Japan Advances Blockchain-Powered Instant Settlement for Stocks and Bonds

Japan is taking steps to modernize its financial infrastructure by developing a blockchain-based system for instantaneous settlement of stock and government bond transactions. The initiative aims to reduce delays in payment and securities settlement, which currently take two business days (T+2) after execution.

The Financial Services Agency, the Ministry of Finance, and the Bank of Japan, along with private financial institutions, will form a study group this summer to design the blockchain framework, clarify roles and responsibilities, and map out a detailed roadmap.

The planned infrastructure would allow for real-time delivery-versus-payment for securities trades through digital tokens circulating on a blockchain network. This would eliminate much of the gap between trade execution and final cash settlement, enhancing market liquidity, lowering counterparty risk, and improving capital efficiency.