JIPF's member securities firms must immediately notify JIPF in the event that their registration is revoked or that they file a petition for the commencement of bankruptcy proceedings (hereinafter, such member securities firms are referred to as "Notifying Members").
Auditing of members
JIPF audits Notifying Members to examine the state of entrusted assets.
JIPF conducts an audit to confirm whether the Notifying Member preserves customers' money and securities by managing them separately from its own assets.
If the court issues a provisional administration order, the disposition of the property of the Notifying Member is prohibited and a provisional administrator is appointed.
JIPF receives a report from the provisional administrator regarding changes in the customer assets entrusted to the Notifying Member.
Decision for compensation and notification of investors
After JIPF determines that compensation is required, customers submit documents to request its payment.
In cases where the Notifying Member is unable, or highly likely to be unable, to return the money and securities entrusted by customers, JIPF resolves to grant recognition（decision for compensation）, and issue public notice, of difficulty in payment.
Customers submit documents to JIPF requesting payment in accordance with the period, location, method, and other particulars for requesting compensation stated in public notices in newspapers, notices mailed to customers, or JIPF's website.
Examination of documents requesting payment, and payment of compensation
JIPF examines the documents and pays compensation.
JIPF checks the customer documents requesting payment against the records of the Notifying Member, determines the amount to be paid by JIPF, and pays compensation.
JIPF pays compensation up to ¥10 million per customer, JIPF acquires from the customer the claim which was the subject of the compensation from the customer in accordance with the compensation payment amount.
Participation in bankruptcy proceedings
Compensation payments take place in parallel with bankruptcy proceedings.
The bankruptcy trustee initiates the liquidation proceedings of the Notifying Member in parallel with JIPF's compensation payment determination process.
Customers requesting payments exceeding ¥10 million may be entitled to receive additional distributions from the bankruptcy procedures.
JIPF confirms the status of customer assets with the bankruptcy trustee, prepares a list of customers requesting payments exceeding ¥10 million, and submits this to the court.
