Market Link Guide - Japan - JGBs
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 | Dedicated omnibus account for CBL’s assets held at BOJ, under HSBC’s participant status | Omnibus |
Legal Account name/holder | The Hongkong and Shanghai Banking Corporation Limited - 0411-7111 | Clearstream Banking S.A. |
Operational arrangements
| Yes/No | Remarks | |
| 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 | |
| Allegements | Yes | |
| Automatic compensation | No | |
| Registered securities | No | |
| Multi Market Securities | Yes | Refer to the Multi Market Securities Guide. |
| Lending and borrowing | No | |
| 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 | JGBs are largely settled under Real Time Gross Settlement (RTGS), which is true DVP. Transfer of JGBs cannot be cancelled once transfer instructions are settled through book-entry system for JGBs, regardless DVP or non-DVP mode. |
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 9 March 2021 (Hong Kong) and 26 October 2021 (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. |