Settlement services - Japanese debt securities

23.11.2018

Pre-matching service

The table below summarises CBL's pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL's pre-matching services, see Pre-matching services for external settlement instructions.

Service offeredMethod employedStart (local time)
Debt
Immediate Release Flag available
Manual via telephone or fax14:00, SD-1
Book-entry bonds and book-entry JGBs
Immediate Release Flag availablePSMS or
Manual via telephone
As soon as instructions are received by HSBC Japan (PSMS)
14:00, SD-1 (Manual)
Connectivity mediumInstruction format
CreationOnlineTick to enable the "Immediate Release" option.
Xact via SWIFT and Xact File TransferField :22F::STCO/CEDE/IREL

Domestic allegement matching service

Where no pre-matching instruction has been sent to the market, CBL accepts allegements via its depository from domestic market counterparties. It will then use these allegement messages to search for the best matching customer instruction.

If no matching customer instruction is found, the allegement is reported to the customer provided that its Clearstream Banking account number is present.

For details of CBL's domestic allegement service, see Pre-matching services for external settlement instructions.

Procedures for domestic counterparties

Procedure for the domestic counterpartyDeadline
Receipt in CBL / Delivery from CBL
Customers delivering securities to, or receiving them from, the Japanese market must request their domestic counterparty to deliver the securities to or receive them from the CBL sub-account with HSBC Tokyo as follows:Market deadline
-Delivering Agent/Receiving Agent: HSBC Tokyo (BIC: HSBCJPJT)
-Deliverer's Custodian/Receiver's Custodian: Clearstream Banking S.A. (BIC: CEDELULL)
-Seller/Buyer: Ordering party's/beneficiary's account number in CBL

Procedures for DTC counterparties

Procedure for the DTC counterpartyDeadline
Receipt in CBL
Customers can receive global bonds from participants in DTC on a free of payment basis.

The DTC participant must instruct DTC to deliver the relevant securities to the U.S. transfer agent designated in the terms and conditions of the bondsa for the account of the Japanese depository designated in the terms and conditions of the bondsb.
Market deadline
Delivery from CBL
Customers can deliver global bonds to participants in DTC on a free of payment basis.Market deadline

a. Mizuho Trust and Banking Company, New York (MHTNY) for CC 5409934; The Bank of Tokyo-Mitsubishi Trust Company, New York (BTMTC) for CC 8451818.
b. Mizuho Corporate Bank Ltd, Tokyo for CC 5409934; The Bank of Tokyo-Mitsubishi UFJ Ltd, Tokyo for CC 8451818.

Allowed countervalue difference

A maximum difference in countervalue of JPY 3,500 is allowed for matching and settlement of against payment transactions with domestic counterparties. In the event of a discrepancy within these limits, the receiving party’s cash amount shall generally prevail.
In addition, there is a market tolerance limit set by JASDEC at JPY 100. When pre-matching is conducted by PSMS, settlement amounts will be automatically adjusted up to JPY 100 and for that, the seller's amount is always prioritised.

Back-to-back processing

Back-to-back processing is available for transactions in all book-entry corporate and municipal bonds settling in JASDEC and government bonds settling in the Bank of Japan. If both the customer and the domestic counterparty meet their settlement obligations and fulfil the market's back-to-back requirements within the relevant deadlines, the linked receipt and the linked delivery will settle with same-day value.

To benefit from this functionality, customers must ensure that their back-to-back transactions are formatted as follows:

Connectivity mediumPool ID formatField(s) to be used
CreationOnline16x a
and
Turnaround
Pool Reference

Type of Settlement Transaction
Xact via SWIFT and Xact File Transfer:POOL//16x a
and
:SETR//TURN
Field :20C: sequence A1

Field :22F: sequence E

a. The reference (16x) must neither start nor end with a single slash ’/’ nor must it contain two consecutive slashes ’//’.

Customers should also indicate their reference in the narrative field of their settlement instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer) by including the text “SAME DAY TURNAROUND RELATED REF xxxxxxxx” on both the receipt and delivery legs of the back-to-back transactions.

Note: Deadlines for the receipt of valid instructions for back-to-back transactions remain unchanged (see Settlement times).

Management of failed instructions

Instructions in the domestic market that remain unmatched by the requested settlement date are reported to CBL.

Any instruction that reaches the depository after the deadline will be settled with the next possible value in the domestic market with no backvaluation. Unconfirmed instructions with domestic counterparties remain pending until they settle or are cancelled. CBL reserves the right to cancel receipt instructions that remain unsettled for five business days in the domestic market.

Delivery instructions that remain unsettled on the requested settlement date are re-submitted by CBL to the Japanese market on each of the next three domestic business days. Any such instruction that remains unsettled after this period will be cancelled by CBL and the securities will be re-credited to the customer's CBL account on the fourth business day after the requested settlement date (SD+4).

New issues settlement

The earliest transaction settlement in new issues will, when appropriate, take place on issuance date in the local market. For confirmation times, please refer to Settlement times.