Collateral on uncleared OTC derivative transactions comes up in calling variation margin and in calculating estimates for initial margin. The conditions of these rules are also consulted when judging whether a counterparty is covered and when deciding which assets to accept as collateral.

What the rules require

The margin requirements require financial instruments business operators, etc., to take measures to exchange margin with their counterparties on OTC derivative transactions that are not cleared through a central counterparty (uncleared OTC derivative transactions). Two kinds of margin are exchanged. Variation margin is margin posted in line with changes in the market value of the transactions. Initial margin is margin posted against a reasonable estimate of the costs and losses that may arise in the future1.

In line with the margin requirements, financial instruments business operators, etc., take measures to exchange margin with the counterparties to their uncleared OTC derivative transactions. The supervisory guidelines list the establishment of a framework for this among their points of focus.

The rules come from an international agreement. At the Pittsburgh Summit on September 24–25, 2009, the G20 agreed on central clearing of standardized OTC derivative transactions, reporting of trade information, and higher capital requirements for transactions that are not cleared2. The whole agreement is covered in The G20 OTC Derivatives Reforms. On margin, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) published a final report on margin requirements for uncleared derivatives in September 2013 and revised it in March 20153.

In Japan, the Financial Services Agency (FSA) promulgated the related Cabinet Office orders, supervisory guidelines, and other instruments on March 31 and July 25, 2016, and they took effect on September 1, 2016. The FSA describes the requirements as being implemented in phases from September 2016, scaled to the size of transactions, in line with the international agreement and with aims that include stabilizing the financial system4. The draft Cabinet Office order had planned for an effective date of December 1, 2015, but the international start date was changed to September 2016, and Japan followed it5.

The obligation falls on financial instruments business operators, etc., that is, financial instruments business operators and registered financial institutions6.

The Financial Instruments and Exchange Act (FIEA) lists, among the situations in the operation of business that financial instruments business operators, etc., must avoid, those specified by Cabinet Office order as "contrary to the public interest or posing a risk of impeding the protection of investors" (our translation). The Cabinet Office Order on Financial Instruments Business, etc. (the Business Order) specifies as one such situation the failure to take measures to exchange variation margin and initial margin7. The provision on measures to exchange margin is in the Business Order, not in the Cabinet Office Order on the Regulation of Over-the-Counter Derivatives Transactions (the OTC Derivatives Order)8.

Provision What it sets out
FIEA, Article 40 Among the situations in business operation that financial instruments business operators, etc., must avoid, those specified by Cabinet Office order
Business Order, Article 123 Measures for variation margin and initial margin, transactions that are excluded, and the assets that can be used as collateral and their substitute values
Notices of the Commissioner of the Financial Services Agency (hereafter "the Commissioner") (March 31, 2016) How margin is calculated, how the estimated potential loss is calculated, and the assets that can be used as collateral and their haircuts
Notice of the Commissioner (relation to foreign rules) Cases in which the Japanese measures need not be taken if foreign rules are followed
Supervisory guidelines Points of focus for the authorities' supervision (not the rules themselves)

There are three notices. FSA Notice No. 15 sets out how the estimated potential loss is calculated, No. 16 sets out the assets that can be used as collateral and the haircuts, and No. 17 sets out how variation margin and initial margin are calculated9.

The supervisory guidelines set out points of focus for the systems that financial instruments business operators, etc., should have. The FSA's supervisory guidelines for major banks and for financial instruments business operators list the following points of focus10. In this list, "financial institutions and similar parties" means financial institutions and persons who engage in OTC derivative transactions as a business abroad.

  • Whether the firm is working to set up a system to exchange variation margin on transactions with financial institutions and similar parties. This includes a firm outside the requirements because its average notional amount of OTC derivative transactions is below 300 billion yen.
  • Whether a firm covered for initial margin is also working to set up a system for initial margin.

When financial instruments business operators, etc., are in a situation in which they have not taken the measures, administrative sanctions are possible. The Prime Minister can order a financial instruments business operator to change its business methods or take other measures needed for improvement, when the Prime Minister finds it necessary and appropriate in the public interest or for the protection of investors. There is a provision for the same order against a registered financial institution11. When a financial instruments business operator or a registered financial institution violates laws and regulations, its registration can be revoked, or it can be ordered to suspend all or part of its business for up to six months12.

The provisions are the versions as of October 12, 2026. They reflect the FIEA up to the amendment that took effect on August 12, 2026, the Business Order up to the amendment that took effect on August 3, 2026, and the OTC Derivatives Order up to the amendment that took effect on June 1, 2025.

Covered transactions and parties

Whether the requirements apply depends on whether the transaction is an uncleared OTC derivative transaction and whether the parties are covered parties. Both are judged on the situation when the transaction was entered into (the reference time)13.

Covered transactions

An uncleared OTC derivative transaction is an OTC derivative transaction other than a transaction for which a financial instruments clearing organization or a foreign financial instruments clearing organization assumes the obligations and a transaction designated by the Commissioner1. The designated transactions are those assumed by a foreign clearing organization where a failure to perform the obligations would have only a minor effect on the Japanese capital market14.

Transaction Treatment
A transaction for which a clearing organization assumes the obligations Outside both variation margin and initial margin
The part of a cross-currency swap that promises to exchange currency equal to the amount set as principal Outside initial margin. The same exclusion is not provided for variation margin
Commodity OTC derivative transactions and FX forwards (forward foreign exchange transactions) The Business Order lists them separately from uncleared OTC derivative transactions
Crypto-asset-related OTC derivative transactions Outside variation margin for the time being. Initial margin is not mentioned

Commodity OTC derivative transactions and FX forwards can be included in the calculation together with the covered transactions if they are included on a continuing basis with the counterparty to the covered transactions. The parties can choose whether to include them15.

Covered parties

The parties covered for variation margin and initial margin are determined by the category of the parties to the transaction and by transaction size. If either party falls in an excluded category, the transaction is outside the requirements16.

Category of party Variation margin Initial margin
A Type I financial instruments business operator, or a registered financial institution that is a bank, the Shoko Chukin Bank, the Norinchukin Bank, a federation of shinkin banks whose district is the whole country, the Development Bank of Japan, or an insurance company Covered if the average notional amount of OTC derivative transactions is 300 billion yen or more Covered if it is 300 billion yen or more and the group's total average notional amount exceeds the threshold amount (which changes by phase; see the initial margin threshold table)
A person who engages in OTC derivative transactions as a business abroad (excluding the Bank for International Settlements, international development banks, foreign central banks, and foreign governments) Covered if the person is in a country where a close-out netting agreement is confirmed to be valid and is expected to be at 300 billion yen or more Covered under the same conditions, plus a group total expected to exceed the threshold amount
Financial instruments business operators, etc., other than the two rows above (such as Type II financial instruments business operators) Not covered Not covered
Non-financial companies and others that fall in neither of the two rows above Not covered Not covered
Transactions between companies in the same group Not covered Not covered

The 300 billion yen for variation margin is tested on the average of the notional amounts at the end of each month. The period is April of the year before last through March of the previous year relative to the year of the reference time (April of the previous year through March of that year if the reference time falls in December)16.

For transactions accounted for in a trust account, the test is applied to each trust property. For variation margin, trust property with an average notional amount below 300 billion yen is not covered. For initial margin, trust property below 300 billion yen or at or below the threshold amount is not covered17. The initial margin threshold amount differs by phase and has been 1.1 trillion yen since September 1, 2022. The threshold amount for each phase is in the initial margin threshold table in Phases and dates of application.

Lining up the conditions above in order gives the figure below for whether a transaction is covered for variation margin.

YesNoIs it a transaction forwhich no clearingorganization assumes theobligations?Not coveredYesNoAre both parties in acovered category in thetable?Not coveredNoYesIs it a transactionbetween companies in thesame group?Not coveredYesNoIs the average notionalamount of both 300billion yen or more?Not coveredNot ruled out by the 4questions: in principlecovered
Figure 1Whether a transaction is covered for variation margin
Figure description

The figure checks whether variation margin applies, through four questions in order. Failing any question takes it outside the requirement (a "yes" at question 3 and a "no" at the others), and passing all means it in principle applies. It judges domestic entities only; the conditions for foreign entities are in the table. Three conditions are not drawn: the exclusion of crypto-asset-related OTC derivatives transactions, the determination by trust property for transactions in trust accounts, and the exclusion of transactions subject to foreign rules recognized as equivalent, covered in Overlap with foreign rules. Initial margin is further judged by a threshold amount.

Consider a hypothetical example in which Bank C and Company D enter into an uncleared interest rate swap.

  • Bank C (a bank that is a registered financial institution) and Company D (a Type I financial instruments business operator in a different group) enter into an uncleared interest rate swap. Both parties are in a covered category in the table and the transaction is not intragroup, so the notional amount condition is the one that matters. If the average notional amount of both is 300 billion yen or more, the transaction is covered for variation margin.
  • Bank C enters into an uncleared interest rate swap with Company W, a non-financial company. Company W is not in a covered category in the table, so even if Bank C's average notional amount is 300 billion yen or more, the transaction is not covered for variation margin.

Consider a hypothetical example in which two Type I financial instruments business operators enter into an uncleared interest rate swap after September 2022 and the other conditions are met. Against the initial margin threshold amount, if the average notional amount of one group is 2 trillion yen and that of the other is 800 billion yen, the 800 billion yen side is at or below 1.1 trillion yen, so the transaction is not covered for initial margin. If the other group is at 1.5 trillion yen, both are above 1.1 trillion yen, so the transaction is covered for initial margin. Variation margin is judged separately, on whether both firms are at 300 billion yen or more.

Requirements for variation margin and initial margin

For covered transactions, the Business Order requires financial instruments business operators, etc., to take the following measures.

Variation margin

For variation margin, the firm calculates every day the total market value of the uncleared OTC derivative transactions by counterparty and the market value of the variation margin it has received (or posted).

When the calculated amount exceeds the amount below which no call is required, set in advance by the parties, the firm immediately asks the counterparty to post (or return) variation margin. After asking, it receives the posting or return without delay. It responds to the same request from the counterparty18.

The notice divides how the amount to be calculated is found according to the total market value19.

Total market value Variation margin posted to the counterparty How the notice finds the amount
Positive None The total market value minus the market value of variation margin received
Positive Some The total market value plus the market value of variation margin posted
Zero or negative Either The market value of variation margin posted minus the absolute value of the total market value

Consider a hypothetical example in which the total market value is positive 300 million yen, no variation margin has been posted to the counterparty, and 100 million yen has been received from the counterparty. The calculated amount is 300 million yen minus 100 million yen, or 200 million yen. Suppose the total market value is negative 200 million yen and 500 million yen has been posted. The calculated amount is 500 million yen minus 200 million yen, or 300 million yen.

The amount below which no call is required is set by the parties at 70 million yen or less, together with the amount for initial margin18. Collateral agreements have a similar mechanism called the minimum transfer amount. What the agreement provides is covered in The Credit Support Annex (CSA).

The date and time at which the market value is calculated must be as close as practicable to the time when the calculation is made, and the call is made immediately after the calculation. The FSA explains that "without delay" means done promptly to the extent practicable, and that "immediately" refers to something quicker than that20.

Initial margin

The Business Order calls the estimate of losses that may arise in the future the estimated potential loss. For initial margin, the firm calculates the estimated potential loss with the counterparty and the market value of the initial margin it has received (or posted) in the following cases21.

  • When it enters into an uncleared OTC derivative transaction
  • When there is a change in legal rights, such as when a transaction ends
  • When one month has passed since the estimate was last calculated
  • When market moves or other events show that initial margin needs to be called

The amount to be called is found by subtracting from the estimate the market value of initial margin received and a deduction amount set in advance by the parties. The deduction amount is 7 billion yen or less, covering the transactions of the parties and the companies of each group combined, and is deemed zero if none is set. Collateral agreements have a similar mechanism called the threshold.

When the amount called exceeds the amount below which no call is required (70 million yen or less, together with the amount for variation margin), the firm immediately calls for initial margin and receives it without delay22.

When the parties' calculated amounts differ, the firm first receives the amount calculated by the method agreed in advance and takes measures to resolve the remaining difference22.

Initial margin received is managed by setting up a trust or a similar method, so that it can be used without delay if the counterparty fails to perform its obligations, and so that it returns to the counterparty if a close-out event occurs for the party that received it. The firm does not pledge or lend it. Initial margin in cash, however, can be invested in a safe way incidental to its management23.

The notice sets out how the estimated potential loss is calculated. There are two methods, one using a quantitative calculation model and one using a standardized schedule. A financial instruments business operator, etc., that uses a model notifies the Commissioner in advance. Transactions that the model cannot calculate are calculated with the standardized schedule24. The model uses a one-sided 99% confidence interval and a holding period of 10 days or more. For a transaction with a remaining maturity of less than 10 days, the remaining maturity can be deemed the holding period25.

Eligible collateral and haircuts

Variation margin and initial margin are provided in cash and in assets specified by the Commissioner26. The assets specified by the Commissioner include cash, bonds of central governments and international organizations, bonds at or above a certain rating, shares that make up a major stock index of a designated country, and investment trusts that invest only in these and whose prices are published every day. Assets issued by a party or a company of the same group are excluded27.

The value of collateral (the substitute value) is the amount of the cash when variation margin is provided in cash. For other assets, it is the market value less the haircut, and when the currency of the asset differs from the currency set by the parties, a deduction for the currency mismatch is also made. When initial margin is provided in cash, a deduction for the currency mismatch is likewise made if the currencies differ28. The haircut values are in the following table29.

Asset category Credit risk category Haircut for remaining maturity of 1 year or less (%) Haircut for remaining maturity over 1 year up to 5 years (%) Haircut for remaining maturity over 5 years (%)
Cash None 0 0 0
Bonds of central governments, international organizations, local governments, and similar issuers 1-1, or falls under Article 89, item 3 of the bank capital adequacy notice 0.5 2 4
Same as above 1-2, 1-3 1 3 6
Same as above 1-4 15 15 15
Bonds of issuers other than the above 2-1, 3-1, 3(2)-1, 4-1, 5-1 1 4 8
Same as above 2-2, 2-3, 3-2, 3-3, 3(2)-2, 3(2)-3, 4-2, 4-3, 5-2, 5-3 2 6 12
Shares that make up a major stock index of a designated country None 15 15 15

The values in the table are the percentage deducted from market value (with a haircut of 2%, 2% is deducted from market value). When the currency of the asset differs from the currency set by the parties, a further 8% is deducted. For investment trusts and similar assets, the highest of the haircuts that apply to the underlying assets is used29. The credit risk categories are the categories of the bank capital adequacy notice that correspond to the ratings of eligible rating agencies.

Phases and dates of application

The requirements began to apply in phases, with the transaction size threshold amount lowered step by step. The dates are as follows.

Date Event
December 11, 2015 The FSA publishes the results of the public comments on the draft Cabinet Office order and a revised draft
March 31, 2016 The amendment of the Business Order (Cabinet Office Order No. 25 of 2016) and FSA Notices No. 15 to No. 17 are promulgated
July 25, 2016 The FSA promulgates the related Cabinet Office orders, supervisory guidelines, and other instruments4
September 1, 2016 The amended order takes effect and the notices begin to apply. Application begins for the first phase of variation margin and initial margin
March 1, 2017 Application of variation margin begins for covered parties outside the first phase

The phases from September 1, 2017, to September 1, 2022, in which the initial margin threshold amount falls, are in the initial margin threshold table below.

The requirements apply to transactions entered into on or after September 1, 2016. Transactions made before the effective date are not covered, but they can be included in the same calculation as covered transactions if they are included on a continuing basis with the counterparty to the covered transactions30. Variation margin applied from September 1, 2016, if the notional amounts of both parties to the transaction (the average of the month-end amounts from March to May 2016) exceeded 420 trillion yen, and from March 1, 2017, in all other cases31.

Initial margin covers parties whose group's total average notional amount exceeds the threshold amount, and the threshold amount fell as follows32.

Period of application Threshold amount (trillion yen)
September 1, 2016, to August 31, 2017 420
September 1, 2017, to August 31, 2018 315
September 1, 2018, to August 31, 2019 210
September 1, 2019, to August 31, 2021 105
September 1, 2021, to August 31, 2022 7
From September 1, 2022 1.1

The notional amount used to judge initial margin is the average of the month-end amounts from March to May of the year before the year of the transaction. If the transaction is made from September to December, the March to May of that same year is used33.

The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) postponed the start of the last two phases (the final phases), which extend initial margin to parties with smaller notional amounts. The dates on which the threshold falls to 7 trillion yen (September 1, 2021) and to 1.1 trillion yen (September 1, 2022) are, as in the table above, the postponed dates.

Overlap with foreign rules

When Japanese and foreign rules overlap on a transaction, following the foreign rules can mean that the Japanese measures need not be taken. The Business Order excludes from coverage transactions in cases designated by the Commissioner. The designation covers "cases in which it is found that, even if the measures are not taken, there is no risk of being contrary to the public interest or of impeding the protection of investors" (our translation). Reasons include compliance with foreign laws and regulations regarded as equivalent to the Japanese measures34.

On October 21, 2016, the FSA promulgated the notice that sets this designation (FSA Notice No. 48 of 2016). A transaction to which foreign rules apply can be covered by the designation whether it is a domestic transaction, a cross-border transaction, or a transaction outside Japan35. The foreign rules recognized as equivalent have been widened by amendments to the notice3637.

Notice and announcement Foreign rules recognized as equivalent (authority in charge)
Notice promulgated on October 21, 2016 US Commodity Futures Trading Commission (CFTC), Office of the Superintendent of Financial Institutions of Canada (OSFI)
Announcement of August 25, 2017 In addition, Australian Prudential Regulation Authority (APRA), Hong Kong Monetary Authority (HKMA), Monetary Authority of Singapore (MAS). Applies from September 1, 2017
Announcement of April 25, 2019 In addition, rules that apply to the countries covered by the Agreement on the European Economic Area. Promulgated and effective on the same day
Announcement of December 25, 2020 Rules that apply to the United Kingdom. Promulgated on the same day and applies from January 1, 2021

The amendment of December 25, 2020, was made so that equivalence assessments covering the United Kingdom could continue for 2021 and after, following the UK's withdrawal from the EU37.

Practical impact

In the work of a covered firm, the total market value by counterparty is calculated every day, and variation margin is called for when the amount exceeds the amount below which no call is required, which the parties set in advance18. For initial margin, the firm must also calculate the estimate and manage the margin it receives, for example in a trust23.

Whether a transaction is covered is judged on the situation at the time it was entered into (the reference time), so the firm needs to check coverage at the time of the transaction13.

What this page does not cover

Whether the exclusion that applies to variation margin also reaches the initial margin on crypto-asset-related OTC derivative transactions, and amendments to the equivalence designations after the FSA's announcement of December 25, 2020, are not covered on this page.

Notes

  1. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-10 (definitions of variation margin and uncleared OTC derivative transactions) and item 21-11 (definitions of initial margin and estimated potential loss). ↩ ↩2

  2. "G20 Leaders Statement: The Pittsburgh Summit" (meeting of September 24–25, 2009), the "OTC derivative contracts" paragraph. The statement does not mention margin. ↩

  3. Financial Services Agency, "コメントの概要及びコメントに対する金融庁の考え方" (Summary of the comments and the Financial Services Agency's views on them, our translation) (December 11, 2015), the explanatory notes (PDF page 2) (in Japanese). The document lists the final report of the Basel Committee on Banking Supervision and IOSCO, "中央清算されないデリバティブ取引に係る証拠金規制に関する最終報告書" (Final report on margin requirements for non-centrally cleared derivatives, our translation), as September 2013 and revised March 2015. ↩

  4. Financial Services Agency, "「金融商品取引業等に関する内閣府令第百二十三条第十一項第五号及び第十二項第五号の規定に基づき、…（平成二十八年金融庁告示第四十八号）の一部を改正する件」について" (On the amendment of FSA Notice No. 48 of 2016 under Article 123, paragraph 11, item 5 and paragraph 12, item 5 of the Cabinet Office Order on Financial Instruments Business, etc., our translation) (April 25, 2019), the first paragraph of the text (in Japanese). ↩ ↩2

  5. Financial Services Agency, "コメントの概要及びコメントに対する金融庁の考え方" (December 11, 2015), No. 17 (printed page 3, PDF page 5) (in Japanese). ↩

  6. "金融商品取引法" (Financial Instruments and Exchange Act, in Japanese; English translation: Japanese Law Translation), Article 34 (financial instruments business operators, etc., means financial instruments business operators or registered financial institutions). ↩

  7. "金融商品取引法" (Financial Instruments and Exchange Act, in Japanese; English translation: Japanese Law Translation), Article 40, item 2. The quoted words are "公益に反し、又は投資者の保護に支障を生ずるおそれがある". "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-10 (variation margin) and item 21-11 (initial margin). ↩

  8. "店頭デリバティブ取引等の規制に関する内閣府令" (Cabinet Office Order on the Regulation of Over-the-Counter Derivatives Transactions, in Japanese; English translation: Japanese Law Translation) (the text reflecting amendments up to the one that took effect on June 1, 2025). The word margin appears only in Article 4, paragraph 1, item 5, which sets out the matters to be kept as trade information on clearing and similar transactions. ↩

  9. FSA Notices No. 15, No. 16, and No. 17 (the text published on the FSA's website, in Japanese; all dated March 31, 2016, and applying from September 1, 2016). The preambles use the numbers from before the Order was amended (items 21-5 and 21-6, paragraphs 8 and 9); today they are items 21-10 and 21-11 and paragraphs 10 and 11. ↩

  10. Financial Services Agency, "主要行等向けの総合的な監督指針" (Comprehensive Guidelines for Supervision of Major Banks, etc.), III-2-3-2-1-2(12) (printed pages 110–111), and "金融商品取引業者等向けの総合的な監督指針" (Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.), IV-2-4(4) (printed pages 124–125) and VIII-1-2 (registered financial institutions; printed pages 431–432) (in Japanese). The scope of "financial institutions and similar parties" is in Financial Services Agency, "コメントの概要及びコメントに対する金融庁の考え方", No. 44 (printed page 7). ↩

  11. "金融商品取引法" (Financial Instruments and Exchange Act, in Japanese; English translation: Japanese Law Translation), Article 51 (financial instruments business operators) and Article 51-2 (registered financial institutions). ↩

  12. "金融商品取引法" (Financial Instruments and Exchange Act, in Japanese; English translation: Japanese Law Translation), Article 52, paragraph 1, item 7 (when a financial instruments business operator violates laws and regulations or a disposition based on them in connection with its business) and Article 52-2, paragraph 1, item 3 (when a registered financial institution violates them in the same way in connection with its registered financial institution business). ↩

  13. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 9, item 1 (c) (the time an uncleared OTC derivative transaction is entered into is the reference time), and paragraphs 12 and 13 (transactions excluded at the reference time). ↩ ↩2

  14. "金融商品取引法施行令" (Order for Enforcement of the Financial Instruments and Exchange Act, in Japanese), Article 1-18-2 (among transactions whose obligations are assumed by a person established under foreign laws and regulations who conducts business abroad similar to financial instruments obligation assumption business, those designated by the Commissioner as having only a minor effect on the Japanese capital market if the obligations are not performed). Article 123, paragraph 1, item 21-10 of the "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese) excludes this designation from uncleared OTC derivative transactions. ↩

  15. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 9: item 1 for variation margin and item 2 for initial margin. The exclusion of the part of a cross-currency swap that exchanges principal from initial margin is in paragraph 1, item 21-11, and the exclusion of crypto-asset-related OTC derivative transactions from variation margin for the time being is in Article 3 of the supplementary provisions (Cabinet Office Order No. 25 of 2016). ↩

  16. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 12 (variation margin) and paragraph 13 (initial margin). The categories of parties are in paragraph 12, items 1 and 4 (a) and (b), and paragraph 13, items 1 and 4 (a) to (c). Intragroup transactions are in paragraph 12, item 3 and paragraph 13, item 3. ↩ ↩2 ↩3

  17. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 12, item 2 (variation margin) and paragraph 13, item 2 (initial margin). ↩

  18. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-10 (a) (daily calculation), (b) (when the amount exceeds the amount below which no call is required, the firm immediately calls for posting or return; this amount, together with the amount in item 21-11 (b), is 70 million yen or less), (c) (receives without delay), and (d) (responds to the counterparty's request). ↩ ↩2 ↩3 ↩4

  19. FSA Notice No. 17, Article 2, items 1 to 3. ↩

  20. Financial Services Agency, "コメントの概要及びコメントに対する金融庁の考え方" (December 11, 2015), No. 81 (printed page 12, PDF page 14) and Nos. 91 and 92 (printed page 14, PDF page 16) (in Japanese). ↩

  21. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-11 (a). ↩

  22. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-11 (b) (when the amount exceeds the amount below which no call is required, the firm immediately calls for posting) and (c) (receives without delay; when the amounts differ, the firm receives the amount calculated by the method agreed in advance and takes measures to resolve the difference, such as promptly receiving the remainder). The deduction amount and the 7 billion yen are in FSA Notice No. 17, Article 3, paragraphs 1 and 2. ↩ ↩2

  23. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 1, item 21-11 (d) (management by setting up a trust or a similar method) and (e) (not pledged or lent, except in a safe way incidental to managing cash). ↩ ↩2

  24. FSA Notice No. 15, Article 1, paragraphs 1 to 3 (methods, notification to the Commissioner, transactions calculated with the standardized schedule). ↩

  25. FSA Notice No. 15, Article 3, paragraph 1. ↩

  26. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 10 (assets). ↩

  27. FSA Notice No. 16, Article 1, paragraph 1, items 1 to 5. ↩

  28. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 11, items 1 to 3. When initial margin is provided in cash and the currencies differ, item 3 applies, and the currency mismatch deduction (8%) is added to the haircut for cash (0%). ↩

  29. FSA Notice No. 16, Article 2, paragraph 1 (the table) and paragraph 2 (the 8% for a currency mismatch). ↩ ↩2

  30. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), supplementary provisions (Cabinet Office Order No. 25 of March 31, 2016), Article 1 (effective date of September 1, 2016) and Article 2, paragraph 1. ↩

  31. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), supplementary provisions (Cabinet Office Order No. 25 of March 31, 2016), Article 2, paragraph 2 (the rules do not apply until February 28, 2017, to transactions of 420 trillion yen or less). The provision refers to item 21-5 at the time (today's item 21-10). ↩

  32. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), supplementary provisions (Cabinet Office Order No. 25 of March 31, 2016), Article 2, paragraph 3 (the "1.1 trillion yen" in Article 123, paragraph 13 is read differently in each phase). From September 1, 2022, the amount is the 1.1 trillion yen in Article 123, paragraph 13, items 1 (c) and 4 (c) of the main provisions. ↩

  33. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 13, items 1 (c) and 4 (c). The total covers transactions in which both parties are in a covered category, and adds up the transactions of parent companies, etc., subsidiaries, etc., and subsidiaries, etc., of parent companies, etc. (excluding intragroup transactions). ↩

  34. "金融商品取引業等に関する内閣府令" (Cabinet Office Order on Financial Instruments Business, etc., in Japanese), Article 123, paragraph 12, item 5 (variation margin) and paragraph 13, item 5 (initial margin). The quoted words are "措置を講じなくても公益に反し又は投資者の保護に支障を生ずるおそれがないと認められる場合". ↩

  35. Financial Services Agency, "「…（平成二十八年金融庁告示第四十八号）の一部を改正する告示」の件について" (On the notice amending FSA Notice No. 48 of 2016, our translation) (August 25, 2017), the text (in Japanese). The explanation of the framework of the notice of October 21, 2016, and the descriptions of CFTC, OSFI, APRA, HKMA, and MAS. ↩

  36. Financial Services Agency, "「…（平成二十八年金融庁告示第四十八号）の一部を改正する件」について" (On the amendment of FSA Notice No. 48 of 2016, our translation) (April 25, 2019), the text (in Japanese). It states that, in addition to CFTC, OSFI, APRA, HKMA, and MAS, the designation includes the rules that apply to the countries covered by the Agreement on the European Economic Area. ↩

  37. Financial Services Agency, "「…（平成二十八年金融庁告示第四十八号）の一部を改正する件」について" (On the amendment of FSA Notice No. 48 of 2016, our translation) (December 25, 2020), the text (in Japanese). It states that, following the UK's withdrawal from the EU, part of the notice was amended so that equivalence assessments covering the United Kingdom could continue for 2021 and after, and that the amendment was promulgated that day and applies from January 1, 2021. ↩ ↩2

  38. Financial Services Agency, "金融商品取引業者等向けの総合的な監督指針" (Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.), IV-2-4(4)③ (printed page 125; ③ハ covers risk management for transactions with foreign financial institutions and similar parties for which the validity of the close-out netting agreement cannot be confirmed) and ②ロ (safety of investing initial margin in cash) (in Japanese). ↩ ↩2

  39. FSA Notice No. 15, Article 9, paragraph 1 and Article 2. ↩

  40. FSA Notice No. 15, Article 6, items 1, 3, and 6. ↩