TOKYO :Japan’s finance ministry said on Friday it would suspend Nomura Securities’ primary dealer status for government bonds for a month starting on Tuesday following alleged manipulation in the government bond futures market.
The step comes after Japan’s securities watchdog last month recommended fines for Nomura, the country’s largest brokerage firm, for a series of derivative transactions the regulator said were made by a Nomura trader to induce others to trade government bond future contracts.
The transactions generated 1.48 million yen ($9,955) in profit and the watchdog recommended a fine of 21.8 million yen.
Nomura Securities and its parent Nomura Holdings said in a joint statement they take the matter seriously and apologise to clients and other concerned parties for the troubles. Nomura said it will issue an announcement if the suspension has impact on its consolidated financial results.
Nomura Holdings’ shares closed down 0.4 per cent on Friday, against a 0.6 per cent gain in the benchmark Nikkei share average. [.T]
Nomura, the securities unit of Nomura Holdings, will be banned from participating in non-competitive auctions that allow primary dealers to buy newly-issued Japanese government bonds (JGBs) at advantageous prices.
Primary dealers are required to buy certain amounts of JGBs that the Ministry of Finance sells at these auctions. The obligation comes with the perk of being able to exchange views directly with the ministry at primary dealer meetings.
In 2019, Citigroup’s primary dealer status for JGBs was suspended for one month after the country’s financial watchdog found deficiencies in Citi’s derivative trading.
Mitsubishi UFJ Morgan Stanley Securities in 2018 had its primary dealer status suspended for a month after an employee was found to have manipulated prices in JGB futures trading.
($1 = 148.6600 yen)
