The operational flow from trading to settlement is divided into three phases; 'trading in markets,' 'clearing at the clearing organization' and 'settlement at settlement organizations.'
In Japan, there are four stock exchanges including Tokyo Stock Exchange, Inc. (TSE) that handle trading of cash products. The clearing operations are conducted by Japan Securities Clearing Corporation (JSCC) for equity and fixed income products traded on these markets. In the past, each exchange market had its own clearing institution. However, since January 14, 2003, the exchanges have entrusted clearing of transactions to JSCC, which has provided cross-market clearing operations.
Furthermore, the clearing operations for Index Futures & Options (e.g. Nikkei 225 and TOPIX), Individual Options and JGB Futures & Options have been conducted by JSCC since clearing functionality of Osaka Exchange, Inc. (OSE) Listed Derivatives was integrated into JSCC on July 16, 2013. And also, JSCC has been providing the clearing services for securities transactions executed on PTS, OTC derivatives, and OTC JGB Transactions.
Trades cleared by JSCC are settled at the following organizations.
Stocks and convertible bonds etc. ---Japan Securities Depository Center, Inc. (JASDEC)
Japanese government bonds---The Bank of Japan
Funds---The Bank of Japan or commercial banks which JSCC designates as fund settlement banks
Functions / Roles of Organizations related to Trading, Clearing and Settlement