Japan Securities Clearing Corporation (JSCC) Member Report

Japan Securities Clearing Corporation (JSCC) Member Report

[ACG 11: September 2007]

1. Current Status

JSCC functions as a central counterparty for clearing of transactions including (1) domestic equity trading at Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, and JASDAQ stock exchanges, (2) foreign equity trading at Tokyo and Osaka stock exchanges, (3) stock Index futures trading at Tokyo Stock Exchange (TOPIX Futures), and (4) Japanese Government Bond futures trading at Tokyo Stock Exchange (JGB Futures). It is the only unified cross-market clearing organization in the financial market in Japan.

2. Challenges

For the purpose of keeping up with the changing business environment, JSCC determined to put priorities on the following business plan in the near future.

--- To enhance risk management system

* More sophisticated monitoring system

* Review of measures to handle defaults

--- To strengthen operational capability

* Clearing system capacity enhancement

* Secondary computer center

--- To start providing additional service

* Possible overseas linkage

* Possible new financial instrument

3. Business Results Summary

a. Value of transactions cleared (daily average, billion yen)

FY2002 / FY2003 / FY2004 / FY2005 / FY2006 / FY2007
Equities, etc. / 1,221 / 1,771 / 1,849 / 3,033 / 3,357 / 3,644
TOPIX Futures / N.A. / 553 / 484 / 830 / 981 / 1,065
JGB futures / N.A. / 3,193 / 3,383 / 4,442 / 4,797 / 5,925

b. Fail Rates (daily average, %)

FY2002 / FY2003 / FY2004 / FY2005 / FY2006 / FY2007
Equities, etc. / 0.19 / 0.21 / 0.38 / 0.16 / 0.26 / 0.11

c. Netting Effect (Equities, etc. daily average, January to May 2007)

Cash / Before / After / Securities / Before / After
3,783 bil. yen / 206 bil. yen / 2,780 mil. / 822 mil.
100% / 5.5% / 100% / 28.6%