BOJ’s Massive ETF Buying Seen Benefiting Japan’s Biggest Brokers
- Policy not fair to small funds with low fees: Professor Harada
- BOJ should leverage power to request discount: NLI Research
A pedestrian wearing a protective mask walks past the Bank of Japan headquarters in Tokyo.
Photographer: Kiyoshi Ota/BloombergThis article is for subscribers only.
The Bank of Japan’s efforts to support the stock market by purchasing large amounts of exchange-traded funds unfairly favors the largest financial firms and hinders price competition, according to some market observers.
The program hurts efficient pricing for ETFs, because it was designed in a way that forced the BOJ to purchase higher volumes of funds that charge larger fees, according to Kimie Harada, a professor at Chuo University in Tokyo. The BOJ has purchased ETFs in proportion to their size, and the bigger ones tend to be offered by giant asset managers, at higher rates.