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Basic Mechanism

Under the Book-entry Transfer System for Investment Trusts launched in 4th January 2007, beneficial certificates are dematerialized and the beneficial rights are recorded and managed in a computer system.

Beneficial rights of investment trusts are managed based on records in the transfer account books kept by account management institutions (AMIs) and JASDEC, in a similar manner to the Book-entry Transfer System for Stocks, etc. In the case of investment trusts handled by the System, operations mainly involve increasing/decreasing the balance of beneficial rights based on purchase and redemption, rather than transfers associated with trades between investors, etc.

The workflow in the event of purchase/redemption is as follows. Firstly, the fund distributor (normally, such company doubles as an AMI) that received a purchase/redemption order from an investor notifies the issuer of the order, based on which the issuer provides JASDEC with the information required for recording it in the transfer account book.

JASDEC then records the increase/decrease in the balance of beneficial rights in the transfer account book after confirming, in the case of purchase, the fact that the money related to the purchase has been paid by the fund distributor to the trustee, and in the case of redemption, the fact that the money related to the redemption has been paid by the trustee to the fund distributor.

JASDEC’s system is linked to the Bank of Japan’s Financial Network System (BOJ-NET) at the system level, enabling the use of Delivery versus Payment (DVP) settlement, which involves executing the settlement of funds and recording the increase/decrease in the balance of beneficial rights in the transfer account book at the same time in the aforementioned workflow.

Process overview

(Example of new record via DVP associated with parchase)

Example of establishment of a new record via DVP

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