Spicing up Japanese government bond trades
Clearstream, the Luxembourg-based ICSD (international central securities depository) has become the first place of settlement outside Japan allowed to clear Japanese government bonds, giving it a competitive edge in the biggest debt market in the world.
After a long wait, Clearstream is now authorized to clear Japanese government bonds (JGBs), becoming the first ICSD to be allowed to do so.
In November, the group obtained the first licence issued to an ICSD to become a Foreign Indirect Participant (FIP) in the Bank of Japan’s government bonds book-entry system and a Qualified Foreign Intermediary (QFI) by the Japanese Nihombashi Tax Office.
The licences mean that Clearstream can now offer book entry and internal settlements of JGBs on its Luxembourg platform.
This is a significant development for the group given that Japan was the only remaining G10 market in which it was not authorized to clear government bonds.
“Our customers have always wanted us to clear Japanese government bonds,” says Philippe Metoudi, Clearstream’s director for relationship management in Asia-Pacific, Middle East and Africa.
Metoudi is highly optimistic that Japan will be a major area of success, with abundant signs that the market is finally opening up for the organization.
“There has been a big change,” says Metoudi, adding that some institutions that previously did not work with Clearstream now are now much more eager to do so.
With over US$7 trillion of securities in issuance, the Japanese government debt market is the largest in the world.
Metoudi says that Clearstream clearly did a pretty good job in presenting its case to the Bank of Japan. He is certain that the head start will help the group gain a bigger market share in the highly lucrative market.
The breakthrough came after Clearstream returned to Japan early this year. “We closed our Tokyo office four years ago but kept servicing Japan customers from Hong Kong with Japanese-speaking staff.
Now it’s time to grow our business there.” Metoudi say he expects a fully-staffed Tokyo office to have a significant impact on the growth of the business in the country.
Jeffrey Tessler, chief executive officer of Clearstream, says that the group is delighted to be given the opportunity to support Japan’s financial authorities in their mission to internationalise the Japanese government debt market.
He believes the collaboration will benefit all participants in the Japanese debt market. “By allowing Clearstream to clear JGB, the BOJ has paved the way to making the market more liquid on a global scale”.
Philippe Metoudi, Clearstream - Director for relationship management,
Asia-Pacific, Middle East and Africa.
Luxembourg +352-243-36868
London +44-(0)20-786 27626
Frankfurt +49-(0)69-2 11-1 72 50
Dubai +825-2530-7411
Hong Kong +9 71-4-331-0644
New York +1-212-309-8882
e-mail address: gsf@clearstream.com
Entry Filed under: SUPPLIER AND TECHNOFIN®, Bond Market, Clearing and Settlement, Custody, Securities
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