Assumption of ObligationBuy-In

Buy-In

  • Fail-affected participant may request JSCC to buy and deliver that Fail-affected securities (this action is referred to as “Buy-In”) in the case where Fail persists beyond the securities Settlement Cutoff Time for delivery on the next day after the day when the Fail originally occurred (original settlement day). This Buy-In request may be submitted from the next business day (between 1:30 pm and 2:30 pm) after the original settlement day.
    If the Buy-In request remains unfilled by the fourth business day after the Buy-In request was submitted, JSCC shall execute Buy-In, and charges the cost of the Buy-In to the participant who is liable for the underlying Fail.Meanwhile, the Buy-In request can be rescinded because of the clearance of underlying Fail (in the case where Fail-affected position pertaining to the Buy-In request is cleared after the Buy-In request date).
  • The flow of the Buy-In execution is as follows.(Assumption) Buy-In request is submitted at the earliest opportunity (X + 1 day), and the underlying Fail-affected position is not cleared before 1:00pm on X+4 days.
X Day 1:00pm: Receiving participant A (buyer) is affected by Fail and does not receive 3,000 shares of Company Z, on the original settlement day.
X + 1 day Between 1:30pm and 2:30pm: Participant A (Fail-affected participant) submits Buy-In request to JSCC
In the case where Buy-In request is submitted, in order to provisionally set the correspondence relation between the Buy-In request and the parties who bear the execution cost of that requested Buy-In (“(provisional)* cost bearing party”), JSCC shall assign participants who are liable for bearing such costs (“(provisional)* cost-bearing participant”) in the following manner after the Cutoff Time for submitting Buy-In request (2:30 pm).
(1) In the order of the date of Fail occurrence form oldest to youngest.
(2) In the case where the date of Fail occurrence is the same, the liable position shall be allocated in proportion to the volume of Fail.

*  Since Buy-In is executed on the 4th day after the submission of Buy-In request, there may be changes of the cost-bearing participants due to clearance of original Fails, etc. during that time. Hence the cost-bearing participants remain “provisional” until the actual execution of Buy-In.

X+2 day JSCC electronically sends notification to both Participant A, who submitted Buy-In request, and the cost-bearing participants (provisional) in the following manner.

*  This notification is sent daily until the correspondence relation of the Buy-In request is rescinded (due to the clearance of Fail-affected position, etc.) or (provisional) cost-bearing participant is released from the liability upon ordinary settlement or re-netting process on that day.

1:30 pm “Buy-In notification (after delivery)”
5:00 pm “Buy-In notification (after netting)”
X + 3 day In the case where the Buy-In request is not rescinded and the (provisional) cost bearing parties is not released from the liability, in the re-netting process on the day (X + 3 days = Second day after the Buy-In request), JSCC sends the following notification to all participants (including Participant A who submitted Buy-In request and the (provisional) cost-bearing participants).

5:00 pm Notification of the issue and the number of shares which are expected to be subject to the Buy-In execution on the next day.

(Note) Actual number of the shares subject to Buy-In execution can be smaller than the notified volume due to the settlement outcome on that day.

X + 4 day(Buy-In execution day) If the Buy-In request is not rescinded and the (provisional) cost bearing parties is not released from the liability in the delivery on the day (X + 4 days), then the following processes are executed.

1:30 pm JSCC sends notification of “Buy-In Execution” to all participants
3:30 pm
– 4:00 pm
Sell-orders are received from participants who wish to accept Buy-In order. (Selling participants place their orders via Clearing Member Firm (CMF) terminals.)
Number of Buy-In shares: 3,000 shares
Closing market price on the day: ¥1,000.5
Buy-In Execution price range: Between ¥1,000 and ¥1,100
(Between the closing market price of the day (Any fraction less than one yen shall be rounded down) and 110% of that price)Participant B: Orders to sell 2,000 shares at ¥1,010
Participant C: Orders to sell 1,000 shares at ¥1,050
Participant D: Orders to sell 3,000 shares at ¥1,080

↓Buy-In Execution

Buy-In trade shall be executed according to Competitive bidding system i.e. Sell orders are filled from the lowest price.

4:00 pm
(Trade execution time)
Participants B and C are determined as the successful bidders.
Contract price: ¥1,050 (All orders are filled at the highest price among the orders of successful bidders)
After
4:00 pm
JSCC sends “Notification of Buy-In Execution Result”, which includes the name of the issue, contract price and the traded volume, to all participants
(Note) In the case where Buy-In order is not completely fulfilled and the Buy-In request is not cleared by the securities Settlement Cutoff Time for the delivering participant on the next day, Buy-In is executed again for the remaining position on that day.
X + 5 days Settlement day for Buy-In transactions. See Figure “Settlement of Buy-In transactions” for details.
  • <Figure>Settlement of Buy-In transactions (In cases of stocks, etc.)
    The following figure shows the cases where the cost-bearing participants have not cleared the underlying Fail at the time of Buy-In execution.
(1) Settlement of securities
Settlement of shares
(2) Settlement of funds