Japan’s Watchdog Seeks $3,100 Fine for JGB Futures Manipulation

Japan’s Securities and Exchange Surveillance Commission recommended a 333,000 yen ($3,134) penalty for market manipulation of 10-year JGB futures, the regulator said in statement on website today.

The fine will target a Singapore-based man in his 20s, working as a company executive, an official at the Financial Services Agency said in a briefing in Tokyo today, without giving further details. On June 26, 2013, the man placed buy and sell orders in such a way as to cause price fluctuations, the regulator said in the statement.

The Bank of Japan’s about 7 trillion yen in monthly bond buying aimed at ending deflation has paralyzed the sovereign market, pushing price swings and volumes to near record lows. The 10-year JGB futures trading volume fell 854.6 billion yen on Aug. 18, the lowest since October, according to data compiled by Bloomberg.

“The drop in volumes of JGB futures trading and declining liquidity made this market more susceptible to manipulation,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 13.4 trillion yen. “There is no impact on the bond market.”

Japan’s 10-year benchmark yield fell 20 basis points this year to 0.535 percent in Tokyo today, the lowest globally after Switzerland. The corresponding futures contracts traded at 146.05, Bloomberg-compiled data show. A basis point is 0.01 percentage point.

The Nikkei has reported the story earlier, saying it would be the first ever fine against an investor for JGB futures manipulations.

This would be the first ever fine given to an investor for manipulating JGB futures, the Nikkei newspaper reported earlier today.

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