home > Clearing Participants > Credit Default Swap

Clearing ParticipantsCredit Default Swap

Requirements for Acquisition of CDS Clearing Qualification

  • Key criteria for acquisition and maintenance of the Clearing Qualification related to CDS Transactions prescribed by JSCC (hereinafter referred to as the “CDS Clearing Qualification”) are as described below.
  • With respect to the criteria for financial basis, satisfaction by a parent guarantee is permitted. Please see Article 9, Paragraph 2 of the “CDS Clearing Business Rules” for details of the parent guarantee.
  • Please refer to “Guideline on Standard for Clearing Qualification Acquisition in Credit Default Swap and Interest Rate Swap Clearing”  for JSCC’s major view points on examination and points to be confirmed (guidelines).

Requirements for Clearing Qualification

  • Principal criteria for acquisition and maintenance of CDS Clearing Qualification are as follows:
  1. Financial Instruments Business Operator or Registered Financial Institution;
  2. Satisfies certain criteria with respect to financial conditions (see Table 1);
  3. Has sound management structure and appropriate business execution structure as a Clearing Participant.

<Table 1> Acquisition / Maintenance Criteria

Financial Instruments Business Operator
Net Capital Amount Not less than 100 billion yen
Capital-to Risk Ratio (Note 1) More than 200% (more than 250%)
Creditworthiness Has sufficient creditworthiness

The level shown in parenthesis shall apply when JSCC deems necessary.

Registered Financial Institution
Net Capital Amount Not less than 100 billion yen
Capital Adequacy Ratio (Note 2) Uniform International Standard ① (Note 3) (1)Common Equity Tier1 ratio (Notes 4, 5): more than 4.5% (more than 5.625%)
(2)Tier1 ratio: more than 6% (Note 5) (more than 7.5%)
(3)Total Capital ratio:  more than 8% (more than 10%)
Uniform International Standard ② (Note 6) More than 8% (more than 10%)
Domestic Standards More than 4% (more than 5%)
Solvency Margin Ratio (Note 7) More than 400% (more than 500%)
Credit Worthiness Has sufficient creditworthiness

The levels shown in parenthesis shall apply when JSCC deems necessary.

*Note1:
The same shall apply to a Special Financial Instrument Business Operator which files the notification prescribed in Article 57-5, Paragraph 2 of the Act.
*Note2:
In respect of a Registered Financial Institution other than insurance company, non-consolidated or consolidated capital adequacy ratio under the Uniform International Standard, if it has any overseas office(s), or non-consolidated or consolidated capital adequacy ratio under the Standards in Japan, if it has no overseas business office.In respect of a foreign bank, it shall satisfy equivalent conditions.
*Note3:
Applies to a bank subject to Uniform International Standards, The Norin Chukin Bank and the Shokok Chukin Bank, Ltd.
*Note4:
This shall be Common Investment Tier1 ratio for The Norin Chukin Bank.
*Note5:
Following transitional measures shall apply to Common Equity Tier1 ratio and Tier1 ratio:
*Note6:
Applies to Registered Financial Institution having any overseas office(s) other than bank subject to Uniform International Standard, The Norin Chukin Bank and The Shoko Chukin Bank Co., Ltd.
*Note7:
Applies to insurance company.

・Transitional Measures for Clearing Qualification Acquisition and Maintenance Criteria

Item Common Equity Tier 1 Raio Tier 1 Ratio
From March 31, 2013 to March 30, 2014 3.5% (4.375%) 4.5% (5.625%)
From March 31, 2014 to March 30, 2015 4% (5%) 5.5% (6.875%)

The levels shown in parenthesis shall apply when JSCC deems necessary.