Securities Settlement Revolution: Market Participant Strategies and Vendor Initiatives Toward JGB T+1

This report is the third installment in a series on the ongoing securities settlement revolution. The series draws upon the results of a 2016 Celent survey on solution trends related to the implementation of a shortened (T+1) settlement cycle for Japanese Government Bonds (JGBs), examining market participant responses to the securities settlement revolution. The report also examines the strategies, initiatives, and solutions of the leading technology vendors in this space.

Major changes loom on the horizon for Japan’s securities market. It is planning to shift to JGB T+1 settlement in 2018 and shift to T+2 securities settlement in 2019. Exchange and clearinghouse system renewal plans are also in the cards; the planned introduction of cross-margining and additional new products for Japan Exchange Group’s (JPX’s) OTC clearing systems; exchange clearing system changes related to renewal of derivative clearing functions, and enhanced risk and collateral management functions; and next-generation systems planned for JASDEC’s securities transfer and matching regimes.

From the summer to the fall of 2016, Celent conducted a survey of financial institutions and an RFI survey of technology vendors to examine and gain a better understanding of the first wave of the so-called settlement revolution with a focus on preparation for the 2018 spring migration to JGB T+1 settlement. Leading professionals from Japan’s financial industry took part in the survey and shared insights about their firms’ experiences in the industry and future initiatives. This report also includes the solution outline of the following leading technology vendors for JGB T+1: Broadridge Japan, Information Services International-Dentsu, Nomura Research Institute, and Nihon Unisys.