Compensation procedures

What are the compensation procedures?

  1. 1

    Notification from members

    Definition of “Notifying Members
    • Securities firms that are JIPF members 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").

  2. 2

    Auditing of members

    JIPF audits Notifying Members to confirm the 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.
    • A court issues a provisional administration order to prohibit the disposition of the Notifying Member's property and appoints a provisional administrator.
    • JIPF receives a report from the provisional administrator regarding changes in the customer assets entrusted to the Notifying Member.

  3. 3

    Decision for compensation and notification of investors

    After JIPF determines that compensation is required, customers submit documents to request their 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 requesting payment to JIPF in accordance with the period, location, method, and other particulars for requesting compensation stated in newspaper public notices or notices mailed to customers.

  4. 4

    Examination of documents requesting payment, and payment of compensation

    JIPF examines the documents and pays the 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 the compensation.
    • JIPF pays a maximum compensation of ¥10 million per customer, and acquires the claim which was the subject of the compensation from the customer in accordance with the compensation payment amount.

  5. 5

    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.
    • 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.

      Flow of Compensation Procedures

      Figure of Flow of Compensation Procedures

      The steps of the compensation procedure