On October 11, several foreign media reported that Japan's Ministry of Finance planned to suspend Nomura's qualification as a primary dealer of Japanese treasury bond bonds for one month from October 15, because the company had manipulated 10-year Japanese treasury bond futures.
In the afternoon of October 11, Nomura Holdings announced that today, the Ministry of Finance announced that Nomura Securities would suspend its qualification as a special participant in the treasury bond bond market from October 15, 2024 to November 14, 2024.
As of Friday, October 11th, Nomura Holdings fell 0.4%.
Nomura Holdings apologizes
In the afternoon of October 11, Nomura Holdings announced that it was proposed to issue a fine payment order against Nomura Securities Co., Ltd. (hereinafter referred to as "Nomura Securities") on September 25, 2024, concerning the treasury bond bond futures trading conducted by the company in March 2021. Today, the Ministry of Finance announced that it would suspend the qualification of Nomura Securities as a special participant in the treasury bond bond market from October 15, 2024 to November 14, 2024.
Nomura Holdings stated, "We attach great importance to the occurrence of this incident and sincerely apologize to our customers and relevant personnel for the great inconvenience and concern it has caused you
Nomura Holdings also stated that if there are any matters that need to be disclosed regarding the impact of this incident on the merger performance of Nomura Holdings Co., Ltd., they will be informed in a timely manner.
Participation in treasury bond bidding will be suspended for one month
In fact, before Nomura officially announced the punishment, foreign media reported that Nomura Securities would be suspended from participating in the treasury bond bond bidding.
According to Bloomberg News on October 11, according to insiders, Japan's Ministry of Finance plans to temporarily exclude Nomura Holdings from treasury bond bond bidding activities. Previously, the company admitted to manipulating the treasury bond bond futures market.
A person familiar with the matter who asked for anonymity said that Japan's Ministry of Finance planned to suspend Nomura's qualification as a primary dealer in Japanese treasury bond bonds for one month from October 15. They said the announcement will be released later on Friday.
Nomura had previously admitted to Japanese regulators that an employee manipulated treasury bond bond futures by listing large orders that he did not intend to buy or sell in full. The incident occurred in 2021, when the securities regulatory agency recommended a fine of 21.8 million yen (147000 US dollars) for Nomura.
The report stated that this measure is another blow to Nomura. After the manipulation was exposed, several companies, including Toyota Financial, have transferred their bond underwriting business to other companies. As one of the main participants in the government bond auction, Nomura's suspension of participation in the treasury bond bond bidding will increase the burden on other bidders.
If Nomura withdraws, the pressure on other brokers will increase, "said Takashi Fujiwara, Chief Fund Manager of the Fixed Income Investment Division at Resona Asset Management Co. in Tokyo. What is particularly concerning is the oversupply of ultra long term bonds, which may lead to a decrease in liquidity
However, Yuuki Fukumoto, a senior financial researcher at NLI Research Institute, stated that given the clear upward trend in interest rates and strong demand, it is unlikely that there will be significant market disruptions.
During the six months ending in September, Nomura ranked fourth among major traders in terms of continuous bidding volume.
According to foreign media reviews, based on past cases of bond market manipulation, Nomura Securities was fined as expected this time. Previously, Citigroup was fined 133 million yen and suspended from its primary trading qualification in 2019. In 2018, the securities joint venture between Mitsubishi UFJ Financial Group and Morgan Stanley was fined 218 million yen and had its primary trading qualification suspended. In addition, the joint venture company has also been disqualified from underwriting multiple corporate bond transactions.
However, Nomura also has some good news. The company announced on Thursday that it has won the underwriting role for the 10 billion yen green and blue bonds planned to be issued by the Tokyo Metropolitan Government. These tools are typically used to provide funding for green projects as well as projects to protect or restore oceans and waterways. In addition, Nomura is also one of the co lead underwriters for Tokyo Metro's highly anticipated initial public offering.