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Developing Database on Securities Holders Information: The Case of Japan. Yoshiko Sato Financial Statistics Section Research and Statistics Department Bank of Japan. WPFS Workshop on Securitization, 27-28 May 2010. 1 /17. Who holds securities ?. - PowerPoint PPT Presentation
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Developing Database on Securities Holders Information:
The Case of Japan
Yoshiko SatoFinancial Statistics Section
Research and Statistics DepartmentBank of Japan
WPFS Workshop on Securitization, 27-28 May 20101/17
Motivation
Who holds securities ?
But identifying the exact holder is always one of the most challenging tasks for statistical compilers.
- Balance sheets are useful but not always available. (Non-financial corporations, Other financial inst., Households)
How can we know who holds securities ?
CSD data is a strong candidate to shed light on the unknown sectors.
- the need to identify the final holder or the holding sector is increased, especially after the recent financial crisis.
2/17
Existing statistics for holding sector
Example: Structured-financing instruments in the flow of funds account statistics (FFA)
0
2
4
6
8
10
12
14
16
1997
/4Q
1998
/2Q
1998
/4Q
1999
/2Q
1999
/4Q
2000
/2Q
2000
/4Q
2001
/2Q
2001
/4Q
2002
/2Q
2002
/4Q
2003
/2Q
2003
/4Q
2004
/2Q
2004
/4Q
2005
/2Q
2005
/4Q
2006
/2Q
2006
/4Q
2007
/2Q
2007
/4Q
2008
/2Q
2008
/4Q
2009
/2Q
2009
/4Q
Depository corporationsInsurance and pension funds
Other financial institutionsPrivate nonfinancial corporations
(tril. yen)
Balance sheets of non-financial corporations and some of other financial institutions arenot always available. The figure of other financial institutions is estimated with low accuracy.
3/17
Central Securities Depository (CSD)
An institution that offers safekeeping and book-entry transfer services of securities in a centralized network.
- In some countries, it offers dividends payment services or it engages in securities lending (not in Japan).
Two advantages in data collection
(1) centralized information(2) wider universe than that of the administratively collected data (Information gaps may exist outside the scope of authorities.)
One and only platform
4/17
Central Securities Depository (CSD)
Background: Dematerialization is almost completed in 2009.- CP(2002-), Corporate bonds(2003-), Investment trusts(2007-), Stocks(2009-).
JASDEC (Japan Securities Depository Center)
CSD in Japan
The Bank of Japan
- deals with general securities such as CP, Corporate bonds, Investment trusts, Stocks, etc.
- deals with central government bonds.
Today’s focus
5/17
Recent exploration of the CSD data
(1) Chain of accounts(2) Finality of ownership(3) Security by security
Distinctive features
Statistical improvements in FFA
(4) ABCP(5) Local government bonds(6) Privately placed asset-backed securities
6/17
Accounts for B
Self Customer
A(Direct AMI)
C(Indirect AMI)
B(Direct AMI)
D(Indirect AMI)
Investor H
Investor J
Investor I
E(Indirect AMI)
CSD
(1) Chain of accounts
Accounts for A
Self Customer
Accounts for C
Self Customer
Accounts for D
Self Customer
Accounts for E
Self Customer
Investor GInvestor F
Investor K
Direct AMI: Direct account management institution
Indirect AMI: Indirect account management institution
89
407
1
7/17
(2) Finality of ownership
Direct system Indirect system
Notes: The chart is made by the author based on Kanda (2009).
CSD
custodian custodian
investor investor
(seller) (buyer)
CSD
custodian custodian
investor investor
(seller) (buyer)
U.S. and U.KJapan and some other countries
A custodian legally holds assets and an investor keeps equitable interest or securities entitlement to these assets.
A custodian is just keeping an investor’s account and does not take over the ownership of securities.
8/17
(3) Security by security
Items Searched result
Name of the issue ←① The second issue of ABC special purpose corp.
Type of issue T, SB
ISIN code ←② JP90B001AB55
Issuing agent X bank
Paying agent Y bank
Currency Yen
Total amount 5,300,000,000
Interest rate 2.013%
Interest payment date May 31, 2010
Next scheduled repayment date June 30, 2010
Factor (ratio of outstanding/face value) 0.93415
・・・ ・・・
An example of a search result in the JASDEC website (corporate bond) Identifier: Name of the issue or ISIN code① ②
9/17
Statistical improvements in FFA
- The figures were once estimated by assuming that ABCP was a part of other structured- financing instruments (Sato[2009]).- “ CP issued by SPC” released by the JASDEC is now used for the outstanding of ABCP.
(4) ABCP
(5) Local government bonds
(6) Privately placed asset-backed securities
By communicating with JASDEC, we confirmed definition of several series of CSD data.
- The information on the outstanding amount of local government bonds was not centralized.- The amount held by non-residents is now used for the ROW sector.- The CSD’s aggregate data is the most centralized and reliable primary source.
- Still under examination. It is a remaining part of the structured-financing instruments after ABCP.- Classification by type of collateral is required (financial/real).- Improvement is expected next year.
10/17
(1) Cascade structure of accounts
(2) Confidentiality of customer accounts
(3) Cooperation with CSD and with securities-related industry
Challenges for statistical development of CSD data
There are general challenges pertaining to CSD dataas a statistical source to identify final holders of securities.
We looked at the cases of OECD countries.
Here we would like to express special gratitude to the six countries (U.S., U.K., Australia, Germany, Spain, Chile) for cooperating on our research.
11/17
CSD data usage in OECD countriesTable. CSD data usage in financial statistics
Respondent CSD Data used other than CSDData usage Holders' information Coverage Contract/agreement (i.e. custodians)
U.S. FederalReserve
○ 1) × Low (ABS) ○
High (ABCP)
U.K. Bank ofEngland
× - - - ○ (London based issuing and paying agents)
Australia AustralianBureau ofStatistics
○ × Low (voluntary registration) ○ ○
Germany DeutscheBundesbank
○ △ (Not in all cases final holders) Low ○ ○
Spain Banco deEspaña
○ △ (debt securities issued by residents and held by non-residents)
Low (If between the non-resident and the CSD there is a resident custodian, it is the latter who declares.)
○ ○ (custodians, used to identify the holdings of securities by Non-financial corporations and by Households.)
Chile BancoCentral deChile
× → ○ 2) - → ○ - - → ○
Japan Bank ofJapan
○ × → ○ (e.g. Local government bonds held by non-residents) 3)
High × ×
Notes: 1) CSD data is used for bonds and stocks issued by non-financial corporate businesses along with other private vendor data. CSD data gives inadequate coverage for asset-backed bonds (probably less than 20 percent of the market), while CSD data on asset-backed CP is 100 percent of the market.
2) Currently, the Banco Central de Chile does not use the information given from the CSD for the compilation of yearly financial accounts statistics. Nevertheless, it is working in a project of quarterly financial accounts, where CSD data will be used intensively, including the securities holders' information.
3) It is identifiable by aggregating the amount of the tax exempt accounts which are specially allowed for non-residents. The figure is released by JASDEC.12/17
(1) Cascade structure of accounts
Most countries have access to supplementary source data other than CSD.
・ CSD data are selectively used (e.g. for ABCP) or not used.
・ Sometimes they are supplemented by the data given byintermediate institutions (custodians or issuing and paying agents).
To obtain supplementary information about customer accounts in DAMI
Approach in Japan
13/17
Accounts for B
Self Customer
A(Direct AMI)
C(Indirect AMI)
B(Direct AMI)
D(Indirect AMI)
Investor H
Investor J
Investor I
E(Indirect AMI)
CSD
(1) Cascade structure of accounts
Accounts for A
Self Customer
Accounts for C
Self Customer
Accounts for D
Self Customer
Accounts for E
Self Customer
Investor GInvestor F
Investor K
CSD and DAMI do not know the change of ownership.
Supplementary information on customer accounts in DAMI will help us estimate the holding sector in the entire market.
14/17
(2) Confidentiality of customer accounts
Confidentiality clause will help
・ A contract with confidentiality clause allows compilers to use only aggregate data.
・ Compilers do not need firm level information as far as the sector of final holders are correctly reported.
15/17
(3) Cooperation with CSD and with securities-related industry
General understanding for the statistical value of CSD data is important.
Participants: CSD, securities companies, securities dealers association, etc.
Observers: Bank of Japan, Financial Services Agency
In Japan, a conference was held in late 2009 and discussed that the availability of additional CSD data could increase understanding about securities market.
- CSD is a private company.- Four countries using CSD data have already had a
contract, which implies there is general understanding.
16/17
Conclusion
There are general challenges for statistical development of CSD data as a statistical source of securities holders information. But they can be overcome.
17/17
CSD data will continue to be a strong candidate to shed light on sectors such as households, non-financial corporations, or some other financial institutions.
- Thank you for your attention-
Sharing experiences among OECD countries is important.