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Collateral / Settlement / Custody / InvestmentCustody and Investment

Custody and Investment

(As of April 1, 2020)

JSCC’s Asset

  • JSCC limits the scope of eligible investment products for its own assets to bank deposit, JGBs, municipal bonds and government guaranteed bonds, and other instruments recognized as having sufficient safety and liquidity in accordance with JSCC’s “Fund Management Handling Rules.”
  • The custodians for deposit in settlement account and term deposit are limited to banks designated based on criteria specified by JSCC.
  • JSCC monitors, on a regular basis, the satisfaction by the custodians of the criteria.
  • These criteria require that the custodians are under supervision of the competent regulatory authority, and have sound operational capacity as well as sound profitability, and financial strength and creditworthiness above the predetermined level.
  • JGBs, municipal bonds and government guaranteed bonds are held in the customer accounts of the financial institutions from which JSCC purchased them. Even in the event of the default of such financial institutions, the customer account assets are protected by the “Act on Book-Entry Transfer of Company Bonds, Shares, etc.”

Clearing Participant and Customer Assets

  • JSCC requires Clearing Participants and their customers to deposit collateral in order to cover credit risks in each clearing business. JSCC keeps and invests such posted assets safely.
  • Custody of the collateral of Clearing Participants and their customers is limited to JSCC’s direct holding in the account with the CSD or the central bank, or custodians that satisfy the criteria specified in JSCC’s “Policies for Designation of Custodians of Posted Collateral” and investment should be done based on JSCC’s “Policies for Management of Posted Collateral.
  • In the “Policies for Designation of Custodians of Posted Collateral,” JSCC requires custodians to have stable profitability, a certain level of financial strength and credit, and stable operational processing capabilities.
  • JSCC continuously monitors that custodians satisfy the “Policies for Designation of Custodians of Posted Collateral” by regularly receiving reports on the financial conditions of custodians and confirming the smooth execution of daily custody operations.