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Shortening the Settlement Cycle of JGBs to T+1

October 31, 2016
Yuriko Watanabe*1, Shunsuke Yoshida*2, Masato Ui
Payment and Settlement Systems Department
Asako Homma*3, Yusuke Kitahama*4, Shigeru Shimizu
Financial Markets Department

  1. *1Currently at the International Department
  2. *2Currently at Sumitomo Mitsui Trust Bank
  3. *3Currently at the Institute for Monetary and Economic Studies
  4. *4Currently at the Financial System and Bank Examination Department

In Japan, efforts to shorten the settlement cycle of Japanese government bonds (JGBs) have reached the final phase. Market participants and financial market infrastructures are currently working toward shortening the period from trading to settlement (settlement cycle) for outright transactions of JGBs from two business days (T+2) to one business day (T+1), aiming for implementation in the first half of fiscal 2018. At the same time, with regard to repurchase transactions (repos) of JGBs, which are closely related to outright transactions, preparations to introduce a new transaction scheme - GC repos under the Subsequent Collateral Allocation Method - are under way. Such efforts are expected to help reduce settlement risks arising from unsettled positions, and also enhance the efficiency, convenience and competitiveness of Japanese financial markets.

Notice

Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2016-E-14, is a translation of the original Japanese version, 2016-J-13, published in July 2016. The views expressed in the Review are those of the authors and do not necessarily represent those of the Bank of Japan.

If you have comments or questions, please contact Payment and Settlement Systems Department (E-mail: masato.ui@boj.or.jp).