Actually, the risk became imminent in the financial crisis of autumn 2008, when the failure of Lehman Brothers resulted in a significant amount of settlement failures in the delivery of JGBs. Market participants who had entered JGB trading with the failed financial institution had to go through time-consuming procedures for terminating unsettled transactions and replacing them with new ones in the markets.
Those events highlighted the importance of reducing the time-lag between trading and settlement and led market participants to establish a working group under the Japan Securities Dealers Association in order to identify and examine the issues related to a shorter settlement cycle for JGB transactions.