Interest Rate SwapClearing Qualification
Requirements for Acquisition of IRS Clearing Qualification
- Key criteria for acquisition and maintenance of the Clearing Qualification related to Interest Rate Swap Transactions prescribed by JSCC (hereinafter referred to as the “IRS Clearing Qualification”) are as described below.
- With respect to the criteria for financial basis, satisfaction by a parent guarantee is permitted. Please see Article 9, Paragraph 2 of the “Interest Rate Swap Clearing Business Rules” for details of the parent guarantee.
- Please refer to “Guideline on Standard for Clearing Qualification Acquisition in Credit Default Swap and Interest Rate Swap Clearing” for JSCC’s major view points on examination and points to be confirmed (guidelines).
Requirements for Clearing Qualification
- Principal criteria for acquisition and maintenance of IRS Clearing Qualification are as follows:
1.Financial Instruments Business Operator or Registered Financial Institution;
2.Satisfies certain criteria with respect to financial conditions (see Table 1);
3.Has sound management structure and appropriate business execution structure as a Clearing Participant.
＜Table 1＞ Acquisition / Maintenance Criteria
| Financial Instruments Business Operator | |
|---|---|
| Net Capital Amount | Not less than the lesser of USD50 million and 5 billion yen |
| Capital-to Risk Ratio(*1) | More than 200％ (more than 250％) |
| Creditworthiness | Has sufficient creditworthiness (*2) |
The level shown in parenthesis shall apply when JSCC deems necessary.
| Registered Financial Institution | ||
|---|---|---|
| Net Capital Amount | Not less than the lesser of USD50 million and 5 billion yen | |
| Capital Adequacy Ratio (*3) |
Uniform International Standard (*4) | (1) Common Equity Tier1 ratio (*5): more than 4.5％ (more than 5.625%) (2) Tier1 ratio: more than 6% (more than 7.5%) (3) Total Capital ratio: more than 8% (more than 10%) |
| Domestic Standards | More than 4% (more than 5%) | |
| Solvency Margin Ratio (*6) | More than 400% (more than 500%) | |
| Credit Worthiness | Has sufficient creditworthiness (*2) | |
The levels shown in parenthesis shall apply when JSCC deems necessary.
- *1：
- The same shall apply to a Special Financial Instrument Business Operator which files the notification prescribed in Article 57-5, Paragraph 2 of the Act.
- *2：
- Please see “Guidelines related to Credit Standing of Clearing participants, etc. in IRS Clearing Business” for the judgment of credit standing
- *3：
- In respect of a Registered Financial Institution other than insurance company, non-consolidated or consolidated capital adequacy ratio under the Uniform International Standard, if it has any overseas office(s), or non-consolidated or consolidated capital adequacy ratio under the Standards in Japan, if it has no overseas business office. In respect of a foreign bank, it shall satisfy equivalent conditions.
- *4：
- Applies to a bank subject to Uniform International Standards, The Norinchukin Bank and The Shoko Chukin Bank, Ltd.
- *5：
- This shall be Common Investment Tier1 ratio for The Norinchukin Bank.
- *6：
- Applies to insurance company.
