Tokyo Stock Exchange Plans To Implement DVP Settlement In The First Half Of 2001.

Over the last few years TSE has implemented T+3 rolling settlement, same day fund settlement and central counterparty clearing, in order to meet global standards, to reduce settlement risk and to increase the efficiency and convenience of the TSE market as a whole. In addition, TSE will soon be implementing delivery versus payment (DVP) settlement, the simultaneous or same day payment of funds and securities, thus meeting global settlement standards.

Due to the inadequate link between the transfer of funds at BOJ (Bank of Japan) or TSE designated settling banks and that of securities at JASDEC (Japan Securities Depository Center), the current settlement system gives rise to principal risk.

Principal risk is the risk of not receiving funds or securities equivalent to those already delivered due to a counterparty default. TSE therefore decided in June 1998 to introduce DVP settlement in order to remove this type of risk, and has been working on its development and implementation since.

TSE will continue with efforts to enhance its clearing and settlement functions, such as the introduction of STP and shortening the settlement cycle.

Outline of DVP Settlement

Transactions involving securities handled by JASDEC

Settlement of transactions involving Convertible Bonds (CBs) will be included in the second half of 2001 when JASDEC starts handling of CBs.

Securities

Delivery from paying members* to TSE.12:00 noon on the date of settlement.

*Members include regular members and special participants in equity options trading.

Funds

Payment from paying members to TSE.13:30 on the date of settlement*.

Payment from TSE to receiving members.14:00 on the date of settlement.

*Members with a net-payment for provisional settlement must deposit equivalent cash collateral with TSE by the securities settlement deadline (12:00).