Japan megabank may give up dealer privilege in bond market

(From Asahi Shimbun)

In a move that could shake up the Bank of Japan’s monetary easing measures, the Bank of Tokyo-Mitsubishi UFJ Ltd. is considering withdrawing as a “primary dealer” in the government bond market.

btmuThe megabank is considering pulling out because the BOJ’s negative interest rate policy, implemented in late January, no longer makes holding the special status as attractive.

The Bank of Tokyo-Mitsubishi UFJ would be the first megabank to forfeit the status, which could have a ripple effect among the other major participating banks.

The Finance Ministry began the government bond market “Special Participants System” in 2004 to ensure stable purchases of the bonds it issues.

Currently, 22 companies participate in the program, including all three megabanks and many of the major securities firms in Japan.

While participants are required to bid for at least 4 percent of the planned bond issue amount, the status also gives the bank or financial company special access to exchange opinions with the Finance Ministry officials regarding bidding on government bonds as well as participation in bidding open only to the primary dealers. Read more


Categories: Asia Unhedged, Japan

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