September 5, 2014
Securities and Exchange Surveillance Commission
The Securities and Exchange Surveillance Commission, today, made a recommendation to the Prime Minister and the Commissioner of the Financial Services Agency that an administrative monetary penalty payment order be issued in regard to market manipulation of 10-year Japanese Government Bond Futures (“10yr JGB Futures”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of the investigation into the market manipulation, whereby the following violations of laws and ordinances were identified.
The person to be named in the Administrative Monetary Penalty Payment Order did the following in 10yr JGB Futures (Future Contract Month: September 2013) with the purpose of inducing market transactions of derivatives: From 9:33 a.m. to 2:58 p.m. on June 26, 2013 as described in the Appendix, the person placed a large number of purchase orders at prices equal to or below the best bid and a large number of sales orders at prices equal to or above the best offer without intention for the orders to be executed. In total the person purchased and sold 39 units of 10yr JGB Futures while placing orders for the purchase of 1,672 units and for the sales of 757 units on the person’s own account. This constituted a series of market transactions of derivatives and entrustments that would mislead others into believing that market transactions of derivatives were thriving and would cause fluctuations in prices of the said futures.
The person’s acts were recognized as “a series of Sales and Purchase of Securities, etc.” and “Entrustment, etc.” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”).
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is 330,000 yen.
Details of the calculation are presented in the Attachment.
We appreciate the assistance of the Monetary Authority of Singapore and the Japan Exchange Regulation (JPX-R) in this matter.
● Method of Calculation of the Amount of the Administrative Monetary Penalty
1. Pursuant to Article 174-2(1) of the FIEA, the amount of the administrative monetary penalty shall be calculated as below:
Amount pertaining to a Matching Volume of Sales and Purchase(Note 1):
(Value pertaining to sales, etc. of securities) - (Value pertaining to purchase, etc. of securities)
Note 1: Matching Volume of Sales and Purchase: Whichever is smaller; number of securities sold or number of securities purchased concerning the violations.
2. In the present case, the amount of the administrative monetary penalty is 330,000 yen as below(Note 2):
A Series of Market Transactions of Derivatives and Entrustments on June 26, 2013
5,545,500,000 yen (value pertaining to sales, etc. of securities)
- 5,545,170,000 yen (value pertaining to purchase, etc. of securities)
= 330,000 yen
Note 2: Details of values pertaining to sales or purchase, etc. of securities are provided in Appendix.