That experience highlighted the importance of central clearing and led market participants to promote the wider use of JSCC in JGB transactions. Against that background, trust banks, which are major providers of funds in the JGB repo market, are expected to use JSCC in the form of so-called “repo trust” in the first half of 2014.
Benefiting from the lessons during the financial crisis, JSCC is reviewing and strengthening its risk management including loss-sharing arrangements, contingent liquidity lines and participant default procedures so that its risk management remains robust enough in light of the growing clearing volume with new users.