Japanese Convertible Bond (JCB) service
CBL does not offer QFI services for convertible bonds. Therefore tax exemption under J-BIEM is not available.
The following CBL customers are eligible for the Clearstream Banking JCB service:
- Intermediaries;
- Proprietary traders.
Account opening process
For details on the account opening process, please refer to the section Japanese Convertible Bonds (JCBs) - rates, eligibility, availability of relief, in the Market Taxation Guide - Japan.
Blocking of positions before interest payment date
As per market practice, Japanese convertible bonds are non-transferable one business day before its Payment Date (PD-1) only.
Positions will therefore, in line with market practice, be blocked at HSBC, regardless of whether full exemption or partial tax relief has been requested prior to the frozen period (that is, during PD-1) under a Double Taxation Treaty or other relevant tax benefits, if there are any.
Positions will be unblocked and freely transferable on PD and thereafter.
Disclosure for zero-coupon convertible bonds
Regardless of their tax status in Japan, all customers investing in zero-coupon convertible bonds and considered as final beneficial owners should be disclosed to the local tax authorities as non-residents can automatically enjoy tax-exemption on discount bonds under the current negative interest environment.
Customers holding proprietary assets need take no action; CBL will perform the reporting obligation on the customer’s behalf.
Customers acting as an intermediary and holding non-proprietary assets on behalf of final beneficial owners are required to submit a disclosure report by the prescribed deadlines, as described below.
- Upon receipt of the relevant SWIFT MT564 Corporate Action Notification, the customer must send the list of beneficial owners with the information and in the format specified in the “Disclosure list for Zero-Coupon Japanese Convertible Bonds” spreadsheet on the Clearstream website.
You can obtain further copies of the spreadsheet by email to Cadatabase@clearstream.com quoting in the Subject line: “<respective isin code> / Japanese zero-coupon convertible bonds Disclosure”. - When the spreadsheet has been duly completed, you must email it to CorporateactionsICSD@clearstream.com quoting in the Subject line: “ / Japanese zero-coupon convertible bonds Disclosure”.
The disclosure report must reach CBL at the latest by close of business (18:00 CET) on the eighth business day of the month following the redemption date.
The information included in the final List of Beneficial Owners provided to us must be accurate as at close of business (18:00 CET) on the relevant maturity date.
QFI customers and beneficial owners are responsible for complying with the above disclosure requirements. Failure to comply and errors or omission on the report may put the QFI status at risk.