- Jul. 3, 2020
- Jun. 30, 2020
- Jun. 30, 2020
January 4, 2007
Bank of Japan
Under the previous legal framework, investment trusts1 could only be issued in the form of physical certificates (i.e., beneficiary certificates), so the settlement scheme for investment trusts was designed based on the existence of physical certificates. Payment between a fund management company2 and a seller company (e.g., a securities firm) was made by means of wire-transfers through the Zengin System or the delivery of cheques, and not linked with the delivery of investment trusts (i.e., non-delivery versus payment3).
In January 2003, the Law Concerning Book-Entry Transfer of Corporate and Other Debt Securities4 came into effect, establishing the legal framework for the full dematerialization of investment trusts. Under this new legal framework, Japan Securities Depository Center, Inc. (JASDEC) has been entrusted with the role of operator of the book-entry transfer system for dematerialized investment trusts, and started system operations today.
Types of investment trusts eligible for the book-entry system are contractual-type investment trusts,5 excluding exchange traded funds (ETFs). ETFs will be handled by the JASDEC book-entry transfer system for ETFs to be implemented in January 2008, while corporation-type investment trusts will be handled by the JASDEC book-entry transfer system for equities to be implemented in January 2009.
The Bank of Japan took measures necessary for the introduction of a real-time gross DVP mechanism6 for sales and repurchases of investment trusts, such as establishing a link between the BOJ-NET Funds Transfer System and the book-entry transfer system for investment trusts operated by JASDEC. With the implementation of the JASDEC system, the Bank today started funds transfer services for DVP settlement of investment trusts through the BOJ-NET Funds Transfer System.
The Bank believes that the full dematerialization of investment trusts and the introduction of the DVP mechanism will contribute to the enhancement of the safety and efficiency of investment trust settlement, and eventually to the development and expansion of the investment trust market. The Bank, in cooperation with relevant parties, continues to actively support further improvement of securities settlement systems in Japan.