The Securities Settlement System and Distributed Ledger Technology

Kenta Sekiguchi, Makoto Chiba and Mikari Kashima
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Kenta Sekiguchi: Bank of Japan
Makoto Chiba: Bank of Japan
Mikari Kashima: Bank of Japan

No 18-E-2, Bank of Japan Research Laboratory Series from Bank of Japan

Abstract: Distributed ledger technology (DLT) is attracting wide attention because of the benefits it provides such as fault tolerance and cost reductions. When introducing DLT in securities transactions, its relationship with the Act on Book-Entry Transfer of Corporate Bonds and Shares, which regulates the transfer of paperless securities, should be examined to ensure the stability of securities settlement. The Bank of Japan's Institute for Monetary and Economic Studies commissioned a series of workshops on the use of DLT in securities settlement and released a report on the findings in 2017 (available in Japanese only). The report presents possible interpretations of current law, which stipulates a multi-layered settlement structure, considering the fault tolerance characteristics of DLT, which enables network participants to share information. Furthermore, the report considers the future shape of the securities settlement system with DLT if legal reforms are taken into account.

Keywords: distributed ledger technology; securities settlement; book-entry transfer securities; Act on Book-Entry Transfer of Corporate Bonds and Shares; multi-layered structure (search for similar items in EconPapers)
JEL-codes: K22 (search for similar items in EconPapers)
Date: 2018-06-05
New Economics Papers: this item is included in nep-law and nep-pay
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