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Listed ProductsClearing Qualification

Clearing Participant

  • A person who becomes the other party to the Financial Instruments Obligation Assumption Service or Business of Assuming Commodity Transaction Debts is called a “Clearing Participant” (Article 156-7 of the Financial Instruments and Exchange Act (“FIEA”), Paragraph 19, Article 2 of the Commodity Derivatives Act).JSCC sets forth matters relating to the requirements for Clearing Participants.

Clearing Qualification

  • As JSCC assumes obligations as a Clearing Organization and is exposed to credit risk of each trade counterparty, it needs to manage credit risk of the Participant.For such purpose, JSCC sets out the requirements to qualify as Clearing Participant (acquisition criteria and maintenance criteria), and any person who intends to become a Clearing Participant must apply for an acquisition of the Clearing Qualification to JSCC and obtain its approval.
  • The Clearing Qualification related to listed products at JSCC is classified into eleven categories, namely, Securities Clearing Qualification, JGB Futures Clearing Qualification, Index Futures Clearing Qualification, Precious Metal Futures Clearing Qualification, Rubber Futures Clearing Qualification, Agricultural Futures Clearing Qualification, Petroleum Futures Clearing Qualification, Energy Futures Clearing Qualification, Dojima Agricultural Futures Clearing Qualification, Dojima Sugar Futures Clearing Qualification and ETF Special Clearing Qualification (including Registered ETF Trust Bank set under ETF Clearing framework related to ETF Creation/Redemption, apart from Clearing Qualification). These Clearing Qualifications may be obtained according to the status of participation in trading at the exchanges, etc.
  • Each Clearing Qualification (excluding ETF Special Clearing Qualification) is further divided into two types: i.e., Principal Clearing Qualification and Agency Clearing Qualification. The Principal Clearing Qualification only authorizes clearing of trades executed by the Clearing Participant on its behalf at the market (including those entrusted by customers), and the Agency Clearing Qualification authorizes clearing of trades executed by other person at the market, as well as trades executed by the Clearing Participant on its behalf (including those entrusted by customers).
  • If a Financial Instruments Business Operator, a Registered Financial Institution a Commodity Futures Trading Firm or a Commercial which is a trading participant of an exchange or PTS is a Clearing Participant, it will settle its securities or commodity futures trading directly through JSCC, the Clearing Organization. However, if such Financial Instruments Business Operator or a Registered Financial Institution is not a Clearing Participant, it is not authorized to directly settle its trades executed at the market it participates in, and must settle such trades through a Clearing Participant of JSCC who has obtained the Agency Clearing Qualification.

Criteria for Clearing Qualification (Securities, JGB Futures, Index Futures)

  • Major acquisition and maintenance criteria for Clearing Qualification related to the listed products at JSCC are as follows:
     (1) To be a Financial Instruments Business Operator, a Registered Financial Institution or a Securities Finance Company.
     (2) To satisfy certain criteria as to financial conditions (see Table 1 and 2).
     (3) To have management structure and business execution structure that are appropriate as a Clearing Participant.

<Table 1> Acquisition Criteria

● Financial Instruments Business Operator Principal Clearing Qualification Agency Clearing Qualification
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan) Not less than JPY2bil (*1) Not less than JPY20bil (*1)
Capital-to-Risk Ratio More than 200% More than 200%
Consolidated Capital-to-Risk Ratio (*2) More than 200% More than 200%
● Registered Financial Institution Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (*3) Not less than JPY300mil Not less than JPY300mil
Net Assets Not less than JPY2bil (*4) Not less than JPY20bil (*4)
Capital Adequacy Ratio (*5) Uniform International Standard (i) (*6) (1) Common Equity Tier 1 ratio (*7,8): more than 4.5%

 

(2) Tier 1 ratio: more than 6% (*8)

(3) Total capital adequacy ratio: more than 8%

(1) Common Equity Tier 1 ratio (*7,8): more than 4.5%

 

(2) Tier 1 ratio: more than 6% (*8)

(3) Total capital adequacy ratio: more than 8%

Uniform International Standard (ii) (*9) More than 8% More than 8%
Domestic Standards More than 4% More than 4%
Solvency Margin (*10) More than 400% More than 400%

<Table 2> Maintenance Criteria

● Financial Instruments Business Operator Principal Clearing Qualification Agency Clearing Qualification
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan) Not less than JPY300mil Not less than JPY20bil
Capital-to-Risk Ratio Not less than 120% Not less than 200%
Consolidated Capital-to-Risk Ratio Not less than 120% Not less than 200%
● Registered Financial Institution Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (*3) Not less than JPY300mil Not less than JPY300mil
Net Assets Not less than JPY300mil Not less than JPY20bil
Capital Adequacy Ratio (*5) Uniform International Standard (i) (*6) (1) Common Equity Tier 1 ratio (*7,8): not less than 2.25%

 

(2) Tier 1 ratio: not less than 3% (*8)

(3) Total capital adequacy ratio: not less than 4%

(1) Common Equity Tier 1 ratio (*7,8): not less than 4.5%

 

(2) Tier 1 ratio: not less than 6% (*8)

(3) Total capital adequacy ratio: not less than 8%

Uniform International Standard (ii) (*9) Not less than 4% Not less than 8%
Domestic Standards Not less than 2% Not less than 4%
Solvency Margin (*10) Not less than 100% Not less than 400%

Clearing Qualification Criteria (Commodity Futures)

  • Major acquisition and maintenance criteria for Clearing Qualification related to the listed products at JSCC are as follows:
    (1) To satisfy certain criteria as to financial conditions (see Table 3 and 4).
    (2) To have management structure and business execution structure that are appropriate as a Clearing Participant.
    (3) To be a trading participant or a member of the Designated Market Operator. (in case of Principal Clearing Qualification)
  • For financial basis, acquisition criteria can be satisfied with the provision of Parental Guarantee. For details of Parental Guarantee, please refer to Item 3, Paragraph 3, Article 7 of the "Business Rules "

<Table 3> Acquisition Criteria

● Financial Instruments Business Operator
●Commodity Futures Trading Firm
(※10
Principal Clearing Qualification Agency Clearing Qualification
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan)/ Total Amount of Capital Contribution Not less than JPY2bil Not less than JPY20bil
Capital-to-Risk Ratio / Required Net Asset Ratio Capital-to-Risk Ratio
Not less than 200%
Required Net Asset Ratio
Not less than 200% (※11)
Capital-to-Risk Ratio
Not less than 200%
Required Net Asset Ratio
Not less than 200% (※11)
● Registered Financial Institution (※12) Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (※3) Not less than JPY300mil Not less than JPY300mil
Total Amount of Capital Contribution Not less than JPY2bil (*4) Not less than JPY 20bil (*4)
Capital Adequacy Ratio (*5) Uniform International Standard (i) (*6) (1) (1) Common Equity Tier1 ratio (※7, 8)
Not less than 4.5%

 

(2) Tier 1 ratio: more than 6% (*8)

(3) Total Capital Adequacy Ratio Not less than 8%

(1) (1) Common Equity Tier1 ratio (※7, 8)
Not less than 4.5%

 

(2) Tier 1 ratio: more than 6% (*8)

(3) Total Capital Adequacy Ratio Not less than 8%

Domestic Standards Not less than 4% Not less than 4%
Solvency Margin (*9) Not less than 400% Not less than 400%

 

●Commercials Principal Clearing Qualification
Stated Capital Not less than JPY300mil
Net Worth (Jun Zaisan) / Total Amount of Capital Contribution Not less than JPY2bil
Status of Equity Capital Adequate in light of the assets and the like it owns

<Table 4> Maintenance Criteria

● Financial Instruments Business Operator
●Commodity Futures Trading Firm
(※10
Principal Clearing Qualification Agency Clearing Qualification
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan) / Total Amount of Capital Contribution Not less than JPY1bil Not less than JPY20bil
Capital-to-Risk Ratio / Required Net Asset Ratio Capital-to-Risk Ratio
Not less than 120%
Required Net Asset Ratio
Not less than 140% (※11)
Capital-to-Risk Ratio
Not less than 200%
Required Net Asset Ratio
Not less than 200% (※11)
● Registered Financial Institution (※12) Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (※3) Not less than JPY300mil Not less than JPY300mil
Total Amount of Capital Contribution Not less than JPY1bil Not less than JPY 20bil
Capital Adequacy Ratio (*5) Uniform International Standard (*6) (1) (1) Common Equity Tier1 ratio (※7, 8)
Not less than 2.25%

 

(2) Tier1 ratio Not less than 3% (※8)

(3) Total Capital Adequacy Ratio Not less than 4%

(1) (1) Common Equity Tier1 ratio (※7, 8)
Not less than 4.5%

 

(2) Tier1 ratio Not less than 6% (※8)

(3) Total Capital Adequacy Ratio Not less than 8%

Domestic Standards Not less than 2% Not less than 4%
Solvency Margin (*9) Not less than 100% Not less than 400%

 

●Commercials Principal Clearing Qualification
Stated Capital Not less than JPY300mil
Net Worth (Jun Zaisan) / Total Amount of Capital Contribution Not less than JPY1bil
Status of Equity Capital Adequate in light of the assets and the like it owns
*1:
And Net Assets exceed Amount of Stated Capital.
*2:
Only applied to Special Financial Instruments Business Operator which has filed the notification set forth in Article 57-5, Paragraph 2 of FIEA.
*3:
It shall be the total amount of foundation fund (kikin) (including the amount of reserve for redemption of foundation fund) in case of a mutual company.
*4:
And Net Assets exceed Stated Capital or Total Amount of Capital Contribution (or the total amount of redemption fund (including the amount of reserve for redemption of foundation fund) in case of a mutual company).
*5:
For a Registered Financial Institution other than an insurance company, non-consolidated or consolidated capital adequacy ratio under Uniform International Standards if having overseas business office, and non-consolidated or consolidated capital adequacy ratio under domestic standards if not having overseas business office.In case of a foreign bank, it shall satisfy conditions equivalent thereto.
*6:
Apply to banks subject to Uniform International Standard, Norinchukin Bank and The Shoko Chukin Bank, Ltd.
*7:
It shall be Ordinary Investment Securities Tier 1 ratio for Norinchukin Bank.
*8:
Apply to Registered Financial Institutions having overseas business office other than banks subject to Uniform International Standard, Norinchukin Bank and The Shoko Chukin Bank, Ltd.
*9:
Apply to insurance companies.
*10:
A Financial Instruments Business Operator can acquire Precious Metal Futures Clearing Qualification, Rubber Futures Clearing Qualification, Agricultural Futures Clearing Qualification and Petroleum Futures Clearing Qualification and a Commodity Futures Trading Firm can acquire Energy Futures Clearing Qualification, Dojima Agricultural Futures Clearing Qualification and Dojima Sugar Futures Clearing Qualification.
*11:
140%, if Capital-to-Risk Ratio is calculated under the transitional measures set forth in Article 4 of Cabinet Office Ordinance on FIEA, Supplementary Provisions (Cabinet Office Ordinance No.11 of February 26).
*12:
A Registered Financial Institution can acquire Precious Metal Futures Clearing Qualification, Rubber Futures Clearing Qualification, Agricultural Futures Clearing Qualification and Petroleum Futures Clearing Qualification.

Criteria for Clearing Qualification, etc. (ETF Special Clearing Qualification, Registered ETF Trust Bank)

  • Major acquisition and maintenance criteria for Clearing Qualification related to the listed products at JSCC are as follows:
    (1) As for a ETF Special Clearing Participant,to be a settlor company (or a party who intends to be a settlor company).
    As for a Registered ETF Trust Bank, to be a trust company, etc. (a trustee of securities investment trust or a party who intends to be a trustee of securities investment trust).
    (2) To have management structure and business execution structure that are appropriate as an ETF Special Clearing Participant or a Registered ETF Trust Bank.

(Note) For acquisition and maintenance of Securities Clearing Qualification, in addition to an account for Book-Entry Transfer System for Stock, etc., an account for Custody Services for Foreign Stock Certificates, etc. at JASDEC needs to be opened and maintained as an account for securities settlement.