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A Framework for the Extension of Operating Hours of the BOJ-NET1

June 26, 1998
Bank of Japan

On March 27th, 1998, the Bank of Japan requested comments from its current account holders on a proposal to extend the operating hours of the BOJ-NET funds transfer system.2Reflecting the comments received from 13 respondents,3 the Bank decided on the following framework for the extension of the BOJ-NET.

  1. As initially proposed, the Bank will extend the operating hours of the BOJ-NET funds transfer system by two hours to ten hours between 9:00 a.m. and 7:00 p.m. (Tokyo time).This extension will be implemented by the end of the year 2000 when the BOJ-NET is to be restructured to an RTGS system by abolishing the current net settlement mode.
  2. In addition, in light of the requests from respondents including the Tokyo Bankers Association (TBA), the gross settlement mode of the Foreign Exchange Yen Clearing System (FEYCS) will also be made available during the above extended hours.4
  3. Access to the BOJ-NET funds transfer system during the extended hours will be limited to on-line participants with current accounts at the Bank's head office, while the FEYCS gross settlement service in those hours will be limited to FEYCS participants which settle payment instructions across their current accounts at the Bank's head office.5
  4. As in the Bank's initial proposal, all BOJ-NET funds transfer system participants admitted to the extended hours will have access to intraday overdrafts during these hours to the extent of their collateral deposited at 5:00 p.m.
  5. In light of the comments, participants admitted to the extended hours will on no account be allowed to close their BOJ-NET terminal prior to 7:00 p.m., to ensure smooth settlement during these hours.6
  1. A summary excerpted and translated from an original paper in Japanese, which is available from the Financial and Payment System Office of the Bank (tel: +81-3-3279-1111; fax: +81-3-5255-6752).
  2. See "A Proposal for the Extension of Operating Hours of BOJ-NET Funds Transfers,"Bank of Japan Quarterly Bulletin, May 1998 andon this site.
  3. Individual comments and proposals are available for public reading at the Public Relations Department of the head office (tel: +81-3-3279-1111; fax: +81-3-3510-1374), branches and local offices of the Bank.
  4. Although the TBA is the owner of the FEYCS, the Bank is entrusted with providing the services of processing payment instructions and calculating net settlement amounts related to FEYCS transactions over the BOJ-NET on behalf of the TBA.The FEYCS plans to introduce a gross settlement mode in addition to the current net settlement mode by the end of 1998.
  5. For both funds transfers and gross settlements of FEYCS transactions, the system architecture will make it technically possible for the operating hours to be further extended up to 8:00 p.m.
  6. This is because in the system architecture, a participant which closes its BOJ-NET terminal before 7:00 p.m. cannot send funds while it might still receive funds from another participant inputting payment instructions by error.Should funds input by such an error during the extended hours be received by a participant having closed its terminal, the recipient would be unable to return the funds, which might cause serious liquidity problems for the sending participant.