Japan’s new bankruptcy law took effect on 1 January 2005, clarifying the priority for outstanding obligations at the Securities Clearing House, for the assets belonging to a bankrupted participant.
The Securities and Exchange Law (1948 Law No.25) has also been amended partially, with regards to the Securities Clearing House provisions. Per the new Article 156-11-2, outstanding obligations at a Securities Clearing House under the Securities and Exchange Law, should be primarily subject to the ‘business procedures’, when any one of bankruptcy procedures has started for a clearing participant of a Securities Clearing House and the business procedures of the Securities Clearing House have relevant provisions regarding netting calculation, collateral liquidation, and so forth.
The new Bankruptcy Law (2004 Law No.75), which will fully replace the previous law originally made back in 1922, was implemented to make the bankruptcy procedures more efficient, to meet changing social requirements in the country.