Overdraft Contracts and Commitment Line Agreements
To ensure prompt and stable fundraising, the Company has
concluded overdraft contracts with four banks. In addition, toprepare 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 unused balances of these overdraft contracts andcommitment line agreements were summarized as follows:

As of March 31

Aggregate amountof commitment line
agreements$ (thousands)

2014

2013

For the years ended March 31

Buildings andaccompanying facilities¥784$ (thousands)

2014

2014

¥

264

$ 2

Tools and furniture

11,752

1,892

18

Software36,652——

Software in progress

13,480193

1¥ 62,669¥ 2,350

$ 22

Total

Annual Report 2014

Investment securities(equity securities)$ (thousands)

2013

As of March 31

Notes to the Consolidated Financial Statements

Notes to the Consolidated Statement of Changes in Net Assets
For the year ended March 31, 2013
1. Outstanding SharesClass of share

Ordinary shares

April 1, 2012

Increase

Decrease

March 31, 2013

8,500

—

—

8,500

Class ofshare

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinaryshares¥ 340,000¥ 40,000March 31, 2012

June 19, 2012

2. Treasury Stock
None.
3. Stock Subscription Rights and Other Securities
None.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders’ Meeting (June 18, 2012)52(2)	Dividends for which the record date is in the year ended March 31, 2013 and for which the effective date is in the following
fiscal year

Annual Report 2014

Resolution

Ordinary General
Shareholders’ Meeting (June 17, 2013)

Class ofshare

Payment source

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinarysharesRetainedearnings¥ 340,000¥ 40,000March 31, 2013

June 18, 2013

For the year ended March 31, 2014
1. Outstanding SharesClass of share

Ordinary shares

April 1, 2013

Increase

Decrease

March 31, 2014

8,500

—

—

8,500

2. Treasury Stock
None.
3. Stock Subscription Rights and Other Securities
None.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders’ Meeting (June 17, 2013)

Class ofshare

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinaryshares¥ 340,000($ 3,303 thousand)¥ 40,000($ 388)March 31, 2013

June 18, 2013(2)	Dividends for which the record date is in the year ended March 31, 2014 and for which the effective date is in the following
fiscal year
Resolution

Ordinary General
Shareholders’ Meeting (June 16, 2014)

Class ofshare

Payment source

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinarysharesRetainedearnings¥ 510,000($ 4,955 thousand)¥ 60,000($ 582)

March 31, 2014

June 17, 2014

Notes to the Consolidated Statementsof Cash Flows(1) ‌Acquisition cost, accumulated depreciation andnet book value

1. ‌The Balance of Cash and Cash Equivalents and its
Reconciliation to the Balance of Cash and Deposits in theConsolidated Balance Sheet¥ (thousands)

2013

2014

2014

¥ 5,433,419¥ 6,262,876$ 60,851

5,433,419

6,262,876

60,851For the years ended March 31

Cash and deposits$ (thousands)

Cash and cash equivalents¥ (thousands)
As of March 31

Acquisition cost

¥—

¥—

$—

—

—

—

Net book value

¥—

¥—

$—

¥—

¥—

$—

—

—

—

¥—

¥—

$—

Software:

Net book valueq Leased assetsa) Property‌and equipment: Mainly backup system hardwareb) Intangible assets: Mainly backup system software

Finance lease transactions other than those in which theownership of the leased assets is transferred to the lessee thatcommenced before April 1, 2008, continue to be accounted
for as operating lease transactions. The following are theamounts which would have been recorded as if capitalized as
finance leases as of March 31, 2013 and 2014, and for theyears then ended:

Total:
Acquisition cost

¥—

¥—

$—

Accumulated
depreciation

—

—

—

Net book value

¥—

¥—

$—

(2) Minimum lease payment including interest thereon¥ (thousands)$ (thousands)

As of March 31

2013

2014

2014

Due within one year

¥—

¥—

$—

Due over one year
Total

—

—

—

¥—

¥—

$—

(3)	Finance lease charges, depreciation expenses andinterest portions¥ (thousands)$ (thousands)

For the years ended March 31

2013

2014

2014

Finance lease charges¥ 219,193¥—$—

Depreciation expenses

216,083

—

—

346

—

—

Interest portions(4) ‌Methods applied in calculating depreciation expenses
and interest portions
Methods applied in calculating depreciation expenses:
Straight—line method with zero residual value over the lease
contract period
Methods applied in calculating interest portions: Computed
as the difference between the lease obligations and theacquisition cost equivalents, allocated over the respective
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, 2013 and 2014.
2. Operating Lease Transactions
Minimum lease payment on the operating lease transactions
that are not cancellable
None.

53
Annual Report 2014

w Depreciation method
The depreciation method is described in Basis of Preparationof the Consolidated Financial Statements, 5. Significant
Accounting Policies, (1) Depreciation and amortization of major
depreciable assets.

2014

Accumulated
depreciation

Acquisition cost

1. Finance Lease Transactions
Finance lease transactions that do not transfer the ownershipof the leased assets to the lessee

2014

Tools and furniture:

Accumulated depreciation

Lease Transactions$ (thousands)

2013Notes to the Consolidated Financial Statements

Financial Instruments

Designated assets and deposits received for clearing funds
are assets and liabilities that are held to secure the DVP for the
NETDs settlement system.
Most of the accounts payable—trade are due within
three months.
Long-term loans payable aim mainly at capital investment,
and mature on or before March 31, 2018. As they carryvariable interest rates, they are subject to interest volatility risk.

1. General Information on Financial Instruments(1) Basic policies for financial instruments
The Company limits financial investments to short-term
deposits, and fundraising 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 risk ofparticipants in the book-entry transfer system. The Company
continuously monitors the financial conditions of theparticipants in accordance with internal policies.

2. Estimated Fair Value of Financial Instruments
The following table presents carrying amount on the consolidated balance sheet, fair value, and difference between the carrying
amount and the fair value as of March 31, 2013 and 2014. It does not, however, include those for financial instruments for which
the fair value is extremely difficult to estimate (see Note 2).

54

As of March 31, 2013
¥ (thousands)
Carrying amount on
the balance sheet

Annual Report 2014

(1) Cash and deposits¥—

3,140,015

3,140,015—

28,935,881

28,935,881—¥ 37,509,316¥ 37,509,316

—

¥

¥

3,146,777(6,762)

Allowance for doubtful accounts*(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds¥

Difference

5,433,419(2) Accounts receivable—trade

5,433,419

Fair value(865,312)(28,935,881)(865,312)—(28,935,881)—(6) Long-term loans payable(2,000,000)(2,000,000)—

Liabilities total¥ (31,801,193)¥ (31,801,193)—* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

As of March 31, 2014
¥ (thousands)$ (thousands)¥ (thousands)

Carrying amount on the balance sheet(1) Cash and deposits(2) Accounts receivable—trade¥6,262,876
3,160,922

Assets total(4) Accounts payable—trade60,851¥

6,262,876$

Difference

60,851——30,712(6,752)(65)

3,154,170

30,646

3,154,170

30,64630,819,217

299,448

30,819,217

299,448—¥ 40,236,263$ 390,946¥ 40,236,263$ 390,946—¥ (1,011,031)$$

Allowance for doubtful accounts*(3) Designated assets for clearing funds$$ (thousands)

Fair value(9,823)¥ (1,011,031)(9,823)—(5) Deposits received for clearing funds(30,819,217)(299,448)(30,819,217)(299,448)—(6) Long-term loans payable(9,400,000)(91,333)(9,400,000)(91,333)

Liabilities total¥ (41,230,248)$ (400,604)¥ (41,230,248)$ (400,604)* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

—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 the NETDs settlement system.
(6) Long-term loans payable:
The book value was deemed to be fair value since they
carry contracted variable interest rates which reflectmarket interest rates, thus the book value approximatesfair value.

2013

2014

¥ 428,237 ¥ 427,474

2. Retirement Benefit Obligation¥ (thousands)

As of March 31, 2013

Category

Retirement benefit obligation¥ 442,447

Allowance for employees’ retirement benefits¥ 442,447

3. Net Periodic Benefit Costs¥ (thousands)
Category

Year ended
March 31, 2013

Service cost

¥ 77,839
48,403

Other*Net periodic benefit costs¥ 126,242$ (thousands)

2014

55

4. Actuarial Assumptions
Not applicable.

$ 4,153

These financial instruments are excluded from the abovetable because their market quotes are not available, thus
their fair value is deemed to be extremely difficult toestimate.
3. ‌Estimated redemptions for monetary claims andsecurities with maturities after the consolidated balance
sheet date
All deposits and accounts receivable—trade in the abovetable have settlement dates within one year.
4. ‌Maturity analysis for long-term loans payable and leaseobligations as of March 31, 2014
Please refer to “Details of Borrowings” in the Consolidated
Supplementary Schedules.

For the year ended March 31, 2014
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. Defined Benefit Plan(1)	Reconciliation of liability for retirement benefits at the
beginning and end of the period accounted for by thesimplified method¥ (thousands)$ (thousands)

2014

2014

Liability for retirement benefits
at the beginning of the period¥ 442,447$ 4,298

Net periodic benefit costs

78,037

758

Payments of retirement benefits(9,616)(93)¥ 510,867$ 4,963

Liability for retirement benefits
at the end of the period(2)	Reconciliation of retirement benefit obligation at the endof the period with liability for retirement benefits reflectedon the balance sheet¥ (thousands)$ (thousands)

2014

2014

Retirement benefit obligation¥ 510,867$ 4,963

Liability for retirement benefits¥ 510,867$ 4,963

Annual Report 2014

Category

Affiliated companies’ stocks¥ (thousands)

For the year ended March 31, 2013
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.

* ‌“Other” represents the amount of contribution to the defined contribution
pension plan.

2. ‌Financial instruments for which the fair value isextremely difficult to estimate(As of March 31)

Retirement BenefitsNotes to the Consolidated Financial Statements(3) Net periodic benefit costs

Net periodic benefit costs accounted
for by the simplified method¥ (thousands)$ (thousands)

2014

2014

¥ 78,037$ 758

3. Defined Contribution Plan
The amount contributed by the Company and its subsidiary to
the defined contribution pension plan was ¥49,016 thousand($476 thousand), provided as net periodic benefit costs.

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

2013

2014

Accrued business tax¥ 23,356¥ 42,901

Allowance for
employees’ bonuses

83,35474,525

724

Business facility taxes

4,056

3,899

37

Accrued social
insurance premiums

11,614

10,341

100—

29,967291

As of March 31

2014

Deferred tax assets—
current:

56
Annual Report 2014

Allowance forasset removal$

416

12,5538,220

79

134,935

169,855

1,650

157,688———

182,073

1,769

Allowance for executives’retirement benefits

10,692

10,692

103

Excess depreciation of
non-current assets

293,455

57,245

556

Excess amortizationof deferred charges
for tax purposes

7,502

5,265

51

Allowance forasset removal

47,354——

Other
Subtotal
Deferred tax assets—
non-current:
Allowance for
employees’ retirement
benefits
Liability for
retirement benefits

Other

13,614

13,240128

Valuation allowance(10,692)(10,692)(103)

Subtotal

519,615

257,824

2,505

Total deferred
tax assets¥ 654,551¥ 427,679$ 4,155

2. ‌Reconciliation between the Nominal Statutory Income Tax
Rate and the Effective Income Tax Rate
The note on the reconciliation between the nominal statutory
income tax rate and the effective income tax rate for the years
ended March 31, 2013 and 2014 was omitted since thedifference of those two was no more than 5% of the statutory
income tax rate.
3. ‌Revisions in the Amounts of Deferred Tax Assets as a
Result of a Change in the Corporate Tax Rate
On March 31, 2014, the Act to Partially Revise the Income Tax
Act (Act No. 10 of 2014) was promulgated, according to which
the Special Reconstruction Corporation Tax will no longer be
imposed starting with the fiscal year beginning April 1, 2014.
Accordingly, the statutory income tax rate used for calculating
deferred tax assets reversing after April 1, 2014 has been
reduced from the previous fiscal year’s rate of 38.0% to35.6%.
As a result, the amount of deferred tax assets decreasedby ¥12,125 thousand ($117 thousand), and the amount of
Income taxes—deferred increased by the same amount.

Segment Information

3. Information by Major Customer

Segment Information
The Company and its subsidiary have one business segment,
Book-entry Transfer of Securities, therefore segment
information has been omitted.
Related Information
For the year ended March 31, 2013
1. Information by Product or Service
Information by product or service has been omitted because
operating revenues from external customers in one businessproduct or service exceeded 90% of total operating revenues
recorded in the consolidated statement 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 overseas.

3. Information by Major Customer
Name of customer

Japan Securities
Clearing Corporation

Operating revenues¥ (thousands)

Related segment¥ 1,755,569

Book-entry Transfer
of Securities

For the year ended March 31, 2014
1. Information by Product or Service
Information by product or service has been omitted because
operating revenues from external customers in one businessproduct or service exceeded 90% of total operating revenues
recorded in the consolidated statement 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 overseas.
(2) Property and equipment
Disclosure is omitted because the Company had no property
and equipment overseas.

Operating revenues¥ (thousands) $ (thousands)

Japan Securities¥ 2,734,325
Clearing Corporation$ 26,567

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.

57
Annual Report 2014

(2) Property and equipment
Disclosure is omitted because the Company had no property
and equipment overseas.

Name of customer

Notes to the Consolidated Financial Statements

Related Party Information
1. Transactions with Related Parties(1) Transactions between the Company and related partiesa) Unconsolidated subsidiaries and associated companies
For the year ended March 31, 2013
Type

Name ofcompany

Address

Tosho
Associated System Chuo-ku,
company
ServiceTokyoCo., Ltd.

Capital¥ (thousands)¥100,000

Principal
business

Design anddevelopmentof software

Percentage ofvoting rightowning/owned

20%
owningdirectly

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment ofcomputer
Accounts¥1,600,293
maintenancepayable—tradefee¥154,676¥1,144,764

Accounts
payable—other¥101,150¥484,159——

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Purchasing
software and Purchase of
systemsoftwaremaintenance
Payment ofsettlementmoney (*3)

For the year ended March 31, 2014
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

58
Annual Report 2014

Tosho
¥100,000 Design and
Associated System Chuo-ku,($971
development
company
ServiceTokyo
thousand) of softwareCo., Ltd.

Percentage ofvoting rightowning/owned

20%
owningdirectly

BusinessrelationshipTransactions

Payment of¥1,817,213
computer
Accounts
Purchasing maintenance ($17,656
payable—trade
thousand)software andfeesystemmaintenance Purchase of ¥4,186,294
Accounts($40,675
softwarepayable—otherthousand)¥200,209($1,945thousand)¥1,045($10
thousand)

Notes:
1. The transaction amounts above exclude consumption taxes, while year-end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.
3. Settlement money was paid upon settlement of arbitration.

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, 2013
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

Financial
SubsidiaryJapan
instrumentof other
Securities Chuo-ku,¥7,350,000 obligation
affiliatedClearingTokyoassumption
companies Corporation
service

Percentage ofvoting rightowning/owned—

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Commission Commission
Accounts¥1,755,569
incomeincomereceivable—trade¥249,107

Businessrelationship

Balance at
end of period¥ (thousands)

For the year ended March 31, 2014
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

Financial
SubsidiaryJapan¥8,950,000 instrumentof other
Securities Chuo-ku,($86,960
obligation
affiliatedClearingTokyo
thousand) assumption
companies Corporation
service

Percentage ofvoting rightowning/owned—

Transactions

Commission Commission
incomeincomeNotes:
1. The transaction amounts above exclude consumption taxes, while end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.

Amount¥ (thousands)

Descriptions¥2,734,325¥221,761
Accounts($26,567($2,154
receivable—trade
thousand)thousand)c) Executives, major shareholders and others of the Company (individuals only)
For the year ended March 31, 2013
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

The Bank
Corporationof Tokyo- Chiyoda-ku,¥1,711,958,104 Banking
where
MitsubishiTokyo
executives
UFJ, Ltd.
of theCompany hold Mitsubishi
representative UFJ Trust Chiyoda-ku,¥324,279,038 Banking
and Banking
Tokyo
posts
Corporation

Percentage ofvoting rightowning/owned

BusinessrelationshipAmount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)¥600,000

Long-termloans payable¥600,000

¥15

—

—

¥300,000

Long-termloans payable¥300,000¥7——Transactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Borrowingof funds¥2,200,000¥2,820,000
Long-term($21,375($27,399
loans payable
thousand)thousand)

Payment
of interest¥17($0
thousand)Borrowingof funds¥1,100,000¥1,410,000
Long-term($10,687($13,699
loans payable
thousand)thousand)

Payment
of interest¥8($0
thousand)Transactions

Commission Borrowing
5% owned income and of funds
directly
borrowing
Paymentof fundsof interest
Commission Borrowing
5% owned income and of funds
directly
borrowing
Paymentof fundsof interest

For the year ended March 31, 2014
Type

Address

Capital¥ (thousands)

Principal
business

Percentage ofvoting rightowning/owned

Businessrelationship

The Bank¥1,711,958,104
of Tokyo- Chiyoda-ku,($16,633,871 Banking
Mitsubishi
Tokyo
thousand)UFJ, Ltd.

Commission
5% owned income anddirectly
borrowingof funds

Mitsubishi¥324,279,038
UFJ Trust Chiyoda-ku,($3,150,787
and Banking
Tokyo
thousand)Corporation

Commission
5% owned income anddirectly
borrowingof funds

Banking

Note: The terms and conditions of the above transactions are on an arm’s-length basis.

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

—

—

—

—

59
Annual Report 2014

Corporation
where
executivesof theCompany holdrepresentative
posts

Name ofcompanyNotes to the Consolidated Financial Statements

Per Share Information
¥

$

2013

2014

2014

Net assets per share¥ 2,759,717.91¥ 2,929,611.14$ 28,464.93

Net income per share¥¥$ 2,039.38

As of / for the years ended March 31

179,102.15

209,893.23

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, 2013 and 2014 is as follows:¥ (thousands)
As of March 31

Total net assets as reported in the consolidated balance sheets

2014

2014

¥ 23,457,602¥ 24,901,694$ 241,951

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)

2013
—

—

—

¥ 23,457,602¥ 24,901,694$ 241,951

8,500

8,500

—

3. The basis for calculating net income per share for the years ended March 31, 2013 and 2014 is as follows:¥ (thousands)

60

For the years ended March 31

Net income as reported in the consolidated statement of income
Net income not pertaining to common stock shareholders

Annual Report 2014

Net income pertaining to common stock shareholders
Weighted-average number of common stock shares outstanding
during the period (in shares)

Subsequent EventsNone.

$ (thousands)

2013

2014

2014

¥ 1,522,368¥ 1,784,092$ 17,334———¥ 1,522,368¥ 1,784,092$ 17,334

8,500

8,500

—

[Consolidated Supplementary Schedules]
Details of Bonds
None.

Details of Borrowings
Category¥ (thousands)¥ (thousands)

Balance as ofApril 1, 2013

$ (thousands)

Balance as of March 31, 2014

Averageinterest rate (%)

Maturity

Short-term borrowings

—

—

—

—

—

Long-term loans payable due within one year

—

—

—

—

—

57

0.4%

—

91,333

1.1%

April 3, 2017

Lease obligations due within one year¥

Long-term loans payable due over one year

¥

5,880

$

2,000,000

9,400,000

6,693

812

7

0.4%

April 1, 2015 – July 31, 2015

—

—

—

—

—

¥ 2,017,156¥ 9,406,693$ 91,398——

Lease obligations due over one year
Other interest-bearing debts

Total

10,462

Notes:
1. ‌Average interest rate above represents the weighted-average of the interest rates applicable to the balances as of March 31,
2014.
2. ‌Aggregate annual maturities of long-term loans payable and lease obligations due over one year for five years subsequent toMarch 31, 2014 are as follows:

Long-term loans payable
Lease obligations

April 1, 2015–
March 31, 2016

Other Informations
None.

April 1, 2017–
March 31, 2018

April 1, 2018–
March 31, 2019

¥ (thousands)——¥ 9,400,000—$ (thousands)——$ 91,333—¥ (thousands)

¥ 812

—

—

—

$ (thousands)

$7

—

—

—

Details of Asset Retirement Obligations
None.

April 1, 2016–
March 31, 2017

Annual Report 2014

Due
Category61

Independent Auditor’s Report62
Annual Report 2014

63
Annual Report 2014

History

1984

Relevant
Legislation

64

Organization of
JASDEC and
its Subsidiary

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

May 27th

Nov. 2nd

Japan Securities
Depository
Center (JASDEC),was established
as a foundation

JASDEC was designatedas the depositoryorganization under the
CSD Law

Detailed plan forJapan Securities
conversion of
Depository Center,
JASDEC to aInc. was establishedjoint-stock company
was announced

Jan. 4th

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

Annual Report 2014

Sept. 10th

Operation of
the System

Pre-Settlement Matching System (PSMS)
started

Oct. 9th

Oct. 9th

Nov. 26th

Depository and bookentry transfer businessstarted (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

Social contribution
Under our basic policy on social contribution activities,
we review the organizations that we support and therecipients of our assistance in our medium-term plans. In
FY2013 we modified our existing policy of providing
support mainly through monetary donations in favor of a

primary emphasis on activities that allow employees toparticipate directly in social contribution activities. Listed
below are new social contribution activities initiated in
FY2013.

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 of Bonds, etc. was amended to the
Act on Transfer of Bonds, Shares, etc.), andthe Law Concerning Central Securities
Depository and Book-Entry Transfer ofStock Certificates and Other Securities wasabolished2012

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)
was establishedJDCC obtained a license for securities
obligation assumption business to act
as a clearing organization in line with
the Securities and Exchange Act

65

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
Book-entry Transfer System
for Investment Trusts

Feb. 14th

Annual Report 2014

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 Bookentry Transfer System
for Stocks, etc.

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

Jan. 4th
Operations of SITRAS
were terminatedActivity

Organization

Ecocap Collection

Ecocap Movement

Collection of used stamps and spoiled prepaid postcards

Japan Overseas Christian Medial Cooperative Services (JOCS)

Installation of vending machines with donation functions in JASDEC offices

Japanese Red Cross Society

Introduction of “Table for Two” program

Table For Two International

Corporate Data
(As of March 31, 2014)

Profile of the company

66

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 OfficeChuo-ku, Tokyo

Consolidated Subsidiary

JASDEC DVP Clearing Corporation (Chuo-ku, Tokyo)

Number of Employees

223

Annual Report 2014

Board Members and Audit & Supervisory Board Members (As of July 1, 2014)
President & CEO

Haruhiko Kato
Executive Managing Director

Yoshinori Seyama
Executive Managing Director

Munetaka Saito
Executive Managing Director

Jun Sugie
Executive Managing Director

Hideki Kono
Director

Takashi Aiki
Executive Officer,
SMBC Nikko Securities Inc.

DirectorMoriyuki Iwanaga
Senior Executive Officer,
Tokyo Stock Exchange, Inc.

Director

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

Director

Director

Masakazu Kubota

Masayuki Hoshi

Director General,
KEIDANREN (Japan Business Federation)

Managing Executive Officer,
Mizuho Bank, Ltd.

Director

Director

Masahiko Koyanagi

Shigeyuki Maeda

Executive Director,
Japan Securities Dealers Association

LawyerDirector

Ayumi Miwa
Managing Director, Operations Head,
Citigroup Global Markets Japan Inc.

Director

Noriaki Nagai
Senior Corporate Managing Director,
Nomura Securities Co., Ltd.

Director

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

Director

Kunihisa Hama
LawyerDirector

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

Director

Satoshi Murabayashi
Managing Director,
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Director

Nobumitsu Watanabe
Managing Executive Officer,
Mizuho Trust & Banking Co., Ltd.

Standing Audit &Supervisory Board Member

Mamoru Kamio
Audit & Supervisory Board Member

Jun Ohta
Senior Managing Director,
Sumitomo Mitsui Banking Corporation

Audit & Supervisory Board Member

Hiroshi Maezono
Senior Executive Officer,
Tokai Tokyo Securities Co., Ltd.

Shares
Total shares approved for issue

10,000Total issued shares

8,500

Paid-in capital¥4,250,000,000

Shareholders

129

Number of
Stake inshares held Company (%)

Japan Exchange Group, Inc.

2,073

24.38

Japan Securities Dealers Association

1,067

12.55

Nomura Holdings, Inc.

485

5.70

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

425

5.00

Mizuho Bank, Ltd.

425

5.00

Mitsubishi UFJ Trust andBanking Corporation

424

4.98

Daiwa Securities Co. Ltd.

360

4.23

Trust & Custody Services Bank, Ltd.

340

4.00

Citigroup Global Markets Japan Inc.

321

3.77

Japan Trustee Services Bank, Ltd.

320

3.76

Organization structure
Meeting of
Shareholders

Board ofDirectors

President &CEOInternal Audit Office
Corporate Administration Group

Audit & Supervisory Board
Audit & Supervisory Board
Member’s Office

General Administration Department
Risk Management Department
Corporate Strategy Group

Corporate Strategy Department
Office of International Research and Relations
IT Strategy Department
Business Operations Group

Equity Department
Shareholders Notification Office
Fixed Income and Investment Trust Department
Post–trade Services Department
IT System Group

System Development Department
System Services Department

67
Annual Report 2014

Helping to Smooththe Operation ofJapan’s Capital Markets

Major shareholders

Moving
ForwardAnnual Report 2014

Annual Report 2014

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/