Compliance Report ISSA Recommendations 2000

ISSA - International
Securtities Services Association

Compliance to the ISSA Recommendations 2000

Market: Japan

Status: September 24, 2001

Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4

Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1. Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)? Electronic linkages are established between JASDEC and stock exchanges. (Stock exchanges all have clearing organisation functions.)

2. Is there one or more depository or settlement system in the market? Only share certificates and a certain types of investment trust beneficiary certificates are eligible at JASDEC. Japanese Government Bonds are handled at the Bank of Japan registration system and book-entry system. Corporate and municipal bonds may be registered at banks.

3. If there are several, has a consolidation been considered? If yes, by when? JASDEC contemplates to expand the scope of types of eligible securities in the near future. It will meet recommendations the Finance Council, an advisory board to Minister of Finance, made in the report issued in June 2000. The entire registration system for corporate bonds under the Corporate Bond Registration Law is now under review by the industry. Convertible bonds currently scheduled for admission to JASDEC on November 26, 2001. Other types of bonds (straight and CP) are not in schedule as yet.

4. Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members? The law does not anticipate that the securities system will have other domestic or foreign securities systems to establish direct links (except a link between a stock exchange clearing function and a securities system) on an equal basis to local members.

5. Does (do) the securities system(s) allow foreign market participants to become direct participants? Non-residents are not allowed to participate directly to the JASDEC system.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	Electronic linkages are established between JASDEC and stock exchanges. (Stock exchanges all have clearing organisation functions.)
2.	Is there one or more depository or settlement system in the market?	Only share certificates and a certain types of investment trust beneficiary certificates are eligible at JASDEC. Japanese Government Bonds are handled at the Bank of Japan registration system and book-entry system. Corporate and municipal bonds may be registered at banks.
3.	If there are several, has a consolidation been considered? If yes, by when?	JASDEC contemplates to expand the scope of types of eligible securities in the near future. It will meet recommendations the Finance Council, an advisory board to Minister of Finance, made in the report issued in June 2000. The entire registration system for corporate bonds under the Corporate Bond Registration Law is now under review by the industry. Convertible bonds currently scheduled for admission to JASDEC on November 26, 2001. Other types of bonds (straight and CP) are not in schedule as yet.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	The law does not anticipate that the securities system will have other domestic or foreign securities systems to establish direct links (except a link between a stock exchange clearing function and a securities system) on an equal basis to local members.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	Non-residents are not allowed to participate directly to the JASDEC system.