Japan Blockchain Project Targets 24/7 Settlement for Bonds and Stocks
Key Takeaways
- •Japan Blockchain is leading an effort to build a settlement system designed to enable 24/7 settlement of Japanese bonds and stocks.
- •According to Nikkei, the initiative will involve the Japanese government, the Bank of Japan, regulators, and other financial firms as part of a broader push to update market infrastructure.
- •Japanese stocks currently settle on a T+2 basis, while the United States moved equities to T+1 settlement in May 2024, a shift widely cited as reducing counterparty risk and freeing up collateral.
- •The Bank of Japan has already conducted DLT settlement experiments, including joint tests with the Banque de France and participation in the BIS-coordinated Project Agorá with other central banks and global financial institutions.
- •A central unresolved question is how tokenized securities would settle against safe central-bank money, an issue comparable projects such as Swiss operator SIX's regulated DLT venue have also had to address.
Japan Blockchain is leading an effort to modernize the country’s financial markets by developing a new settlement system that could enable 24/7 settlement of bonds and stocks.
According to Nikkei, the initiative will involve the Japanese government, the Bank of Japan (BOJ), regulators, and other financial firms. The report said the project is part of a broader push to update market infrastructure and make financial settlement more flexible. The involvement of the central bank and regulators signals a focus on regulated post-trade infrastructure rather than a purely private experiment, and it comes as market operators worldwide have been working to compress the window between trading and settlement — most notably the United States’ shift to next-day (T+1) equities settlement in May 2024 — because shorter settlement windows are widely cited as a way to reduce counterparty risk and free up collateral.
Continuous, around-the-clock settlement would go further than cycle compression, allowing delivery-versus-payment to occur at any time rather than in fixed business-day batches. Japan is not starting from zero on this front. Japanese stocks currently settle on a T+2 basis, the BOJ has already run distributed ledger technology (DLT) settlement experiments, including joint tests with the Banque de France and participation in the BIS-coordinated Project Agorá alongside other central banks and dozens of global financial institutions, and Japan’s financial rules have recognized security tokens since amendments to the Financial Instruments and Exchange Act took effect in 2020. A central question for any such system — one that comparable projects abroad, such as Swiss exchange operator SIX’s regulated DLT-based venue, have also had to address — is how tokenized securities settle against safe central-bank money. How that link is built into the new Japanese system, and how existing post-trade rules are adapted to continuous settlement, will be key points to watch as the project develops.
The Nikkei report was shared on X here: https://twitter.com/NikkeiAsia/status/2092297076474343788
The article also appeared alongside other recent TronWeekly coverage, including stories on Solana transaction activity, World Liberty Financial’s USD1 stablecoin, Bitcoin price action, VeChain, Avalanche, Chainlink, FLOKI, Bitwise, PancakeSwap, Ethereum derivatives positioning, GalaxyOne lending, and BitMine Immersion Technologies’ Ethereum purchases.
