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 clients | 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 4 October 2023 (Hong Kong) and 28 November 2023 (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 seven years in accordance with the statutory law requirement in Hong Kong. Under the laws and regulations of Bank of Japan, participants (including custodians) have the obligation to maintain records for at least 10 years. |