The Bank of Japan (BOJ) has announced plans to migrate to a new book-transfer system, following the passage through the Diet on 5 June of legislation for the reform of the securities settlement system in Japan.
The reform, effective from 6 January 2003, will see the introduction by the Bank of a new book-entry transfer system for JGBs from 27 January next year. The main aim of the change is to improve efficiency by eliminating the need for physical bond certificates, but it will also alter a legal structure based until now on paper securities.
“The structure shall change from the current contractual basis between BOJ and participants to a legal basis covered by the Reform Bill, which is partly aimed at improving understanding by participants globally,” explains Shuta Okawara of BOTM in Tokyo.
The reform also saw the issue of strips (in which principal and coupon are separated) approved. In addition, new floating rate JGBs will be issued that are transferable only between individuals in minimum tradable lots of Yen 10,000 (one fifth the sizef the current minimum).