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Requirements for Clearing Qualification related to JGB OTC Transaction

Major acquisition and maintenance criteria for Clearing Qualification related to JGB OTC Transaction (hereinafter “JGB OTC Transaction Clearing Qualification”) prescribed by JSCC are as follows:

Requirements for Clearing Qualification

  • 1. To be a Financial Instruments Business Operator, a Securities Finance Company, a Call Loan Dealer, a bank, a Cooperative Structured Financial Institution, The Shoko Chukin Bank, Ltd. or an insurance company.,
  • 2. To satisfy certain criteria as to financial conditions (see Table 1 and 2). (*1)
  • 3. To have management structure and business execution structure that are appropriate as a Clearing Participant.

<Table 1> Acquisition Criteria

● Financial Instruments Business Operator, Securities Finance Company or Call Loan Dealer Principal Clearing Qualification Agency Clearing Qualification (*2)
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan) / Net Assets (Jun Shisan) Not less than JPY5bil Not less than JPY20bil
Capital-to-Risk Ratio Not less than 200% Not less than 200%
Consolidated Capital-to-Risk Ratio (*3) Not less than 200% Not less than 200%
● Bank, Cooperative Structured Financial Institution, The Shoko Chukin Bank, Ltd., or Insurance Company Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (*4) Not less than JPY300mil Not less than JPY300mil
Net Assets Not less than JPY5bil Not less than JPY20bil
Capital Adequacy Ratio (*5) Uniform International Standard (i) (*6) (1) Common Equity Tier 1 ratio (*7,8): not less than 4.5%
(2) Tier 1 ratio: not less than 6% (*8)
(3) Total capital adequacy ratio: not less than 8%
(1) Common Equity Tier 1 ratio (*7,8): not less than 4.5%
(2) Tier 1 ratio: not less than 6% (*8)
(3) Total capital adequacy ratio: not less than 8%
Uniform International Standard (ii) (*9) Not less than 8% Not less than 8%
Domestic Standards Not less than 4% Not less than 4%
Solvency Margin (*10) Not less than 400% Not less than 400%

<Table 2> Maintenance Criteria

● Financial Instruments Business Operator, Securities Finance Company or Call Loan Dealer Principal Clearing Qualification Agency Clearing Qualification
Stated Capital Not less than JPY300mil Not less than JPY300mil
Net Worth (Jun Zaisan) Not less than JPY1bil Not less than JPY20bil
Capital-to-Risk Ratio Not less than 140% Not less than 200%
Consolidated Capital-to-Risk Ratio (*3) Not less than 140% Not less than 200%
● Bank, Cooperative Structured Financial Institution, The Shoko Chukin Bank, Ltd., or Insurance Company Principal Clearing Qualification Agency Clearing Qualification
Stated Capital or Total Amount of Capital Contribution (*4) Not less than JPY300mil Not less than JPY300mil
Net Assets Not less than JPY1bil Not less than JPY20bil
Capital Adequacy Ratio (*5) Uniform International Standard (i) (*6)

(1) Common Equity Tier 1 ratio (*7,8): not less than 4.5%
(2) Tier 1 ratio: not less than 6% (*8)

(3) Total capital adequacy ratio: not less than 8%

1) Common Equity Tier 1 ratio (*7,8): not less than 4.5%
(2) Tier 1 ratio: not less than 6% (*8)
(3) Total capital adequacy ratio: not less than 8%
Uniform International Standard (ii) (*9) Not less than 8% Not less than 8%
Domestic Standards Not less than 4% Not less than 4%
Solvency Margin (*10) Not less than 200% Not less than 400%
*1:
“Criteria for Clearing Qualification based on Parent Guarantee” and “Criteria for Intermediary Service Provider” will be separately prescribed.
*2:
An Agency Clearing Qualification authorizes to operate a Brokerage for Clearing of Securities, etc.Only a Financial Instruments Business Operator or a Registered Financial Institution may apply for acquisition of an Agency Clearing Qualification.
*3:
Only applied to Special Financial Instruments Business Operator which has filed the notification set forth in Article 57-5, Paragraph 2 of the Financial Instruments and Exchange Act.
*4:
It shall be the total amount of foundation fund (kikin) (including the amount of reserve for redemption of foundation fund) in case of a mutual company.
*5:
For a bank, Cooperative Structured Financial Institution or The Shoko Chukin Bank, Ltd. (hereinafter referred to as “Banks”), non-consolidated or consolidated capital adequacy ratio under Uniform International Standards if having overseas business office, and non-consolidated or consolidated capital adequacy ratio under domestic standards if not having overseas business office.In case of a foreign bank, it shall satisfy conditions equivalent thereto.
*6:
Apply to banks subject to Uniform International Standard, Norinchukin Bank and The Shoko Chukin Bank, Ltd.
*7:
It shall be Ordinary Investment Securities Tier 1 ratio for Norinchukin Bank.
*8:
Following transitional treatment to apply to Common Equity Tier1 Ratio and Tier1 Ratio:

・Transitional Treatment for Clearing Qualification Acquisition Criteria

Item Common Equity Tier1 Ratio Tier1 Ratio
From March 31, 2013 to March 30, 2014 3.5% 4.5%
From March 31, 2014 to March 30, 2015 4% 5.5%

・Transitional Treatment for Clearing Qualification Maintenance Criteria

Item Common Equity Tier1 Ratio Tier1 Ratio
From March 31, 2013 to March 30, 2014 3.5% 4.5%
From March 31, 2014 to March 30, 2015 4% 5.5%
*9:
Apply to Banks having overseas business office other than banks subject to Uniform International Standard, Norinchukin Bank and The Shoko Chukin Bank, Ltd.
*10:
Apply to insurance companies.

(Note) For acquisition and maintenance of JGB OTC Transaction Clearing Qualification, an arrangement of an appropriate system environment, such as participation in Pre-Settlement Matching System of JASDEC, is required.