HSBC launches third-party clearing service in Japan
HSBC Securities Services has launched its third-party clearing service in Japan. Local and cross-border broker dealers will be able to outsource their securities back-office operations to HSBC.
With the increasing focus on back office rationalization among broker dealers, there is a growing demand from clients for greater operational and cost efficiency especially in the larger markets like Japan.
With a market capitalization of over USD3.5 trillion and a daily average turnover in excess of USD12 billion, Japan is the largest unrestricted market in Asia. However, under the current market conditions, the daily average turnover has been decreasing and this put even more pressure on broker dealers’ operating costs as they see lower revenue but same level of fixed costs from market infrastructure and service providers.
As a general clearing member (locally called “agency clearing qualification”) of the Japan Securities Clearing Corporation, HSBC will perform the clearing and settlement function and associated processes for broker dealers, thereby introducing cost and operational efficiency, while also reducing the broker dealers operational and settlement risk. The broker dealers benefit directly from the reduction in expenses related to running their clearing and settlement activities, effectively turning fixed into variable cost, while the obligation to the clearing house for settlement purposes is also transferred to HSBC.
“This new service has further strengthened HSBC Japan’s position as a one-stop solution provider for securities services in Japan and will enable us to provide an integrated offering to both local and international broker dealers,” said Rajesh Atal, head of HSBC Securities Services, Japan, HSBC, Tokyo branch.
HSBC currently provides broker outsourcing services in Australia, Hong Kong, India, Singapore, Thailand, the United Arab Emirates, Mexico, Cyprus, Greece and the UK.