The Digital Asset Co-Creation Consortium, a 367-member industry body run by Progmat, has published an interim report proposing tokenized Japanese government bonds (JGB) for on-chain repo. The target is not the automated core of the market. It is the roughly 40% of Japan’s JGB repo market, around JPY 106 trillion, that settles bilaterally outside the JSCC clearing house. A simulation using test tokens on Canton Network’s testnet runs from November through March, connecting multiple domestic and overseas repo and collateral platforms.
Japan’s government bond repo market stands at around JPY 250 trillion ($1.6 trillion). The majority clears through JSCC, the central counterparty, on automated matching and settlement systems. The bilateral segment is different. Trades are often confirmed by fax and email, intermediated by securities firms and tanshi houses (Japan’s money market brokers) standing between counterparties. The participants here are those shut out of central clearing, including non-residents, life insurers and regional banks. Japan’s automated matching for non-resident trades closes before 1pm Tokyo time and the settlement window ends at 4:30pm, so London and New York counterparties must finalize instructions a day ahead.
Intraday repo is once again the lead use case. It has held that position since the first tokenized collateral platforms went into production five years ago, yet take-up internationally has been limited, with volumes elsewhere concentrating in overnight and term trades. The working group is candid about this. Large domestic banks already get interest-free intraday liquidity from the Bank of Japan. The case for distributed ledger rests on those who lack that option, particularly non-residents, funds held in trust custody and firms needing foreign currency or funding outside normal settlement hours.
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