Japan: JGBs - New improved deadlines and changes to determination of entitlement balance

Clearstream Banking¹ advises customers that, effective

13 October 2015

rules related to the determination of entitlement for interest and redemption payments on Japanese Government Bonds (JGBs) will be changed and, effective

19 October 2015

settlement deadlines for JGBs free of payment instructions will be improved.

These operational changes are enabled as a result of an upgrade to Bank of Japan’s Financial Network System (BOJ-NET ), scheduled for 13 October 2015. The system upgrade will significantly extend its operating hours as well as abolish the two-day frozen period for JGBs (currently, transfers of interest-bearing JGBs are prohibited two business days prior to the interest payment date).

Impact on customers

Determination of entitlement balance

Effective 13 October 2015, entitlements for interest or redemption payments on JGBs will be determined based on settled positions, at 15:00 Japan Standard Time (JST) on the business day prior to the interest or redemption payment date (PD-1), in the books of the BOJ.

Transfers of JGBs made after 15:00 JST on the day prior to the interest or maturity date (PD-1) will not be accepted for settlement on PD-1.Instructions received for the transfer of these securities will be blocked by our depository, HSBC Japan. Customers are advised not to send any transfer instructions to Clearstream Banking during this period for requested settlement date equal to PD-1.

For holdings in Clearstream Banking that qualify for income distribution, the entitlement is determined after the end of day processing in Clearstream Banking. Clearstream Banking will not reject or block any transfer instructions sent by customers.

Pending domestic trades with a requested settlement date equal to PD-1 that did not settle by the 15:00 JST cut-off time will be reported to customers in the MT564 as PEND or PENR //ELIG, whereas they will be considered as non-eligible by the BOJ.

Please be reminded that Clearstream Banking does not send market claims to the Japanese market and no compensation is made.

For more information about record date determination, please refer to the Clearstream Banking Customer Handbook  and for more information about income collection, please refer to the Market Profile - Japan.

Deadline improvements

Effective 17 October 2015, Clearstream Banking’s improved deadlines for free of payment instructions will be as follows.

There will be no change to current deadlines for against payment transactions.

Settlement times in Central European Summer Time (CEST)

17 October 2015 - 24 October 2015

Settlement times in Central European Time (CET)

25 October 2015 – 26 March 2016

Settlement times in Japan Standard Time (JST)

a. Registered bonds are credited to customers' accounts even though finality of settlement has not been reached. Therefore, the credit may later be reversed. See “Specific settlement rules / settlement restrictions” under Settlement services.

For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.