With the increasing expectations for further streamlining of clearing functions and operations in Japan from interested parties including securities companies, all the five stock exchanges in Japan (Tokyo Stock Exchange, Inc. (TSE), Osaka Securities Exchange Co., Ltd. (OSE), Nagoya Stock Exchange, Inc. (NSE), Sapporo Securities Exchange (SSE), Fukuoka Stock Exchange (FSE)) and Japan Securities Dealers Association (JSDA) agreed to establish a new cross-market clearing organization (JSCC) for stocks and other securities traded in Japan in January 2002.
On the basis of trading value of domestic stocks in each market at that time, the TSE, which is the largest in the market size, owns 86.3% of its total shares capitalizing at JPY 3 billion. The OSE and the JSDA(Jasdaq Securities Exchange, Inc.(JSE) from Dec. 2004) hold 9.5% and 3.4%, respectively.（From Apr.2010,The OSE holds 12.9% by the merger with JSE.) Remaining shares are held by the NSE, the SSE and the FSE. For a quick start-up of the business, the JSCC started operations utilizing the infrastructure and methodology of TSE’s clearing system.
To fulfill its important mission as the main infrastructure of the Japanese capital markets and to reflect users’ needs to the management, the majority of its board of directors consists of representatives from users (securities companies) and other neutral party.
Newly established JSCC is a completely different entity from former JSCC, which changed its company name to Japan Securities Settlement & Custody, Inc. (JSSC).
In January 2003, the JSCC started its operation as the first licensed securities clearing organization under the Securities and Exchange Act in Japan (the Act). JSCC is supervised by the Financial Service Agency (FSA) in accordance with the Act.
For settlement of domestic shares, the JSCC opens a settlement account with the Japan Securities Depository Center, Inc. (JASDEC, the central securities depository of Japan) to make use of its Central Securities Depository and Book-Entry Transfer System, while settlement of funds are carried out through account transfers between a participant account and a JSCC account at either six fund settling banks (all of which are commercial banks) or Bank of Japan (BOJ, the central bank of Japan).
In addition to cash products traded at all Japanese stock exchanges, the JSCC has started to act as a CCP for derivatives traded at the TSE since Feb. 2004. (As a result, the JSCC acts as a CCP for all trades (cash and derivatives) conducted on the TSE market.)