A firm such as a financial instruments business operator that deals in OTC derivatives as a business checks whether a yen interest rate swap falls under the mandate by working through the requirements of the notice and the exceptions to the mandate. The operator of an electronic trading platform publishes the outline of the transactions conducted on it.

What the rule requires

The electronic trading platform mandate requires certain OTC derivative transactions to be conducted on an electronic trading platform. At the 2009 G20 Pittsburgh Summit, leaders agreed that standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms where appropriate1. The agreement as a whole is covered in The G20 OTC Derivatives Reforms. Japan set the mandatory clearing requirement and the retention and reporting of trade information in a 2010 amendment, and the electronic trading platform mandate in a 2012 amendment (Act No. 86 of 2012)2.

The name differs by source. The text of the Financial Instruments and Exchange Act (FIEA) says "electronic data processing system". The Cabinet Office Order on Financial Instruments Business, etc. (the Business Order) defines "electronic trading platform operation business" as carrying on specified OTC derivative transactions as a business using that system3. The Financial Services Agency (FSA) calls the rule "electronic trading platform regulation" and lists it alongside the central clearing requirement (mandatory clearing), trade reporting, and margin requirements4.

The mandate is set in four tiers: a statute, a Cabinet Order, a Cabinet Office Order, and a notice5.

Tier Name What it sets
Statute FIEA The mandate and the publication of a transaction outline (Article 40-7), and the license for operators of foreign electronic trading platforms (Article 60-14)
Cabinet Order Order for Enforcement of the Financial Instruments and Exchange Act (the Enforcement Order) The minimum capital of operators, the period of experience in the grounds for refusing a license, and similar items
Cabinet Office Order Business Order The scope of specified OTC derivative transactions and the exceptions to the mandate (Article 125-7), the method of publication (Article 125-8), and the operators' business methods
Notice FSA Notice No. 67 of 2015 The requirements for the designated transactions

On the face of the statute, the authority to license and to take supervisory actions belongs to the Prime Minister. The FIEA delegates that authority to the Commissioner of the Financial Services Agency, except for matters that a Cabinet Order excludes6. The Commissioner of the Financial Services Agency is the person that the Business Order empowers to designate the transactions covered by the mandate.

The statutory text was retrieved on October 5, 2026, and confirmed as the current version on October 12, 2026 (the FIEA and the Enforcement Order in force since August 12, 2026, and the Business Order in force since August 3, 2026).

Covered transactions and parties

Who is bound, and which transactions

The FIEA calls financial instruments business operators and registered financial institutions together "financial instruments business operators, etc."7. The mandate binds financial instruments business operators, etc. that deal in OTC derivative transactions as a business8. A bound firm conducts specified OTC derivative transactions on one of three kinds of electronic data processing system8. The first is its own system. The second is the system of another financial instruments business operator, etc. (limited to one that deals in OTC derivative transactions, etc. as a business). The third is the system of a licensed electronic OTC derivative business operator (the "licensed operator")8. Trading on its own system also counts as use.

The FIEA leaves the definition of specified OTC derivative transactions to a Cabinet Office Order. They are the transactions for which, in light of trading volume and similar factors, prompt disclosure of outline information is considered necessary to ensure fair trading8. The Business Order defines them as yen-denominated interest rate swaps that the Commissioner of the Financial Services Agency designates. Here an interest rate swap is a transaction in which the notional amount is set in yen and each party pays the other money based on an agreed rate or on the rate of change of a market interest rate9.

The notice was issued in 2015. Its original requirements were a floating rate of 6-month yen LIBOR, payment frequencies of 6 months on both the fixed and floating legs, an actual/360 day count on the floating leg, and Tokyo and London as the business day centers10. The amendment accompanying the permanent end of LIBOR publication was promulgated on November 5, 2021 and has applied since December 6, 202111.

The notice as amended, applicable from December 6, 2021, designates transactions that satisfy all of the following requirements11.

Item Requirement
Payments One party pays money based on a fixed rate, and the other pays money based on a floating rate
Floating-rate benchmark TONA compounded in arrears
Clearing Japan Securities Clearing Corporation covers the obligations arising from the transaction under its financial instruments obligation assumption business
Notional Constant over the term of the transaction
Effective date Two business days after the trade date
Term 5, 7, or 10 years
Business day adjustment If a specified day is not a business day, the next business day; if the next business day falls in the following month, the preceding business day
Fixed-rate payment frequency and day count Payment frequency of 1 year; interest day count of actual/365
Floating-rate payment frequency and day count Payment frequency of 1 year; interest day count of actual/365

An order that a party places as a single package on the condition that several different transactions are concluded at the same time is not among the designated transactions11.

Exceptions to the mandate

Even for a designated transaction, the Business Order excludes a transaction from the mandate if, when the contract is made, it falls under any of the following12.

Exception Content
Trust account A transaction accounted for as belonging to a trust account
Within a group A transaction whose counterparty is a parent company, etc., a subsidiary, etc., or a subsidiary, etc. of the parent company, etc. of the financial instruments business operator, etc. conducting the transaction (excluding that operator itself)
Scope of parties A transaction in which one or both parties fall under (1) or (2) below
Failures and similar A transaction in a case that the Commissioner of the Financial Services Agency designates as one in which conducting it on an electronic data processing system is inappropriate because of special circumstances, such as a failure that requires suspending the use of the system

Under "scope of parties," (1) is a person that is neither of two kinds of firm. One is a financial instruments business operator that engages in Type I financial instruments business. The other is a registered financial institution that is a bank, the Shoko Chukin Bank, the Development Bank of Japan, a federation of shinkin banks whose district is the whole country, or the Norinchukin Bank. Likewise, (2) is a person in either of those two groups whose average notional of OTC derivative transactions is below 6 trillion yen.

If even one party falls under "scope of parties," the transaction is outside the mandate. The mandate therefore arises only for a transaction that falls under no other exception and in which neither party falls under (1) or (2). Both parties are then Type I financial instruments business operators or designated registered financial institutions with an average notional of 6 trillion yen or more.

The average is the mean of the sums of the notional amounts at the end of each month over a 12-month period fixed at the time the contract is made. It counts OTC derivative transactions that are subject to trade information reporting, and excludes transactions in trust accounts. The period runs from April of the year before last to March of the previous year, counting from the year of the contract. If the contract is made in December, it runs from April of the previous year to March of the contract year13. For example, a contract made in October 2026 uses April 2024 to March 2025, and a contract made in December 2026 uses April 2025 to March 2026.

The decision flow and examples

Figure 1 puts the conditions so far in the order of the questions.

YesNoIs it a yen swap thenotice designates?Not aspecified OTCderivativeNoYesDoes any of theexceptions apply (trust,group, failure, etc.)?Excluded by anexceptionYesNoAre both parties Type Ifirms or designatedregisteredinstitutions?Excluded by anexceptionYesNoIs the average notionalof both 6 trillion yen ormore?Excluded by anexceptionSubject to the mandate
Figure 1Deciding whether the mandate applies
Figure description

If the first check fails, the transaction is not a specified OTC derivative transaction.

For the second check, a transaction is outside the mandate if the answer is "yes," that is, if any one of the exceptions applies. For the third and fourth checks, it is outside the mandate if the answer is "no."

A transaction that passes all four is subject to the mandate under these conditions.

Consider a hypothetical example in which Bank G has an average notional of 8 trillion yen and Company H has 7 trillion yen.

Example 1: Bank G and Company H are both financial instruments business operators that engage in Type I financial instruments business. Their average notionals are 8 trillion yen for Bank G and 7 trillion yen for Company H. The two firms enter into a yen interest rate swap with a floating rate of TONA compounded in arrears, a term of 10 years, and a constant notional. It meets all the other requirements in the table. It falls under neither the trust account exception nor the within-a-group exception.

The conditions that matter are that both parties are Type I financial instruments business operators and that both have an average notional of 6 trillion yen or more. No exception applies, so the transaction is subject to the mandate.

Example 2: For the same transaction, suppose Company H is an operating company that is neither a Type I financial instruments business operator nor a designated registered financial institution. What matters is the type of Company H. An exception applies if even one party falls under it, so the transaction falls outside the mandate.

Electronic trading platform operators and the publication duty

Categories of operators

Operators of electronic trading platforms fall into two categories. The first is financial instruments business operators, etc. that carry on electronic trading platform operation business. Both Type I financial instruments business operators and registered financial institutions state in their registration applications that they carry on this business15. The FSA calls the Type I financial instruments business operators among them "electronic trading platform operators"16.

The second is the licensed operator. A person that deals in OTC derivative transactions, etc. as a business abroad under foreign law, and that is neither a financial instruments business operator nor a financial institution such as a bank, carries on electronic trading platform operation business with a license from the Prime Minister. The license covers cases in which the counterparty is a person engaged in securities-related business, and cases set by Cabinet Order17.

The Enforcement Order sets a minimum capital of 300 million yen for a Type I financial instruments business operator that intends to carry on electronic trading platform operation business. If the operator also underwrites securities, the categories are 3 billion yen or 500 million yen. The minimum capital of a licensed operator is also 300 million yen. Among the grounds for refusing a license is not having continued the same kind of business for a set period, which the Enforcement Order sets at 1 year18.

An operator states its business methods in its registration or license application. The Business Order lists items including the types of transactions, the criteria for starting transactions with customers, the method of publishing price information such as quotes, and the method of determining transaction prices. It also lists the method of publishing the outline of transactions, an overview of the system, the method of settlement, the creation and retention of transaction records, and the prevention of unfair trading19.

For transactions whose notional is at or below the publication threshold (the table under "Publication of the transaction outline"), the operator's method of determining prices must be either a method based on published quotes, or a choice that the customer can make between that method and negotiation between customers. In the negotiation, the operator, at the customer's designation, asks three or more other customers to provide quotes, and notifies the customer of the quotes provided and the published quotes, among other things, before the negotiation takes place20.

Publication of the transaction outline

An operator publishes the price, quantity, and other details of specified OTC derivative transactions conducted on its electronic trading platform. This is a duty under the FIEA, and it applies mutatis mutandis to licensed operators8. Publication takes place immediately after the transaction. For a transaction whose notional exceeds the threshold below, the operator publishes by the business day after the transaction date, and publishes the fact that the notional exceeds the threshold instead of the notional amount. The threshold depends on the period from the date the transaction takes effect to the date it expires23.

Transaction term Threshold (billion yen)
3 months or less 300
Over 3 months, up to 6 months 60
Over 6 months, up to 1 year 55
Over 1 year, up to 2 years 50
Over 2 years, up to 5 years 20
Over 5 years, up to 10 years 10
Over 10 years, up to 30 years 5
Over 30 years 2

For the designated terms, the threshold is 20 billion yen for 5 years and 10 billion yen for 7 and 10 years. Consider a hypothetical example in which 7-year transactions have notionals of 15 billion yen and 8 billion yen. The 15 billion yen transaction exceeds the 10 billion yen threshold, so by the next business day the operator publishes the fact that the threshold is exceeded, not 15 billion yen. For the 8 billion yen transaction, the operator publishes 8 billion yen immediately.

The items to be published include the date and time the transaction was concluded, the fact that the obligations are to be assumed by a clearing organization where that applies, and the dates it takes effect and expires. They also include the day count method, the settlement currency, the type of contract, the rate or the type of financial indicator, and the payment and calculation frequencies. If there is an unavoidable reason, such as an abnormality in the electronic data processing system or maintenance, the operator publishes promptly after the reason has ended23.

Path to implementation

The mandate is part of the amending Act promulgated on September 12, 2012 that was to take effect within three years of promulgation. The related Cabinet Order and Cabinet Office Order were promulgated on November 19, 2014 and took effect on September 1, 2015. However, part of the Order's supplementary provisions (paragraphs 2 and 3) took effect on the date of promulgation24.

Date Event
September 2009 G20 Pittsburgh Summit agrees that standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms where appropriate
May 2010 Amending Act containing the mandatory clearing requirement and the retention and reporting of trade information is enacted (effective November 2012)
September 6, 2012 Amending Act containing the electronic trading platform mandate (Act No. 86 of 2012) is enacted
September 12, 2012 The amending Act is promulgated
November 19, 2014 The related Cabinet Order and Cabinet Office Order are promulgated (part of the Order's supplementary provisions takes effect the same day)
July 13, 2015 The notice designating the transactions is promulgated
September 1, 2015 The Order (except the part of the supplementary provisions that took effect earlier) and the Cabinet Office Order take effect, and the notice applies
November 5, 2021 The amendment to the notice accompanying the end of LIBOR publication is promulgated
December 6, 2021 The amended notice applies

The notice applies to transactions conducted on or after the effective date10. Transactions conducted before the effective date (legacy contracts) are outside the OTC derivative rules, including electronic trading platform regulation, under transitional measures25.

Treatment of violations

The party bound by the mandate is a financial instruments business operator, etc. Supervisory actions follow the general provisions of the FIEA and are not specific to a violation of this obligation.

For both a financial instruments business operator and a registered financial institution, the Act provides for a business improvement order and for revocation of registration or suspension of business for up to 6 months26.

A business improvement order can be issued when it is found necessary and appropriate for the public interest or for investor protection, and a violation of law is not a requirement. Revocation of registration and suspension of business require, for example, a violation of laws relating to the business26.

A licensed operator is not bound by the mandate. The Act provides for sanctions where it has violated laws relating to its business, among other grounds, such as revocation of the license, suspension of business for up to 6 months, and an order to change its business methods26.

No penalty in the FIEA is specific to a violation of the mandate27.

The publication duty is separate. Failing to publish, or publishing false information, is subject to a non-penal fine of up to 300,000 yen. Carrying on business that requires a license without obtaining it is subject to imprisonment of up to 3 years, a fine of up to 3 million yen, or both28.

How the US and EU obligations differ

The US and the EU also have obligations to trade on trading venues. The US calls its obligation the trade execution requirement, and the EU calls its obligation the trading obligation. The venues are the designated contract market (DCM) or the swap execution facility (SEF) in the US, and regulated markets, multilateral trading facilities (MTFs), organised trading facilities (OTFs), and similar venues in the EU. The EU obligation is set by MiFIR.

Item Japan US EU
Basis FIEA Article 40-7 Commodity Exchange Act (CEA) Section 2(h)(8) MiFIR Article 28
Venues The electronic data processing system of a financial instruments business operator, etc. or a licensed operator A DCM or a SEF (including a SEF exempt from registration) Regulated markets, MTFs, OTFs, and third-country venues that meet certain conditions
Coverage Yen-denominated interest rate swaps that the Commissioner of the Financial Services Agency designates by notice Swaps subject to the clearing requirement that a DCM or SEF has made available to trade Classes of derivatives declared subject to the trading obligation and listed in the public register under Article 34
Who is bound Financial instruments business operators, etc. that deal in OTC derivatives as a business. Through the exceptions, narrowed to cases where both parties are, for example, firms with an average notional of 6 trillion yen or more Parties to a swap subject to the clearing requirement Financial counterparties and non-financial counterparties that meet certain conditions (the condition of EMIR Article 10(1)(b))

Japan's notice specifies the requirements down to the individual transaction, and the exceptions narrow the parties. In the US, the swaps determined to be made available to trade, and in the EU, the classes of derivatives declared subject to the trading obligation, are each selected from those subject to the clearing requirement2930.

What this page does not cover

Amendments to the notice after the 2021 amendment and the content of the Order's supplementary provisions are not covered on this page. Whether the 2015 public comment answers apply to the notice as amended in 2021 is not covered on this page.

Notes

  1. Financial Services Agency, "Financial Services Agency: The Year in Review (FY2015 edition)" (金融庁の１年（平成27事務年度版）), Part 2, Chapter 3, Section 3, note to III (the content of the September 2009 G20 Pittsburgh Summit agreement) (in Japanese). ↩

  2. The same source, Section 3, III, 1 (the amending Act enacted in May 2010; effective November 2012) and Section 1, I and II, 1 (Act No. 86 of 2012, enacted on September 6, 2012 and promulgated on September 12) (in Japanese). ↩

  3. Business Order Article 1, paragraph 4, item 16 (definition of electronic trading platform operation business) (in Japanese). The statutory term appears in the title and paragraph 1 of FIEA Article 40-7. ↩

  4. Financial Services Agency, "Materials on the OTC derivative regulations" (店頭デリバティブ取引規制関連), section on legacy contracts (the list of OTC derivative regulations) (in Japanese). ↩

  5. FIEA Articles 40-7 and 60-14. Enforcement Order Article 15-7 and Articles 17-10-2 to 17-10-5. Business Order Article 8, item 6(ri), Articles 125-7 and 125-8, and Articles 232-3 to 232-5. The notice is FSA Notice No. 67 of 2015 (July 13, 2015) (in Japanese). ↩

  6. FIEA Article 194-7, paragraph 1 (the Prime Minister delegates the authority under the Act, except for matters that a Cabinet Order excludes, to the Commissioner of the Financial Services Agency) (in Japanese). ↩

  7. Financial Services Agency, "Materials on the OTC derivative regulations", section on the trade information retention and reporting regime (a financial instruments business operator, etc. means a financial instruments business operator or a registered financial institution) (in Japanese). ↩

  8. FIEA Article 40-7, paragraph 1 (the mandate; specified OTC derivative transactions are defined in the parenthetical of the same paragraph) and paragraph 2 (publication of the transaction outline) (in Japanese). ↩ ↩2 ↩3 ↩4 ↩5

  9. Business Order Article 125-7, paragraph 1 (a transaction under FIEA Article 2, paragraph 22, item 5, in yen, in which each party pays money based on an agreed rate or on the rate of change of a market interest rate, that the Commissioner of the Financial Services Agency designates) (in Japanese). ↩

  10. FSA Notice No. 67 of 2015 (July 13, 2015; Attachment 2 to the FSA's public comment results), main text items 1, 5, 7, and 8, and the supplementary provision (applicable to transactions conducted on or after the effective date). Pages 1 to 3 of the PDF (in Japanese). ↩ ↩2

  11. The notice amending FSA Notice No. 67 of 2015 (Attachment 3 to the FSA's public comment results), table of old and new provisions and supplementary provision (PDF pages 2 to 4). The other requirements are as in the main text of the 2015 notice. The promulgation and application dates are in items 2 and 3 of the FSA's "Results of public comments on the partial amendment of … following the permanent cessation of LIBOR" (LIBORの恒久的な公表停止に伴う…パブリックコメントの結果等について) (in Japanese). ↩ ↩2 ↩3

  12. Business Order Article 125-7, paragraph 2, item 1 (trust account), item 2 (parent company, etc., subsidiary, etc., and subsidiary, etc. of the parent company, etc.), item 3(i) and (ii) (scope of parties and 6 trillion yen), and item 4 (failures and similar) (in Japanese). ↩

  13. Business Order Article 125-7, paragraph 2, item 3(ii) (the period for the average, and how the sum of month-end notional amounts is averaged) (in Japanese). The example periods are the result of applying this provision. ↩

  14. Financial Services Agency, "Summary of comments and the FSA's views on them" (コメントの概要及びコメントに対する金融庁の考え方) (July 2015), Nos. 2 to 5 (package orders), No. 6 (proof of use), No. 7 (terms), and No. 10 (termination and restructuring) (PDF pages 1 to 2). These are comments on the draft 2015 notice that designated 6-month yen LIBOR (in Japanese). ↩

  15. Business Order Article 44, item 4-2 and Article 45, item 7 (registered financial institutions), and Article 7, item 3-2 and Article 8, item 6(ri) (Type I financial instruments business operators). The registration application states that the firm carries on electronic trading platform operation business (in Japanese). ↩

  16. Financial Services Agency, announcement of the draft amendments to the Order for Enforcement of the Financial Instruments and Exchange Act and the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators (July 1, 2014), summary of the proposed amendment to the Guidelines (in Japanese). ↩

  17. FIEA Article 60-14, paragraph 1 (the scope of the license) and paragraph 2 (licensed operators). Enforcement Order Article 17-10-2 (the cases set by Cabinet Order) (in Japanese). ↩

  18. Enforcement Order Article 15-7, paragraph 1, item 1 (3 billion yen), item 2 (500 million yen), and item 2-2 (300 million yen); Article 17-10-5 (300 million yen for a licensed operator); Article 17-10-4, paragraph 1 (period of experience: 1 year) (in Japanese). ↩

  19. Business Order Article 8, item 6(ri) (matters where the operator carries on electronic trading platform operation business). For licensed operators, the similar matters are in Article 232-4 (in Japanese). ↩

  20. Business Order Article 8, item 6(ri)(7)(i) and (ii) (method of determining transaction prices, for transactions at or below the amount in each category of Article 125-8, paragraph 2) (in Japanese). ↩

  21. Business Order Article 157, paragraph 1, item 15-2. The Article sets the books and records to be prepared, for financial instruments business operators that engage in Type I financial instruments business (in Japanese). ↩

  22. Business Order Article 8, item 6(ri)(10) (method of settlement: having a clearing organization assume the obligations arising from transactions under FIEA Article 156-62, item 1 or 2, and handling a customer's failure to perform) (in Japanese). ↩

  23. Business Order Article 125-8, paragraph 1 (publish immediately) and paragraph 2 (thresholds and publication by the next business day), and Appendix Table 2 (items 1 to 12 to be published, and the treatment of unavoidable reasons) (in Japanese). ↩ ↩2

  24. Financial Services Agency, "Financial Services Agency: The Year in Review (FY2015 edition)", Part 2, Chapter 3, Section 1, I and II, 1, and the FSA's "Results of public comments on the draft partial amendment to the Order for Enforcement of the Financial Instruments and Exchange Act, etc." (November 19, 2014), item 2. The notice's promulgation and application dates are in item 2 of the FSA's "Results of public comments on the draft notice specifying matters designated by the Commissioner of the Financial Services Agency under Article 125-7, paragraph 1 of the Cabinet Office Order on Financial Instruments Business, etc." (in Japanese). ↩

  25. Financial Services Agency, "Materials on the OTC derivative regulations", section on legacy contracts (transactions conducted before the effective date are outside the regulations under transitional measures) (in Japanese). ↩

  26. FIEA Articles 51 and 51-2, Article 52, paragraph 1, item 7, Article 52-2, paragraph 1, item 3, and Article 60-14, paragraph 2 with Article 60-8, paragraph 1, item 3. Revocation and suspension require a violation of laws or dispositions relating to the business (in Japanese). ↩ ↩2 ↩3

  27. Across the whole FIEA, the only provisions that cite Article 40-7 are Article 40-7 itself, Article 60-14, and the penalty provision Article 208, item 6-2 (the paragraph 2 publication) (in Japanese). ↩

  28. FIEA Article 208, item 6-2 (failing to publish, or publishing falsely, under Article 40-7, paragraph 2; non-penal fine of up to 300,000 yen) and Article 198, item 3 (a violation of Article 60-14, paragraph 1; imprisonment of up to 3 years, a fine of up to 3 million yen, or both) (in Japanese). ↩

  29. 7 U.S.C. § 2(h)(8) ((A) a party to a swap subject to the clearing requirement executes the transaction on a DCM or a SEF (including a SEF exempt from registration); (B) it does not apply to swaps subject to an exception to clearing). ↩

  30. Regulation (EU) No 600/2014 Article 28, paragraph 1 (the trading obligation of financial counterparties and of non-financial counterparties that meet the conditions of Article 10(1)(b)). Adopted version of 2014, on legislation.gov.uk. ↩