Osaka Exchange, Inc. (OSE) will partially revise the Business Regulations, etc. in connection with shortening the period from the last trading day to the day of settlement by physical delivery and payment of JGB futures contracts. With the changes to the taxation system for public and corporate bonds in the FY2013 Tax Reform, OSE will make the necessary revisions for JGB futures contracts, such as changing the method for calculating accrued interests in settlement by physical delivery and payment and shortening the period between the last trading day and the day of settlement by physical delivery and payment by two business days.
An outline of the revisions is as follows.
I. Outline of Revisions
1. Change in Treatment of Accrued Interests in Settlement by Physical Delivery and Payment
The classification of taxable and non-taxable treatment of accrued interests in settlement by physical delivery and payment and the deduction of tax equivalent in the calculation of taxable accrued interests will be abolished.
2. Shortening of Period from Last Trading Day to Day of Settlement by Physical Delivery and Payment
For large JGB futures contracts, the period from the last trading day to the day of settlement by physical delivery and payment will be shortened so that the last trading day of the contract month with the nearest day of settlement by physical delivery and payment falls on the trading day that ends five business days prior to such day of settlement by physical delivery and payment (excluding non-business days).
3. Others
Other necessary revisions will be made.
II. Implementation Date
- The abolition of the deduction of the tax equivalent amount in the calculation of taxable accrued interests in settlement by physical delivery and payment in I.1. will be implemented on March 12, 2015 and applied to the calculation of accrued interests for which the first coupon payment date after delivery arrives on or after January 1, 2016.
- The abolition of the classification of taxable and non-taxable treatment of accrued interests in settlement by physical delivery and payment in I.1., and I.2. will be implemented on March 12, 2015. However, with regard to contracts existing as of the implementation of the rule revisions, the provisions then in force will remain applicable.
- A part of I.3. will be implemented on October 13, 2015. However, the implementation date will be changed if OSE deems it inappropriate due to unavoidable reasons, such as a malfunction in the trading system. In such case, OSE shall specify a later date for implementation.