Market infrastructure - Japan
Institutions and organisation
Stock Exchanges and related institutions
The Japan Securities Clearing Corporation (JSCC) www.jscc.co.jp, was established by the stock exchanges and the Japan Securities Dealers Association (JSDA) to provide a unified clearing infrastructure to handle equities and fixed income instruments traded among all the stock exchanges in Japan.
The four stock exchanges in Japan are as follows:
- Tokyo (TSE);
NB: The Tokyo Stock Exchange (TSE) and the Osaka Securities Exchange (OSE) merged on 1 January 2013 and are wholly owned by the holding company. Japan Exchange Group, Inc., has been renamed to Osaka Exchange,Inc. and now manages derivatives only.
The exchanges are responsible for:
- Setting out listing and disclosure requirements for companies to be listed;
- providing corporations with a place to trade their securities issues and operating the market;
- Monitoring and supervising the listed companies and the trading participants.
Stocks listed on TSE and Nagoya Stock Exchange are divided into first and second sections:
- The first section comprises the more established companies;
- The second section comprises the newer listings.
Note: More than 70% of listed companies are classified under the first section. The other exchanges have one section only.
CSD - The Japan Securities Depository Center (JASDEC -www.jasdec.com)
The Japan Securities Depository Center (JASDEC) is governed under The Act on Transfer of Bonds, Shares, etc. and provides safekeeping and book-entry transfer facilities for listed equities and dematerialised securities, including investment trust beneficiary certificates, corporate bonds and convertible bonds.
In 2002, JASDEC changed its legal status from a non-profit foundation structure to a stock company.
Central Bank - The Bank of Japan (BOJ - www.boj.or.jp)
The Bank of Japan (BOJ) provides central depository services for Japanese Government Bonds (JGBs). The Bank of Japan Law stipulates that the BOJ must be at least 55% owned by the Government of Japan. The remaining 45% is held by non-government entities. As a central bank, the BOJ is effectively self-regulating, although it is also under the supervision of the Ministry of Finance.
The BOJ's role in the securities markets is primarily as issuer of JGBs and provider of book-entry settlement and custody services through the Bank of Japan Financial Network Systems (BOJ-NET).
- Financial Services Agency (FSA - www.fsa.go.jp)
The FSA ensures regulatory compliance in the securities industry and is responsible for all aspects of financial regulation, from the design of financial systems to the inspection, supervision and surveillance of financial activities. The FSA is also responsible for all kinds of financial services, such as banking, securities business and insurance.
The stock exchanges are organised according to the Financial Instruments and Exchange Law and licensed by the FSA. The FSA also regulates JASDEC jointly with the Ministry of Justice.
- The Bank of Japan (BOJ)
The BOJ supervises banks and regulates the foreign exchange and money markets. It conducts foreign exchange and market operations in line with the prevailing monetary policy.
The BOJ and the FSA jointly conduct inspections of Japanese banks and local branches/offices of foreign banks.
- The Japanese Bankers Association (JBA)
Established in 1999, the JBA is an industry organisation for banks in Japan that takes the lead in dealing with issues confronting the banking industry as a whole.