Recent years have witnessed enormous efforts to enhance automation and reduce operational risks in securities markets. This article examines and compares the applicable law and operational aspects of securities transfer, pledge, clearance, and settlement in the Japanese and United States securities markets-in particular the Japanese Government Bond and United States Treasury securities markets. It also addresses the credit risks posed by financial intermediary control of securities. The article concludes that many aspects of law and operations, in both the United States and Japan, could benefit from reforms. Reform and harmonization of domestic laws and operations also would benefit continuing efforts to coordinate and link the world's major securities markets.
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.