Securities firms strictly observe the separate management system that is required by law.
Separate management is a system whereby securities firms manage the assets entrusted by customers (money, shares, bonds, and other securities) strictly separately from their own property to preserve the customer assets.
As long as separate management is observed, even if a securities firm goes bankrupt, this will in principle have no effect on customer assets and customers can request return of their assets from the bankrupt securities firm.
Customer (investor) assets are protected by separate management
Basic Flow of Deposits (under Normal Conditions)
Case of listed shares
Investor protection mechanism (2) "Our mission"
Even in the worst case, customers can receive up to ¥10 million in compensation.
In the event that, for some reason, customer assets cannot be returned smoothly from a bankrupt securities firm, the Japan Investor Protection Fund ("JIPF") provides compensation of up to ¥10 million per customer for customer assets that cannot be returned.
JIPF Compensation Limits
Customer assets are protected by dual systems.
In this way, assets which customers entrust to securities firms are protected by the dual systems of separate management by securities firms and compensation by JIPF.
Investors we protect
JIPF protects general customers, excluding professional investors.
JIPF protects customer transactions, within a certain range.
Transactions we protect
JIPF protects assets (money and securities) entrusted by general customers to securities firms in transactions concerning the securities-related business or the commodity derivatives-related business.
Transactions we cannot protect
JIPF cannot protect over-the-counter derivatives transactions and foreign market derivatives transactions, even those concerning the above-stated businesses.
JIPF cannot protect transactions that fall under the Type II Financial Instruments Business, such as those concerning trust beneficial rights, partnership agreements, anonymous partnership agreements, or limited partnership agreements.
JIPF cannot protect against a decline in the value of customer securities.
