# Securities Settlement and CSDs: DvP, JASDEC and T+1

> Securities settlement is the transfer of securities by book entry in a securities settlement system. A central securities depository (CSD) provides securities accounts and holds securities centrally, and in many countries it also operates a settlement system. Delivery versus payment (DvP) removes the risk that only the securities or only the payment is performed.

- URL: https://www.derivatives-compass.org/en/market-infrastructure/securities-settlement-and-csd/
- Area: Market Infrastructure › Settlement Systems
- Last reviewed: 2026-10-22
- 日本語版: https://www.derivatives-compass.org/ja/market-infrastructure/securities-settlement-and-csd/index.md

## Key points

- A securities settlement system moves securities by book-entry transfer, and a CSD provides securities accounts and holds securities centrally.
- DvP ties the delivery of securities to payment, and it has three models depending on whether each settlement is gross or net.
- In Japan the Bank of Japan manages government bonds and JASDEC manages shares and corporate bonds, and there are major CSDs abroad as well.
- Securities delivered as collateral, and the government bonds delivered at the final settlement of JGB futures, also move by account transfers.
- The United States and Canada have moved to T+1 first, and the EU and the United Kingdom plan to follow.

When you post bonds as [collateral](https://www.derivatives-compass.org/en/glossary/collateral/) for derivatives, or deliver government bonds at the final settlement of [JGB futures](https://www.derivatives-compass.org/en/glossary/jgb-futures/), a securities settlement mechanism is involved. The institution whose accounts carry out the delivery depends on the type of security.

## Securities settlement systems and the role of CSDs

A securities settlement system moves and settles securities by book-entry transfer under rules common to its participants[^pfmi-sss]. A transfer of securities can be free of payment or can be linked to a payment[^pfmi-sss].

A central securities depository ([CSD](https://www.derivatives-compass.org/en/glossary/central-securities-depository/)) provides securities accounts, holds securities centrally, and offers asset services such as the administration of corporate actions and redemptions[^pfmi-csd]. It also helps ensure that securities are not issued or destroyed accidentally or fraudulently and that their details are not altered[^pfmi-csd]. Securities can be held in immobilized physical form or in dematerialized form, as electronic records only[^pfmi-csd]. In many countries, a CSD also operates a securities settlement system[^pfmi-csd-sss].

What a CSD does differs by jurisdiction. Jurisdictions differ on whether they allow direct holding, in which the CSD or the issuer knows each investor's account, or indirect holding, in which investors are visible only at the level of intermediaries such as [custodians](https://www.derivatives-compass.org/en/glossary/custodian/)[^pfmi-csd].

## How DvP prevents one-sided settlement

Delivery versus payment ([DvP](https://www.derivatives-compass.org/en/glossary/delivery-versus-payment/)) is a mechanism under which securities are transferred only if payment is made[^pfmi-sss].

Consider a hypothetical example in which Securities Firm E sells a bond to Securities Firm F for 9.9 billion yen. Without DvP, if Securities Firm E delivers the bond first and Securities Firm F fails before paying, Securities Firm E has delivered the bond and cannot receive the 9.9 billion yen. This is principal risk, which arises when only one of two linked obligations is settled, and the loss can reach the full amount of the trade[^pfmi-3121]. Under DvP, the bond moves only if Securities Firm F pays[^pfmi-3122]. If Securities Firm F cannot pay, the bond does not move, so Securities Firm E does not lose the bond.

**Figure 1: Bond and payment under DvP**

The bond moves from the seller, Firm E, through the system to the buyer, Firm F, and the payment moves the other way, from Firm F through the system to Firm E. The settlement system does not settle the bond unless the payment is also settled, and the reverse, so it avoids a state in which only one side is settled. The figure simplifies the setup to one system that handles both the bond and the payment; in some setups the funds are transferred at a settlement bank instead.

The international Principles for Financial Market Infrastructures (PFMI) recommend that systems that settle an exchange of value eliminate principal risk through mechanisms such as DvP[^pfmi-3122]. Even with DvP, [trades that did not settle](https://www.derivatives-compass.org/en/glossary/settlement-fail/), for example because payment was not made, remain unsettled. For such trades, the seller can lose gains it expected to realize, and the parties can incur the cost of replacing the original contract at market prices[^pfmi-3121]. DvP removes principal risk, but it does not remove the risk of systemic disruption, such as an uneven distribution of liquidity after a participant defaults[^pfmi-112].

DvP does not require the two obligations to be performed at the same instant. For example, when a securities settlement system holds no funds accounts, it first blocks the seller's securities, confirms that the transfer of funds at the settlement bank that handles funds is complete, and only then delivers the securities to the buyer[^pfmi-3124]. The PFMI recommend minimizing the time from blocking to delivery and keeping the blocked securities from becoming subject to third-party claims[^pfmi-3124].

## The three models of DvP

DvP has Models 1 to 3, depending on whether securities and funds are each settled one obligation at a time or settled net, by offsetting payments and receipts[^pfmi-model].

| Model   | Securities settlement | Funds settlement      |
| ------- | --------------------- | --------------------- |
| Model 1 | One at a time (gross) | One at a time (gross) |
| Model 2 | One at a time (gross) | Net                   |
| Model 3 | Net                   | Net                   |

Model 3 settles both securities and funds net, at the same time[^pfmi-model]. On top of DvP, using Model 1, which settles gross, one obligation at a time, further reduces credit exposures and liquidity exposures among participants and between participants and the securities settlement system[^pfmi-model].

In Models 2 and 3, which settle net, the settlement system or a participant may explicitly guarantee that settlement will be performed. The party that gives the guarantee is in effect extending intraday credit[^pfmi-model]. Without a guarantee, if a participant defaults, the participants bear settlement risk to one another[^pfmi-model].

In every model, legal, contractual, technical, and risk management frameworks must ensure that one settlement is executed only if the linked settlement becomes final, meaning confirmed and irrevocable[^pfmi-3123]. Funds-side settlement is covered on the [Payment Systems: RTGS, BOJ-NET and Correspondent Banking](https://www.derivatives-compass.org/en/market-infrastructure/payment-systems/) page.

## JGB settlement, JASDEC, and clearing houses in Japan

The [Bank of Japan](https://www.derivatives-compass.org/en/glossary/boj/) operates the JGB book-entry transfer system as the book-entry transfer institution for government bonds[^boj-jgb]. Government bonds are delivered by book-entry transfers between the accounts of system participants. The structure is tiered: the Bank of Japan holds accounts for banks, financial instruments business operators, and others, and participants hold accounts for their customers[^boj-jgb]. Rights in JGBs are determined by the entry in the transfer account book, and a transfer takes effect when the entry is made in the transferee's account[^boj-jgb-right].

JGB transfers are processed on the JGB services side of the Bank of Japan Financial Network System ([BOJ-NET](https://www.derivatives-compass.org/en/glossary/boj-net/)), and funds are settled by transfers between current accounts at the Bank of Japan on the current account side[^psr-bojnet]. The Bank of Japan provides DvP settlement of JGBs by linking each funds transfer on the current account side to each JGB transfer on the JGB services side, so that neither takes place unless the other does[^boj-jgb]. The JGB services side is a real-time gross settlement system that checks balances and settles each transfer immediately, one at a time[^boj-jgb].

The Japan Securities Depository Center ([JASDEC](https://www.derivatives-compass.org/en/glossary/jasdec/)) is designated by the government as a book-entry transfer institution under the Act on Book-Entry Transfer of Corporate Bonds and Shares[^jasdec-about] It handles the book-entry transfer of dematerialized securities[^jasdec-about]. These include shares, public bonds other than JGBs, corporate bonds, short-term corporate bonds (electronic commercial paper), and investment trusts[^jasdec-about]. JASDEC is a CSD that operates a securities settlement system for the safekeeping and book-entry transfer of shares and similar securities, short-term corporate bonds, general corporate bonds, and investment trusts[^psr-jasdec]. It links that system to the current account side of BOJ-NET to provide DvP settlement[^psr-jasdec].

JASDEC DVP Clearing Corporation (JDCC) is a wholly owned subsidiary of JASDEC and a clearing house ([CCP](https://www.derivatives-compass.org/en/glossary/central-counterparty/)) that clears the book-entry transfers of share transactions and similar transactions between financial institutions conducted outside exchanges[^psr-jdcc]. The Japan Securities Clearing Corporation ([JSCC](https://www.derivatives-compass.org/en/glossary/jscc/)) clears over-the-counter JGB transactions[^psr-jscc]. As of September 2024, use of clearing houses has grown in JGB trading, and transactions that previously did not use DvP have moved to DvP settlement through a clearing house[^psr-ccp].

## Major CSDs abroad

Major CSDs abroad include the following.

| CSD                            | Position                                                                                      | Scope                                                                       |
| ------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- |
| Euroclear Bank                 | International CSD (ICSD) of the Euroclear Group under Belgian law[^nbb-euroclear]             | International bonds and domestic securities                                 |
| Clearstream                    | Part of Deutsche Börse Group, with an ICSD in Luxembourg and a CSD in Frankfurt[^clearstream] | Safekeeping of Eurobonds and similar securities, and of domestic securities |
| DTC (Depository Trust Company) | CSD subsidiary of [DTCC](https://www.derivatives-compass.org/en/glossary/dtcc/)[^dtcc]        | US shares, corporate bonds, and municipal bonds                             |

Through its links to national CSDs, Euroclear Bank also acts as a gateway for participants to foreign securities markets. An ICSD in this role is called an investor ICSD, and the CSD on the foreign side is called an issuer CSD[^nbb-euroclear].

Euroclear Bank and Clearstream Banking in Luxembourg jointly perform the role of the issuer-side CSD (the notary function) for Eurobonds, which are international bonds issued in a currency other than that of the issuer's country[^nbb-euroclear].

DTC safekeeps securities for financial institutions, custodians, and brokers, and provides settlement and asset services such as corporate actions[^dtcc].

## Securities settlement in derivatives transactions

Some settlements move only securities, with no funds paid in return, such as posting collateral or moving securities between accounts[^pfmi-fop]. The operational side of exchanging collateral is covered on the [Collateral Operations](https://www.derivatives-compass.org/en/internal-operations/collateral-operations/) page.

JGB futures trade a notional standard bond that does not exist, so the final settlement delivers actual government bonds called deliverable bonds[^jpx-jgb]. The delivery is made by transfers between accounts in the JGB book-entry transfer system[^boj-jgb].

## Dates of the shorter settlement cycle

The standard settlement cycle is written as the number of business days from the trade date to the settlement date, such as T+1 (one business day after the trade date) or T+2 (two business days after the trade date)[^sec-summary]. As of October 2026, the dates of the move to a shorter settlement cycle are as follows.

| Region                             | Date             | Change                                                                 |
| ---------------------------------- | ---------------- | ---------------------------------------------------------------------- |
| Japan                              | May 2018         | OTC JGB transactions moved from T+2 to T+1[^psr-cycle]                 |
| Japan                              | July 2019        | Share and similar transactions moved from T+3 to T+2[^psr-cycle]       |
| Japan                              | July 2020        | General corporate bond transactions moved from T+3 to T+2[^psr-cycle]  |
| Canada, Mexico, Argentina, Jamaica | May 27, 2024     | Moved to T+1[^cds]                                                     |
| United States                      | May 28, 2024     | Compliance date for the T+1 requirement in Rule 15c6-1(a)[^sec-date]   |
| EU                                 | October 11, 2027 | Date of application of Regulation (EU) 2025/2075[^eu-t1]               |
| United Kingdom                     | October 11, 2027 | Date the government gave for the legislation that mandates T+1[^uk-t1] |

In the United States, the Securities and Exchange Commission (SEC) adopted a final rule on February 15, 2023, that shortened the standard settlement cycle for most transactions by US broker-dealers from T+2 to T+1[^sec-summary]. [Security-based swaps](https://www.derivatives-compass.org/en/glossary/security-based-swap/) are excluded from this T+1 provision[^sec-sbs]. The EU regulation requires the intended settlement date of securities transactions executed on trading venues to fall no later than the first business day after the trade. Certain transactions, such as securities financing transactions, are excepted[^eu-t1].

> **For operations and accounting: Same-day matching**
>
> For trades with institutional customers, US broker-dealers handle allocations, confirmations, and [affirmations](https://www.derivatives-compass.org/en/glossary/affirmation/). They are required to enter into contracts, or to establish policies and procedures, that are designed to complete these as soon as technologically practicable and no later than the end of the trade date[^sec-15c6-2]. The SEC explains that under T+1, submission to the clearing agency is scheduled for the evening of the trade date, and a trade whose steps are not complete during the trade date cannot be included in that processing[^sec-15c6-2].

[^pfmi-sss]: [CPSS and IOSCO, "金融市場インフラのための原則"](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf) (Principles for financial market infrastructures; provisional Japanese translation, April 2012), paragraph 1.12, page 11 (in Japanese).

[^pfmi-csd]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraph 1.11 and footnote 8, pages 10–11.

[^pfmi-csd-sss]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), end of paragraph 1.11, page 11.

[^pfmi-3122]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraph 3.12.2, pages 107–108.

[^pfmi-3121]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraph 3.12.1, page 107.

[^pfmi-112]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), footnote 112 to paragraph 3.12.1, page 107.

[^pfmi-3124]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraph 3.12.4, pages 108–109.

[^pfmi-model]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraphs 3.4.9 and 3.4.11, pages 53–54.

[^pfmi-3123]: [The same document](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf), paragraph 3.12.3, page 108.

[^boj-jgb]: [Bank of Japan, "日本銀行が運営する国債振替決済制度に関する情報開示"](https://www.boj.or.jp/paym/outline/pay_boj/pboj250731b.pdf) (July 31, 2025), sections 3-1 and 1-3, pages 7–8 and 4 (in Japanese).

[^boj-jgb-right]: [Bank of Japan, "日本銀行が運営する国債振替決済制度に関する情報開示"](https://www.boj.or.jp/paym/outline/pay_boj/pboj250731b.pdf) (July 31, 2025), page 13 (in Japanese).

[^psr-bojnet]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (Payment and Settlement Systems Report 2024; September 2024), page 9 (in Japanese).

[^jasdec-about]: [Japan Securities Depository Center, "証券保管振替機構について"](https://www.jasdec.com/about/index.html) (About JASDEC), opening description (in Japanese).

[^psr-jasdec]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (September 2024), page 14 (in Japanese).

[^psr-jdcc]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (September 2024), page 15 (in Japanese).

[^nbb-euroclear]: [National Bank of Belgium, "Securities clearing, settlement and custody"](https://www.nbb.be/doc/ts/publications/fmi-and-paymentservices/latest/fmi_securities_clearing.pdf) (Financial Market Infrastructures and Payment Services Report 2026), section 2.2, pages 20–22.

[^clearstream]: [Clearstream, "Asset services overview"](https://www.clearstream.com/clearstream-en/res-library/asset-services/asset-services-overview-1274910), opening description.

[^dtcc]: [DTCC, "DTCC Central Securities Depository Subsidiary Surpasses $100 Trillion in Assets Under Custody, Marking Historic Milestone"](https://www.dtcc.com/press-releases/2025/dtcc-central-securities-depository-subsidiary-surpasses-100-trillion-in-assets-under-custody) (June 18, 2025), second paragraph of the text.

[^pfmi-fop]: [CPSS and IOSCO, "金融市場インフラのための原則"](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf) (Principles for financial market infrastructures; provisional Japanese translation, April 2012), footnote 111 to paragraph 3.12.1, page 107 (in Japanese).

[^jpx-jgb]: [Japan Exchange Group, "商品概要（国債（JGB）先物）"](https://www.jpx.co.jp/derivatives/products/jgb/jgb-futures/index.html) (Product overview: JGB futures), "商品概要" (in Japanese).

[^psr-jscc]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (September 2024), page 16 (JSCC section) (in Japanese).

[^psr-ccp]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (September 2024), page 10 (BOJ-NET JGB services section) (in Japanese).

[^sec-summary]: [SEC, "Shortening the Securities Transaction Settlement Cycle"](https://www.federalregister.gov/documents/2023/03/06/2023-03566/shortening-the-securities-transaction-settlement-cycle), 88 FR 13872, at 13872 (Summary). The adoption date is "Dated: February 15, 2023" at the end of the document (page 13954).

[^psr-cycle]: [Bank of Japan, "決済システムレポート 2024"](https://www.boj.or.jp/research/brp/psr/data/psr240910.pdf) (September 2024), page 9 (in Japanese).

[^cds]: [CDS, "T+1 Is Here: Transforming Canadian Capital Markets"](https://www.cds.ca/solutions/cds-key-initiatives/t-1), "Seamless Transition to T+1" and "Global Alignment".

[^sec-date]: [SEC, "Shortening the Securities Transaction Settlement Cycle"](https://www.federalregister.gov/documents/2023/03/06/2023-03566/shortening-the-securities-transaction-settlement-cycle), 88 FR 13872, at 13916–13918 (Part VII.A).

[^eu-t1]: [European Parliament, "Securities settlement in the EU and central securities depositories (CSDs)"](https://oeil.europarl.europa.eu/oeil/en/document-summary?id=1852603) (2025/0022(COD)), "CONTENT", "ENTRY INTO FORCE", and "APPLICATION".

[^uk-t1]: [HM Treasury, "Policy note – Mandating T+1 settlement in the UK"](https://www.gov.uk/government/publications/accelerated-settlement-t1/policy-note-mandating-t1-settlement-in-the-uk) (updated November 20, 2025), "Introduction" and "Next steps".

[^sec-sbs]: [SEC, "Shortening the Securities Transaction Settlement Cycle"](https://www.federalregister.gov/documents/2023/03/06/2023-03566/shortening-the-securities-transaction-settlement-cycle), 88 FR 13872, at 13883 (Part II.C.3).

[^sec-15c6-2]: [SEC, "Shortening the Securities Transaction Settlement Cycle"](https://www.federalregister.gov/documents/2023/03/06/2023-03566/shortening-the-securities-transaction-settlement-cycle), 88 FR 13872, at 13872 (Summary) and 13890–13891 (Part III.C).

## Sources

- [金融市場インフラのための原則（仮訳）](https://www.boj.or.jp/paym/intlact_pm/cpss/data/rel120416a4.pdf) — BIS 支払・決済システム委員会、証券監督者国際機構専門委員会
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