第1回 FIAジャパン オペレーション委員会 議事録（公開版）FIA Japan Operations Committee — 1st Meeting Minutes (Public Version)

Note (Chatham House Rule): This record has been prepared under the Chatham House Rule; statements that would identify individual speakers have been removed. With the exception of the Chair (Shun Yanagisawa), the Secretariat (Tony Crane), the chairs of other FIAJ committees, and the Webmaster (David Wilkinson), neither individual names nor organization names are recorded. No substantive content — what was discussed or decided — has been altered.

Note (Status of this public version): This public version is not a verbatim translation of the Secretariat's internal version. Wording has been deliberately altered to apply the Chatham House Rule. Substantive content — what was discussed and decided — matches the internal version, but word-for-word equivalence is not intended.

Note (Reference translation): The English text below is a reference translation prepared for the website. The Secretariat's official record for this meeting exists in Japanese only.

Secretariat's Distribution Memo

• A group address, "opecom," was updated and created using the contact details of those who attended the previous day's meeting as core members.
• The minutes below, drafted with AI and checked through "YI — Yanagisawa Intelligence!", are circulated for review.
• In addition, the JSDA rules on in-house average unit price provided by a committee member are shared (see attached PDF file).

1. Meeting Overview

Participants (honorifics omitted):

Yanagisawa, — (name withheld) (Citi), — (name withheld) (GS), — (name withheld) (JPM), — (name withheld) (MS), — (name withheld) (MTBJ), — (name withheld) (MTBJ), — (name withheld) (CBJ), — (name withheld) (NRI), — (name withheld) (FIS), — (name withheld) (Blackrock), — (name withheld) (OSTTRA), — (name withheld) (Broadridge), Tony (FIAJapan)

Individual names are withheld except for the Chair and the Secretariat. Participating organizations, their order, and the number of entries (= number of participants) are preserved as in the source.

2. Agenda and Summary of Discussions

Agenda Item 1: Identifying Inefficiencies in Post-Trade Processes for Domestic Futures Transactions

1. Margin reconciliation procedures for domestic futures (between trust banks and securities firms) → attached Excel (#12)

Examination of the necessity of margin reconciliation procedures for domestic futures. At present, margin reconciliation is carried out between trust banks and securities firms for domestic futures, whereas no such reconciliation is performed for overseas futures.

Since the margin payment amount stated in the securities firm's statement is considered to create a contractual payment obligation, is the reconciliation work not unnecessary?

2. Review of JASDEC reconciliation items and process improvement (#11)

Review of the mandatory items in JASDEC reconciliation and simplification of the process.

Currently, because there is no classification of mandatory items among the reconciliation items at JASDEC, reconciliation is performed on all items, creating an excessive operational burden. After confirming the statutory bookkeeping requirements under the Financial Instruments and Exchange Act, the items requiring reconciliation should be narrowed down to improve efficiency.

3. Unification of close-out / FIFO logic (#1)

Standardization of the FIFO logic itself is required. Because asset managers have their own logic, it is necessary to understand that logic and unify it.

Asset managers use FIFO logic based on chronological order (timestamps), but this is difficult for securities firms to accommodate. Hearings should be conducted on why timestamps are necessary.

An industry standard is to be formulated with a target of three years out, and unified FIFO logic introduced (guidelines as FIA, opinions from JSDA, JPX/OSE/JSCC, etc.).

4. Unification of average unit price calculation and rounding rules (#5)

When allocating bulk-executed trades to individual funds, using an "average unit price" rather than individual execution prices reduces the operational burden and improves downstream processing such as allocation and offsetting between funds. However, at present the average unit price is used only in part domestically.

The average unit price has already been introduced domestically, but the timing and number of digits used in rounding during the calculation process are not unified across the industry, giving rise to discrepancies such as one-yen differences in calculation results between firms. A unified industry rule is therefore required.

Guidelines from the JSDA exist from the time the average unit price was introduced, but certain aspects of rounding for futures are not clearly specified in those guidelines, so improvement is necessary.

5. Commission calculation (round-turn / one-way) (#3)

Round-turn commissions are the domestic standard, whereas one-way is the global standard. Securities firms prefer one-way.

Trust banks can accommodate both round-turn and one-way (in some cases requiring system development). Since asset managers' systems may only support round-turn, their ability to handle round-turn requires confirmation. In domestic futures accounts, a drawback of round-turn commissions is that when commission rates change, manual work such as commission adjustments arises at both counterparties.

6. Electronification of trade confirmation (post-trade) (#9)

The problem is that no industry-standard system has been introduced for trade confirmation processing. Formats for pre-confirmation and trade confirmation should be unified, and data transmission via FIX Drop Copy should be considered.

It is necessary to examine what solutions are available from vendors.

7. Other

Among the reasons cited for give-up transactions not taking hold in domestic futures accounts was that the delivery deadline for statements on domestic futures accounts is earlier than the exchange's give-up acceptance deadline. This will be examined in line with industry needs.

Agenda Item 2: Consideration of Standardization of System Specifications and Operational Processes; Approaches and Solutions for Achieving Standardization

1. Consensus-building process

It was recognized that the greatest challenge in introducing new rules is building consensus among clients, particularly on the buy side. A concrete approach was proposed in which FIA Japan takes the lead in preparing a draft proposal, obtains the agreement of a majority of securities firms and asset managers, issues it as guidance, and ultimately submits it to the Japan Securities Dealers Association (JSDA) with the aim of establishing it as a rule. The work will proceed with the cooperation of JSCC (Japan Securities Clearing Corporation) and OSE (Osaka Exchange) as observers.

2. Leveraging existing infrastructure and considering solutions

To contain new development costs, it was discussed that applying the FIX protocol infrastructure already used in equities trading to futures trading as well would be the most realistic and cost-efficient approach. Trade confirmation platforms used as standard overseas were cited, including OSTTRA's matching service Triana, and it was discussed that their use in Japan is to be hoped for. On the other hand, since CTM, used for equities, does not support futures and options, alternative solutions need to be considered. Going forward, vendor hearings and product demonstrations will be arranged to examine the futures post-trade ecosystem as a whole.

3. Real-time post-trade processing

With reference to initiatives such as DMIST in the United States (30/30/30) — guidelines requiring give-up, allocation, and take-up to be performed within 30 minutes of execution — transparency and real-time processing will be recommended, and guidelines will be prepared in Japan as necessary.

Agenda Item 3: Action Items

Based on the discussions at the meeting, the following action plan and owners ("champions") were decided as concrete improvement items that can be addressed within the year. Each owner will proceed with investigation and consideration ahead of the next meeting (targeted for one month later).

Please refer to the attached Excel for details.

Agenda Item 4: New Issues Raised

1. Interest on margin in domestic futures trust accounts

The treatment of income arising from OSE/JSCC's launch of a program to pay securities firms the investment income generated from margin was discussed. Because investment income can be configured on an account-by-account basis, it was recommended that interest income not be passed through in trust accounts.

2. Multi-SSI

The issue that there are multiple margin payment destination accounts (SSIs) for trust accounts, differing on each occasion, was discussed. This arises because asset managers use different banks on each occasion in search of the best foreign exchange rate, so the settlement instruction (SSI) is not fixed. It stems from a structural feature of Japan's trust scheme, in which funds are treated as individual legal entities and in some cases do not hold custody accounts. Awareness of the issue is shared within the trust industry and there is movement toward resolving it, but a solution is expected to take several years. For securities firms, the SSI is only identified upon receipt of the margin transfer instruction from the trust bank, so in the case of an SSI for a new foreign exchange bank, it must be set up within a short window in the evening, which imposes an operational burden from a KYC/AML perspective.

3. Next Steps

• Next meeting: To be held approximately one month later as a forum for each owner to report progress. A hybrid format (in-person and online) will also be considered.
• Preparation of a proposal: The matters discussed at this meeting will be compiled into a proposal, distributed widely to domestic securities firms and asset managers, and the process of soliciting opinions will be advanced.
• Owners by priority issue

• Observer participation: As necessary, JSCC (Japan Securities Clearing Corporation) and OSE (Osaka Exchange) will be invited to participate in the discussions as observers.

4. Notice from the Secretariat

The next meeting is planned for around midday on Thursday, July 17, to be arranged in a hybrid format (in person and Zoom). A further notice will be issued once the venue is confirmed.

These minutes are a record of the discussions held during the meeting. Please direct any corrections or amendments to the Secretariat (Tony Crane).