Market Link Guide - Japan - Debt securities

20.07.2020

Key features

CSD link as defined under CSDRa

Yes

Type of link

Indirect via Hongkong and Shanghai Banking Corporation Limited (Tokyo Branch) to Bank of Japan

a. CSD Regulation (EU) No 909/2014, Article 2(29).

CSD

Custodian

Name

Bank of Japan (BOJ)

Hongkong and Shanghai Banking Corporation Limited (HSBC), Tokyo branch

FATCA GIIN

Not available

4RI52Y.00000.BR.392

LEI

353800717BLAHZMEXR15

2HI3YI5320L3RW6NJ957

Country of incorporation

Japan

Hong Kong via its branch in Tokyo

Account type

Omnibus account

Omnibus

Legal Account name/holder

Omnibus account at BOJ in the name of HSBC. There is no individually segregated account for CBL at BOJ

Clearstream Banking S.A.

Operational arrangements

Yes/NoRemarks
Settlement free of payment

Yes

Settlement against payment

Yes

Eligible settlement currency: Japanese Yen (JPY).

Settlement against payment in central bank money account of CBL/CBL customers

No

CBL holds a cash account at the custodian. Against payment settlement in JPY takes place on the cash account of the custodian at the Bank of Japan.

Bridge settlement

No

 
Shaping facility

No

 
Partial settlement

No

 
Settlement penalty fees

Yes

Refer to the Market Profile.
Pre-matching

Yes

 
Back-to-back processing

Yes

Book entry corporate, municipal and government bonds only.

Allegements

Yes

 
Automatic compensation

No

 
Registered securities

No

 
Multi Market Securities

Yes

Refer to the Multi Market Securities Guide.
Lending and borrowingNo 
Proxy voting

No

 
Investment Funds

No

 
Liquidity Hub Connect

No

 
Sale and purchase of rights

No

 
Repo services

Yes

CBL internal settlement.

Market restrictions

Yes

Refer to Investment Regulation.
FTT

No

 
Daily reconciliation

Yes

 

Moment of entry of instructions

The rules of BOJ do not define the moment of entry within the meaning of the Settlement Finality Directive.

Irrevocability of instructions

All transfer instructions that do not designate DVP settlements are treated as instructions without conditions, and are processed immediately upon the BOJ’s acceptance of valid transfer instructions; these transfer instructions may not be cancelled.

Transfer requests designating DVP settlements may be cancelled even after they have been accepted by the BOJ, if the counterparty of the transaction gives its consent. However, even in such cases, they may not be cancelled after the BOJ has accepted the corresponding funds transfer requests

Finality of instructions

The attribution of rights to the JGBs is final when it is entered or recorded in the transfer account ledgers.

Legal Arrangements

The below section is based on the legal opinions obtained by CBL that were issued on 17 May 2018 (Hong Kong) and 28 September 2018 (Japan).  The information is provided for guidance only and should not be considered in isolation or as constituting a complete or definitive legal advice on any specific matter.

No insolvency proceedings against the custodian

Confirmed

Liability for negligence

Confirmed

Book-entry regime with in rem rights

Confirmed

Recognition of nominee concept

The laws and regulations of Japan do not have a concept equivalent to the nominee concept.

No right of retention for the custodian

Confirmed

Segregation of assets at the custodian

Confirmed

No right of use

Confirmed

No upper-tier attachments

Confirmed

Insolvency of the custodian with no impact on CBL's rights 

Confirmed. Cash held by the local custodian will only give rise to an unsecured claim against the estate of the local custodian on insolvency.

Shortfall pro-rated among holders

Confirmed

Settlement finality in case of insolvency

There is no concept equivalent to finality under Japanese laws and regulations.

Record keeping of at least 10 years

The custodian has committed to record keeping period of at least 7 years in accordance with the statutory law requirement in Hong Kong. Under the laws and regulations of Japan, custodians have the obligation to maintain records for at least 10 years.