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About JSCCRegulatory Status

License granted by Regulatory Authority in Japan

In January 2003, JSCC was licensed to conduct the Financial Instruments Obligation Assumption Services(*) as the Financial Instruments Clearing Organization stipulated in Article 2, Paragraph 29 of the Financial Instruments and Exchange Act, and, in July 2020, it was licensed to conduct the Business of Assuming Commodity Transaction Debts stipulated in Article 2, Paragraph 18 of the Commodity Derivatives Act on an occasion of succeeding to the clearing services related to the commodity markets by integrating the clearing functions of Japan Commodity Clearing House Co., Ltd.. JSCC has been regulated and supervised directly by the Financial Services Agency, the Ministry of Agriculture, Forestry and Fisheries and the Ministry of Economy, Trade and Industry of Japan.
(*) At that time, in 2003, Securities Obligation Assumption Services under the Securities and Exchange Act.

JSCC provides, on a monthly basis, its clearing participants upon their request with the necessary information to calculate the amount of credit risk assets with respect to the clearing funds pursuant to paragraph 1, Article 270-8 of the notice related to the capital adequacy requirements provided by the Financial Services Agency (Japan), and therefore, falls within the definition of Qualifying Central Counterparty under the same notice.

Recognition, etc., obtained from Overseas Regulatory Authorities

Since the financial crisis in 2008, each country has been taking necessary steps for further progress of the central clearing of OTC derivatives. In order to provide clearing services to overseas financial institutions, JSCC has obtained recognitions, etc. from overseas regulatory authorities as follows:

【U.S.】Exempt DCO (subject to Interest Rate Swap Clearing Business and Credit Default Swap Clearing Business)

  • With regard to an exemption from the requirement under the U.S. Commodity Exchange Act to register as a Derivatives Clearing Organization (DCO) in relation to Interest Rate Swap Clearing Business, in October 2015, JSCC has received an Order of Exemption from Registration from the U.S. Commodity Futures Trading Commission (CFTC) pursuant to Section 5b (h) of the Act.
  • To go to the press release regarding the Exemption Order above, please click here.
  • Consecutively, JSCC received a decision of the CFTC to expand the scope of cleared products to any swaps under CFTC jurisdiction for the exemption from registration as a DCO in May 15, 2017.
  • With these orders, by clearing through JSCC, its Clearing Participants and their Affiliates that are U.S. Persons have been able to fulfill the centralized clearing mandate under the U.S. Commodity Exchange Act in relation to any swaps under CFTC jurisdiction subject to JSCC Clearing.
  • To go to the press release regarding the expansion of scope of cleared products subject to the exemption, please click here.

【EU】The Third-Country CCP (subject to All of Clearing Businesses)

  • In April 2015, JSCC was recognized as a third-country CCP by the European Securities and Markets Authorities (ESMA) pursuant to Article 25 of the European Market Infrastructure Regulation (EMIR), which was adopted in July 2012.
  • With this recognition, by clearing through JSCC, EU financial institutions have been able to fulfill their obligation to centrally clear OTC derivatives, which is required by EMIR. (*)For details of JSCC’s Clearing Participants (Category1) in association with the Clearing Obligation under EMIR, please click here.
  • As a third-country CCP, JSCC is also considered a Qualifying Central Counterparty (QCCP) in relation to EU capital regulations. The requirements impose significantly higher capital charges on EU financial institutions with exposures to non-QCCPs. However, with JSCC’s QCCP status, EU clearing participants have been able to utilize JSCC’s clearing services without being subject to the higher charges.
  • To go to the press release regarding Third-Country CCP, please click here.

【Australia】Designation as Prescribed CCP (subject to Interest Rate Swap Clearing Business)

  • JSCC has been designated by the Australian Authority as a Prescribed CCP in the “Corporations Amendment (Central Clearing and Single-Sided Reporting) Regulations 2015 (Select Legislative Instrument No. 157, 2015),” in relation to OTC derivatives regulations in Australia.
  • With this designation, by clearing through JSCC, Australian financial institutions have been able to fulfill the proposed Australian centralized clearing mandate for OTC derivatives.
  • To go to the press release regarding the Designation as Prescribed CCP, please click here.

【Hong Kong】ATS-CCP and Designated CCP (subject to Interest Rate Swap Clearing Business)

  • With regard to IRS Clearing Services, in August 2016, JSCC was authorized by the Securities and Futures Commission (SFC), pursuant to Securities and Futures Ordinance of Hong Kong, as an ATS-CCP, which is the qualification required for JSCC to provide OTC derivatives clearing services to Hong Kong corporations, and as a designated CCP, which makes JSCC available for trading parties to fulfill their mandatory central clearing requirements(Obtained NOTICE OF AUTHORIZATION TO PROVIDE AUTOMATED TRADING SERVICE and NOTICE OF DESIGNATION).
  • As a result of the ATS-CCP and designated CCP authorizations, granted to JSCC, Hong Kong financial institutions have been able to fulfill their clearing mandate for OTC derivatives trades in Hong Kong, by clearing through JSCC.
  • To go to the press release regarding ATS-CCP and designated CCP, please click here.

【Switzerland】Foreign Central Counterparty (subject to Interest Rate Swap Clearing Business)

  • With regard to IRS Clearing Services, in January 2018, JSCC was recognized as a foreign central counterparty by the Swiss Financial Market Supervisory Authority (FINMA) pursuant to Article 60 of the Financial Market Infrastructure Act (FMIA).
  • With this recognition, by clearing through JSCC, Swiss financial institutions have been able to fulfill the Swiss centralized clearing mandate for OTC derivatives.
  • To go to the press release regarding the foreign central counterparty recognition, please click here.

【Canada】Exempt Clearing Agency (subject to Interest Rate Swap Clearing Business)

  • With regard to exemption from recognition as a clearing agency under laws of Ontario, Canada in relation to Interest Rate Swap Clearing Business, in September 2023, JSCC was granted Order of Exemption from Registration by the Ontario Securities Commission (OSC).
  • Also, the financial regulatory authorities in Ontario and Quebec issued an interim exemptive relief for JSCC with respect to the substituted compliance with the National Instrument setting forth OTC derivatives' customer clearing and customer protection by compliance with the relevant Japanese regulations.
  • To go to the press release regarding the interim exempt order, please click here.

【UK】The Third-Country CCP (subject to All of Clearing Businesses)

  • JSCC has been temporally recognized as a third-country CCP by the Bank of England pursuant to UK Statutory Instrument (The Central Counterparties (Amendments, etc., and Transitional Provision) (EU Exit) Regulations 2018), which was implemented in November 2018.