A: Basically, the Book-Entry Transfer System for Shares, etc. only handles shares that are listed on financial instrument exchanges.
Share that the Japan Security Dealers Association designates as "Phoenix names" can be handled by the Book-Entry Transfer System for Shares, etc., even though these shares are not listed on financial instrument exchanges. Please go to the following site for more information about "Phoenix names."
A: For example, to participate in JASDEC as a JASDEC Participant, you need to apply to JASDEC to open your account. To participate in JASDEC as an Indirect Account Management Institution, you need to apply to JASDEC for approval to be an Indirect Account Management Institution. In any case, we recommend that you discuss the matter with JASDEC at the earliest possible stage.
If you want to participate as an Issuer, there is a consent procedure to follow. Please follow the guidance from the financial instrument exchange at which you are applying to list and contact JASDEC before you begin the consent procedure. Regarding the procedure to become a participant of an Account Management Institution, please ask the Account Management Institution.
A: Please refer to the following materials for information on JASDEC fees.
A: When a share is delisted, it can no longer be handled by the Book-Entry Transfer System for Shares, etc. When handling a share is stopped, the name of the final shareholder in the Book-Entry Transfer System for Shares, etc. is entered into the list of shareholders held by its Issuer through the General Shareholder Notification. Then all records of such share (outstanding balances) in JASDEC accounts are erased.
Shares whose handling on the Book-Entry Transfer System for Shares, etc. were stopped become shares without certificates as defined in the Companies Act. Regarding the procedures for the entry of name change of such shares without certificates as defined in the Companies Act, please ask the Issuer of the shares.
A: JASDEC handles the following new equity warrants or corporate bonds with warrants for new shares on the Book-Entry Transfer System for Shares, etc..
Corporate bonds with warrants for new shares
1Corporate bonds with warrants for new shares that are listed on financial securities exchanges
2Corporate bonds with warrants for new shares that were listed on financial commodity exchanges (except for cases where the Issuer has forfeited the benefit of time in relation to the corporate bonds with warrants for new shares)
3Corporate bonds with warrants for new shares at full price (these are corporate bonds with warrants for new shares that is not listed and which meet certain requirement set by JASDEC. The objective of investment when corporate bonds with warrants for new shares are used is the corporate bond component of those corporate bonds with warrants for new shares.)
4Corporate bonds with warrants for new shares the Japan Security Dealers Association designates as “Phoenix names” and which have satisfied requirement set by JASDEC.
1New equity warrants listed on financial securities exchanges
2Equity warrants for new shares at full price (these are equity warrants for new shares that is not listed and which meet certain requirement set by JASDEC.
A: The Book-Entry Transfer System for Shares, etc. handles those beneficial interests in investment trusts which have been established based on the Act on Investment Trust and Investment Corporations (Act No. 198 of 1951) and which are listed on or have been granted permission to be listed on financial commodities exchanges.
Under certain conditions, beneficial interests in unlisted investment funds are handled by the Book-Entry Transfer System for Investment Trusts, and beneficiary interests or beneficiary certificates in foreign investment trusts that are listed on a Japanese financial commodity exchange are handled by the Custody Services for Foreign Stock Certificates, etc.
A: You need to carry out the following steps for JASDEC. For further details of these procedures, please go to the following link.
1Submit Consent Notice(consent for the corporate bonds, etc. that JASDEC is to handle) as required under Article 13, Clause 1 of the Act on Book-Entry Transfer of Company Bonds, Shares, etc. (the Transfer Act) and other necessary documents.
2Report the selection of the Issuing Agent and Paying Agent.
In accordance with the Transfer Act, you will need to make the following decision.
3For all bonds that you decide to issue after joining the Transfer System, you need to state that the provisions of the Transfer Act shall apply to all bonds issued based on that decision (Article 66, No. 2 of the Transfer Act. The following Articles of the Transfer Act apply to specific types of bonds: Article 113 for municipal bonds, Article 115 for investment company bonds, Article 117 for corporate bonds issued by mutual companies, Article 118 for specified corporate bonds, Article 120 for special corporation bonds, and Article 127 for foreign bonds.)
A: The Issuing Agent registers information about the issue of the bond with JASDEC's system, notifies JASDEC of the completion of payments relating to the issue of the bond and carries out other administrative procedures between the issuer and JASDEC concerning the issue. In principle, the firm who is entrusted with issuing duties such as receiving the payments relating to the issue of the bond is chosen to be the Issuing Agent.
The Paying Agent updates the information of the issue, distributes the redemption and interest, and conducts administrative procedures with JASDEC after the payment relating to the issue of the bond until the redemption. In principle, the firm who is entrusted with managing the bond registry and other matters during the term of the bond is chosen to be the Paying Agent.
The Issuing Agent and Paying Agent must be designated by JASDEC in advance. In principle, the same firm should be both the Issuing Agent and Paying Agent for a given bond issue.
A: In future, fees for the use of JASDEC's Book-Entry Transfer System for Corporate Bonds will be reviewed in line with advancements in the use of the system, if the economics prove favourable.
A: To own book-entry bonds, investors need to carry out an account-opening procedure with a securities company or other financial institution who will become their Account Management Institution. The Transfer System's Account Management Institutions are securities companies and other financial institutions. They are listed on the page(Japanese only) of System participants, as either "JASDEC Participants*"or"Indirect Account Management Institutions*" in the Book-Entry Transfer System for Corporate Bonds. Please note that some Account Management Institutions may be unable to handle certain bonds. We recommend that you contact the Institutions directly for the details.
*JASDEC Participants: a securities company or other financial institution whose account that used for the book-entry transfer of corporate bonds, etc., is opened by JASDEC. Direct Account Management Institutions are those JASDEC Participants who open accounts for their clients.
*Indirect Account Management Institutions: a securities company or other financial institution for whom accounts are opened by another Account Management Institution (but not directly by JASDEC), and who open accounts for clients.
A: The transfer of rights that accompanies the buying and selling of book-entry bonds occurs through the increasing or decreasing of the outstanding balances in the Transfer Account Books of each Account Management Institution.
A: The establishment of collateral or rights of pledge occur when the depositor (the pledgor or provider of the collateral) transfers the book-entry bonds to the account of the receiver (the person who accepts the bonds as collateral or pledgee).
A: Under Japanese law, ownership of book-entry bonds is determined by the records within the Transfer Account Books that JASDEC and the Account Management Institutions maintain (Article 66 of the Transfer Act). If an Account Management Institution managing a Transfer Account Book goes bankrupt, only the Institution's own assets would be attached and the bankruptcy would have no effect on investors' rights.
A: You will need to participate as an Issuer when you issue your bonds. And, when you come to participate as an underwriter you will need to have either JASDEC or an Account Management Institution open an account for you. If JASDEC opens your account, you will have to participate as a JASDEC Participant.
A: A participant is someone whose account is opened by JASDEC or an Account Management Institution. A JASDEC Participant is someone whose account is directly opened by JASDEC.
A: The Issuing Agent undertakes procedures on behalf of the Issuer, from the issue of short-term corporate bonds until the payment relating to the issue of the bond. Examples of the Issuing Agent's tasks include the application to issue the bonds and confirmation of fund settlement. The Paying Agent undertakes procedures after the payment relating to the issue of the short-term bonds until their redemption. An example of the Paying Agent's tasks is the confirmation of applications to redeem the bonds and fund settlement.
A: The Fund Settlement Corporation undertakes fund settlement arising from the new record, transfer or redemption of short-term corporate bonds, on behalf of the Issuer or a participant.
A: A Direct Account Management Institution is an Account Management Institution for whom JASDEC has opened accounts, whereas an Indirect Account Management Institution is one whose accounts have been opened by another Account Management Institution (not JASDEC).
Questions about participation costs
A: There is an initial System Connection Preparation Fee of 50,000 yen, regardless of whether or not you will have a terminal connection. If your terminal needs to be connected, then there is a Termination Connection Fee running cost. In addition, there are fees for new records, redemptions and other procedures when you use the system. (If you are an Issuer who is not connected to the system but is using an agent, JASDEC will not directly charge you for running costs.)
A: Under the Companies Act, short-term bonds are a class of corporate bond. If the Issuer defaults on a bond payment, the short-term bonds that the Issuer has issued will be treated as bankruptcy claims or reorganization claims during the bankruptcy or reorganization of the Issuer. In the case of a default, bondholders can apply to JASDEC or their Account Management Institution for a certificate of the outstanding balance in their account at the time of the default.
A: The Book-Entry Transfer System for Investment Trusts is a book-entry transfer system established by the Japan Securities Depository Center, Inc. (JASDEC) based on the Act on Book-Entry Transfer of Company Bonds, Shares, etc. (the Transfer Law). The System began operation in January 2007.
Prior to the start of the System, investment trust beneficial certificates were issued as proof of beneficial rights. In almost all cases, the Fund Distributors held these certificates for safekeeping and it was rare for the trust beneficiaries to actually take physical ownership of their beneficial certificates, although under the law, the exercise and transfer of beneficial rights resided with the beneficial certificates.
In the Book-Entry Transfer System for Investment Trusts, instead of beneficial certificates the interests of the trust beneficiaries are managed through a series of accounts (the Transfer Account Book) within a computer-based system that holds records of the beneficial rights. When an investor purchases an investment trust, the beneficial right is created by an increase in the number of the units in the Transfer Account Book. When the investment trust is cancelled or redeemed, the beneficial right is reduced through a reduction in the number of the units in the Transfer Account Book. In this way the balance of the investor's right in the investment trust is maintained in the Transfer Account Book.
The book-entry transfer system has several advantages.
- The costs associated with the issuing and verification of beneficial certificates are reduced.
- There is no need for revenue Stamp Tax that is levied when beneficial certificates are issued.
- The cost of transport and storage of beneficial certificates is reduced. In general, the various administrative and management costs associated with physical beneficial certificates are reduced, i.e., the costs of making entries in and managing the beneficiary right ledger, ledger collation costs, the expense of preparing the certificates and then physically cancelling them when they are redeemed.
- The risk of certificate loss, theft or forgery is eliminated.
- The process of investment trust establishment, cancellation, redemption, transfer and other processes are standardized and leads to the establishment of safer and more efficient settlement schemes.
As these advantages illustrate, we believe that this Transfer System is promoting growth in the use of investment trusts in Japan.
A: The System handles beneficial rights in unlisted Investment Trust Funds With Trustor-directed type, as provided in the Act on Investment Trust and Investment Corporations. Exchange Traded Funds(ETFs) and real estate investment trusts (REITs) are handled by JASDEC's Book-Entry Transfer System for Shares, Etc. Foreign investment trusts (trusts that are set up offshore under foreign laws and which resemble investment trusts) and mother funds are outside the scope of the System.
A: To take part in the ordinary book-entry transfer DVP system, you must:
1Be a JASDEC Participant
2Be a user of a settlement and collating system that JASDEC operates
3Meet the financial criteria that JDCC has established in the Business Rules
4Have a sound management structure
5Have an appropriate senior management system
A: The cutoff times for JDCC's acceptance of the DVP Instruction are as follows.
|Types||Cutoff Time for Acceptance|
|Trade DVP Instruction||1:50 p.m. on the Settlement Date|
|Lending DVP Instruction||1:20 p.m. on the Settlement Date|
|Pledged Securities DVP Instruction||1:30 p.m. on the Settlement Date|
Also, the Time to Accept Amount Adjustment Instruction shall be 1:45 p.m. on the Settlement Date.
A: The DVP Book-Entry Cutoff times are as follows.
|Types||DVP Book-Entry Cutoff Time|
|Trade DVP Instruction||2:00 p.m. on the Settlement Date|
|Lending DVP Instruction||1:30 p.m. on the Settlement Date|
|Pledged Securities DVP Instruction|
Also, the Amount Adjustment Cutoff Time shall be 2:00 p.m. on the Settlement Date.
A: The participant's settlement is communicated after the deadline for DVP processing on each settlement day (2:00 p.m.). The deadline on the settlement date for settlement payment by all "PAYING" individual fund settlement participants (and "PAYING" settlement banks) is 3:10 p.m. After confirmation of the receipt of funds from all the paying participants, the funds are transferred to the receiving participants by 3:30 p.m.
The completion of the securities transfer for the receiving participant and for the paying participant occur at the following points in time. For the receiving participant, the transfer is completed when they are notified of the settlement (which occurs when the settling banks approves the settlement), while for the paying participant, the transfer is completed when their payment of the funds is made. The settlement amount can be estimated on the previous business day or on the settlement day by using the System's simulation function.
A participant fund discretionary deposit is the portion of the participant fund deposit that is in excess of the required amount that the participant needs to deposit. This excess is added to the funds held. The participant fund deposit that each DVP participant is required to make is recalculated at the end of each month, using a fixed formula. JASDEC DVP Clearing Corporation notifies each participant of the new amount that they are required to deposit.
If the new request exceeds the deposit that a participant has already made, then the participant is required to add the balance to their account by the 4th business day of each month. On the other hand, if the new request is less than the amount already deposited, then the balance is referred to as the "discretionary deposit." A participant may request a refund of their participant fund discretionary deposit.
Newly required deposits are applied from the 5th business day of each month. By making a request for the refund of a participant fund discretionary deposit on the 4th business day of the month, a participant may receive their fund refund after the completion of the day's fund settlement.
A: Please refer to Schedule "Table Concerning the Appraisal Value, etc., of the Securities-to-be-Received Balance and the Pledged Securities Balance" of the Treatment of Business Rules.
A: At any time during the day before the deadline for DVP book-entry transfer completion, a DVP participant can deposit a settlement promotion pre-payment into the charge account of JASDEC DVP Clearing Corporation at the Bank of Japan. When the participant remits the settlement promotion pre-payment, an equivalent amount is deducted from the balance payment (as a result, the excess increases). The settlement promotion pre-payment helps prevent DVP transfer re-tries in advance that would have been made if a DVP transfer had failed because the conditions concerning either payment limits or excesses had not been satisfied; moreover, the pre-payment can cancel a DVP transfer re-try order that has been issued (but not yet executed).
A participant may request a refund of the settlement promotion pre-payment they have made during business hours; however, the following conditions must be satisfied for the refund to proceed:
1The refund request must not exceed the settlement promotion pre-payment; and
2If the pre-payment is refunded, the payment limit will not be exceeded and the excess will not become negative.
That part of the settlement promotion pre-payment that a participant deposits during business hours and which has not been refunded by the deadline for DVP book-entry transfer will be included in the day's participant settlement as funds received.