Japanese exchanges agree national clearing pact

Japanese exchanges agree national clearing pact

Japan Securities Dealers Association and the boards of five Japanese stock markets have entered an agreement to establish a national unified clearing organisation.

The five exchanges are Tokyo Stock Exchange, Osaka Securities Exchange Co., Nagoya Stock Exchange, Sapporo Securities Exchange and Fukuoka Stock Exchange.

Under the new horizontally integrated clearing organisation, all clearing procedures for cash transactions, currently provided independently by each marketplace, will be streamlined into a single central counterparty.

The companies claim the unification will reduce the amount of both securities and funds required for settlement since the clearing organisation assumes all obligations resulting from transactions in cross-listed stocks at multiple marketplaces and offsets selling and buying positions. In addition, access to the clearing operation from users will be centralised at the organisation.

The new clearing operation is scheduled to go live in November 2002.

Market participants say the move will pave the way for the introduction of T+1 settlement in the future.

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