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Securities settlement revolution: Japanese Government Bonds move to T+1 with the advent of a new repo market

Author

Listed:
  • Yanagawa, Eiichiro

    (Senior Analyst in the Asian Financial Services Group, Celent, The Imperial Hotel Tower 13F 1-1-1 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan)

Abstract

This paper examines the efforts planned and in progress to shorten the settlement cycle of Japanese government bonds (JGBs) from two business days after the trade date (T+2) to one (T+1). This move is designed to maintain and strengthen the market’s international competitiveness amid the challenge of putting in place a market infrastructure that will enhance the global appeal and convenience of JGBs. Towards this end, it seeks to jettison practices peculiar to the Japanese repurchase transaction (repo) market to harmonise repo transactions with global standards with the aim of creating a new market with new business opportunities. In practice and from a more granular perspective, this means transitioning to so-called shin-gensaki repos, or conditional sale securities repurchase transactions, from so-called gentan repos, or cash-collateralised securities lending repurchase transactions. In addition, the new market is also being designed to help spur greater diversity among market participants.

Suggested Citation

  • Yanagawa, Eiichiro, 2017. "Securities settlement revolution: Japanese Government Bonds move to T+1 with the advent of a new repo market," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 9(4), pages 356-373, September.
    • Handle: RePEc:aza:jsoc00:y:2017:v:9:i:4:p:356-373
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    More about this item

    Keywords

    shorten the settlement cycle; Japanese government bonds (JGBs); securities settlement revolution; central counterparty (CCP); central securities depositories (CSD); repurchase transaction (repo);
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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