Overview of New System (January 2014) Japan Securities Depository Center, Inc.

Transcription

1 Overview of New System (January 2014) Japan Depository Center, Inc.

2 Main features of new system Stronger systems foundation Reduced settlement risk Alignment with international standards (ISO20022 compliance) Introduction of tolerance matching for non-residents transactions Increased convenience and efficiency for users In addition to replacing hardware, the systems structure has been revised with the aim of providing an even higher level of reliability and efficiency. Network connections between JASDEC and users have also been consolidated compared to the separate connections for each user interface that characterized the previous system. Based on the report Development of Institutional Frameworks Pertaining to Financial and Capital Markets announced by the FSA in January 2010, JASDEC has constructed a scheme to reduce settlement risk in SLB (Stock Lending and Borrowing) transactions, known as DVP settlement for SLB. For the Pre- Matching system (PSMS) and Book-entry transfer system, the next-generation international standard messaging format ISO20022 has been adopted, and system connectivity is now also available through SWIFTNet. A tolerance matching function has been added to PSMS, as introduced in the main markets of Europe, North America and Asia. Based on user feedback to various subcommittees, a number of system improvements have been implemented to improve convenience and efficiency. 1

3 1. Main aspects of stronger systems foundation Migration to open system The shareholder notification system (shareholder notification host) has been changed to an open system. Review of external network In external network systems, separate connections for each user interface have been consolidated. Renewal of system equipment In addition to replacing system hardware and storage, the systems structure has been revised with the aim of providing a higher level of operational efficiency. 2

4 2. Conceptual diagram of new system Connected System Network JASDEC System Platform System Operation System BOJ BOJ-NET BOJ Gateway System Interface with BOJ for processing DVP settlement and handling fund settlement data for principal and interest payment Book-Entry Transfer System for Stocks, etc. Operation processing on Stocks, etc. SWIFT Net JEX Gateway System ISO20022 compliant Participant Information System Management of participant information and name identification processing Shareholder Notification System Shareholder notification processing and file transfer processing, etc. Integrated Channel System Data transmission/reception by real-time in ISO15022 format Book-Entry Transfer System for Corporate Bonds and CP Users (Issuing/paying agents, JASDEC Participants, etc.) JASDEC Integrated Network /arrownet Integrated Web System Provides on-screen interface with each operation system on the same web terminal Operation processing on Corporate Bonds and CP Book-Entry Transfer System for Investment Trusts File Transfer System Operation processing on Investment Trusts Transmission/reception of files of book-entry transfer/shareholder notification/principal and interest data, etc. Foreign Stock System Processing of ownership rights, etc. on Foreign listed on domestic exchanges Participant Information Network Participant Information Web System Management of participant information and name identification processing Pre- Matching System Operation processing on trade/settlement matching Main Center Backup Center 3

5 3. risk reduction scheme (DVP settlement for SLB) Lender SLB Trade (T/D) Borrower SLB Trade Matching (T/D) DVP settlement for SLB is realized through obligation assumption and risk management by JDCC. JASDEC Pre- Matching System (PSMS) (Trade Matching) ( Matching) JDCC Clearing (Obligation Assumption) SLB Trade Matching (T/D) Trust Bank / SLB JASDEC (Equities) Transfer JDCC JDCC SLB JGBs Cash Payment * Bank of Japan JGBs Transfer JDCC Fund JDCC JGBs Cash Payment * * The cash collateral payment is netted with the final settlement balance of DVP settlement services for NETDs. 4

6 4. Alignment with international standards (ISO20022 compliance) Establishment of JEXGW system and discontinuation of existing integrated channel system A new JEXGW online gateway system has been constructed to enable the sending and receiving of messages in the ISO20022 format. The new gateway will operate in parallel with the legacy online real-time integrated channel system for five years (from January 2014 until December 2018), after which the legacy system will be discontinued. Connectivity network Users are now able to connect to the JEXGW system via the JASDEC Integrated Network, arrownet or SWIFTNet. 5

7 5. Introduction of tolerance matching for non-residents' transactions In settlement matching for non-residents transactions by PSMS, discrepancies in settlement amounts between the settlement instruction data sent by the delivering and receiving settlement agents are deemed matched if such discrepancies are within the tolerance amount limit (100 yen). This tolerance matching function leads to increased efficiency of settlement matching process for users by eliminating the need to investigate the cause of discrepancies, modify settlement instruction data, and perform the re-matching process. Before January 2014 After January ,000 10,050 10,000 10,050 Agent A Unmatched (Discrepancy) Agent B Agent A Discrepancy( 50) Tolerance amount limit( 100) Agent B Investigation Matched (Re-Matching) Modification of Matched PSMS Modify 10,050 10,000 PSMS 6