Any delay in settlement functions could lead to a loss of trust in the market as a whole, which in turn could have a significant impact on the global economy. Daiwa Securities considers it vital to settle transactions accurately and promptly as required in order to ensure that markets function as a social infrastructure and become a driver for economic development. It is therefore striving to build a structure enabling the smooth execution of settlement operations.
For this reason, Daiwa Securities has implemented a reliable system that has high processing capability to reliably settle a massive number of transactions. In addition, the company is carrying out its settlement operations with the best mix of the digital world and the real world. This includes the digital transformation (DX) of its operations to ensure efficiency and greater accuracy and personnel with a wide range of knowledge and expertise to quickly grasp the situation and respond appropriately in the event of an irregularity.
Meanwhile, recognizing the need to further increase convenience and strengthen risk management in order to boost the competitiveness of Japan's financial and capital markets, the entire securities industry is working on reducing settlement time. T+1 (trade date plus one day) settlement began for government bonds in May 2018, T+2 settlement for stocks in July 2019, and T+2 settlement for domestic corporate bonds in July 2020. We are also continuously examining various ways to further improve the efficiency of settlement operations in collaboration with settlement institutions and other organizations.
We are determined to continue settlement operations no matter what happens. In accordance with such determination, we have drawn up a business continuity plan (BCP) and regularly conduct training in preparation for unforeseen circumstances, such as the spread of new infectious diseases, natural disasters, and terrorism.
The reliability of settlement is extremely important for maintaining customer trust. We will continue to meet increasingly sophisticated customer needs and quickly provide solutions by taking advantage of our reliable settlement infrastructure and human resources.

Daiwa Securities and Daiwa Institute of Research (DIR) played central roles in carrying out the second phase of a project to consider the application of blockchain/ distributed ledger technology (DLT) to the securities trade matching operations*. The project was conducted jointly with 26 companies, including institutional investors, financial institutions, and computer system companies.
This is a project using an industrial collaborative framework led by Japan Exchange Group. The first phase of the project was conducted in 2017, confirming the usefulness of the application of DLT to the trade matching operations. Following such confirmation, the second phase of the project was conducted from September 2018 through January 2019. In that phase, discussions were held on data items in the operations, the standardization of the operational process, policy on operating the DLT infrastructure, and other issues. The project participants then drew up a more concrete plan toward the construction of a system. The results of the project were released as a working paper in February 2019.
Daiwa Securities Group expects that the initiatives of this project will lead to the reduction of costs in the entire domestic securities industry and the enhancement of convenience, which will ultimately contribute to the benefit of investors. We will continue working to realize the plan in order to provide useful services to customers.

• *Operations in which a securities company and an institutional investor confirm the trading volume, fee, etc. with each other after the execution of securities trading

Daiwa PI Partners is engaged in full-scale private equity investment in Southeast Asia and Taiwan and has invested in a total of 14 projects to date in response to economic development and economic opening in the regions. In addition, Daiwa PI Partners established DAIWA Myanmar Growth Fund in 2019. The investment targets include Commercial Plastic Holding, which manufactures recycled plastic in Myanmar. By reducing the amount of plastic bottle waste while expanding the use of recycled products, the company is contributing to improvement of environmental problems in the country. Onstar Express, which conducts logistics in Indonesia, is contributing to enhancing the people's convenience and living standards by undertaking last-mile logistics to end users who place orders with e-commerce companies. MedScope Biotech, which manufactures precision medical devices in Taiwan, contributes to healthy living through the manufacture of high-performance surgical instruments. Qoala Technology, which brokers and distributes insurance products in Singapore using its own platform, contributes to economic growth by providing insurance products to people in Southeast Asia.
Southeast Asia and Taiwan are undergoing amazing economic development, and there are many startup companies with high growth potential. We will continue to provide financing to these companies to support their growth and contribute to enhancing social infrastructure and the living standards of people in the regions.

In March 2019, DIR started providing technical support aimed at development of the stock market in Vietnam as entrusted by the Japan International Cooperation Agency (JICA). This is a large-scale international cooperation project implemented pursuant to a request made by the Vietnamese government to the Japanese government as part of the Vietnamese Prime Minister's "2011–2020 Securities Market Development Strategy" decision promulgated in March 2012. The project started as a three-year project led by DIR, which was selected by JICA through a public tender, with a team of 12 consultants including from the Japan Exchange Group and other organizations.

The following four specific outcomes were established at the start of this project:

1. 1.Reinforcement of the stock market's capacity for monitoring against unfair trading
2. 2.Tightening of regulations on and supervision over securities companies
3. 3.Improvement of listing management and screening procedures
4. 4.Penetration of investor-oriented management approach

The initial plan for the actual project activities was to provide knowledge, training to improve practical skills, and support for the creation of practical manuals to the State Securities Commission of Vietnam (SSC), the supervisory authority of capital markets, as well as the HoChiMinh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX), with the goal of achieving international standards of fairness, transparency, and efficiency. After the start of the project, the scope of the work was expanded to include providing consultation on the formulation of enforcement ordinances and notifications pursuant to the new Securities Law established in November 2019 (came into effect in 2021, providing policy recommendations, supporting the creation of strategies for development of securities markets, and organizing large-scale seminars such as for listed companies in Vietnam. Since March 2020, due to the impact of the COVID-19 pandemic, activities have comprised primarily online consultation, courses, and seminars. A new format of business implementation that involves the participation of Japanese authorities and market participants, which had been difficult to achieve with conventional activities centered on local travel, was introduced and has received high praise from both countries.

The new Securities Law and various ordinances and notifications pursuant to the new law have been in effect in Vietnam since 2021, and the Vietnam Stock Exchange (VNX) was established as a holding company of the two existing stock exchanges, HOSE and HNX. As of May 2022, a new securities market development strategy for 2030 is being formulated to further promote the development of Vietnamese securities markets and increase their international presence under this new legal system and securities market framework. Seeking assistance in formulating and subsequently implementing this new securities market development strategy, the Vietnamese government requested a one-year extension of the project from the Japanese government. Agreement between the two countries has been reached, and as a result, the project is now in its fourth year with an end date of March 2023.

By improving the transparency and fairness of the Vietnamese stock market and cooperating in the sound development of the securities market, this project will contribute to building a foundation for Vietnam's economic growth and industrial development as well as enriching Vietnamese society. It is also positioned as an activity that contributes to the realization of SDG 9: "Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation." In addition, deepening Daiwa Securities Group's involvement in Vietnam's financial and capital markets through the project is expected to contribute to the development of the Group's business related to Vietnam and Asia in the medium to long term.

DIR is undertaking activities that contribute to the long-term development of bond markets in various countries in Asia.
One representative example is participation in the Asian Bonds Markets Initiative (ABMI) framework. Taking a lesson from the Asian currency crisis that occurred in the late 1990s, ABMI seeks to secure stability in financial markets by expanding the means of financing through the development of markets for bonds denominated in local currencies. It is a regional cooperative framework that was established in 2003. Specific measures of the framework are decided at the ASEAN + 3 (the 10 ASEAN members countries plus Japan, China, and South Korea) Finance Ministers' and Central Bank Governors' Meeting. The framework provides regional support under the leadership of the Asian Development Bank (ADB) for enactment of laws and regulations, infrastructure development, bond issuance, and demand stimulus, as well as country-specific support under the jurisdiction of the ASEAN Secretariat.
DIR has used these types of country-specific support programs to provide ongoing technical support to bond markets in the Philippines, Indonesia, and Myanmar multiple times since 2004 in collaboration with Group companies and other companies as necessary. And in all countries, the support recipients are governmental agencies such as relevant ministries and agencies, central banks, and supervisory authorities. To date, DIR has set topics suited to the development phase of each country based on discussions and consultations with executives and practitioners of government agencies in the various countries, such as the establishment of legal systems, construction of issuance and secondary markets, and the development of bond investment products, and has also provided knowledge and expertise and proposed schemes. Pursuant to a contract from the Japan International Cooperation Agency (JICA), DIR conducted a feasibility study of a project bond to provide funds to public infrastructure in the Philippines and proposed measures for future market activation.
These contributions to the development and fostering of bond markets in Asian countries facilitate the circulation of necessary funds from entities that have excess funds to those that lack funds, and they can contribute to the achievement of the SDGs in terms of solving social issues from monetary and fiscal perspectives. DIR is committed to continuing these initiatives in the future.