Euroclear Bank is to offer cross-border settlement, custody and collateral management services for Japanese government bonds (JGBs) from 2007, subject to legal and regulatory approvals.
Euroclear Bank’s services for JGBs, a market valued at approximately Euros 6 trillion, means the Brussels-based ICSD will be offering services to support trading activity in all of the world’s major government debt securities. The Japanese authorities, on the other hand, will be hoping that settlement in Euroclear will increase the appeal of JGBs to foreign investors.
In preparation for the launch, Euroclear Bank has appointed Mizuho Corporate Bank as its local depository for JGBs. Mizuho Corporate Bank, which is part of the Mizuho Financial Group, already serves as one of two Euroclear Bank local depositories for other Japanese securities.
“As a result of tax-law changes led by the Japanese Ministry of Finance, Euroclear Bank will play a key role in broadening the foreign ownership of these securities, which constitute the largest debt market in the world,” says Martine Dinne, Chief Executive Officer of Euroclear Bank. “The new service complements our existing offering for Samurai bonds, yen-denominated global bonds, Japanese equities and ETFs. Furthermore, Euroclear Bank is the only international central securities depository with a representative office in Tokyo, underscoring its long-term commitment to, and knowledge of, the Japanese market. “
Following a simplification of reporting requirements for JGBs, Euroclear Bank’s services will be offered to foreign and Japanese resident holders that are exempt from Japanese withholding tax. Approximately Euros 300 billion of these securities are currently held by overseas investors.