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Recommendation for Administrative Monetary Penalty Payment Order for Market Manipulation in JGB Futures by Nomura Securities Co., Ltd.
1. Contents of the Recommendation
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 by Nomura Securities Co., Ltd. (Corporate Number: 6010001074037, “Nomura”) pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency. This recommendation is based on the findings of an investigation into market manipulation, whereby the following violation of laws and ordinances was identified.
2. Summary of the Findings Regarding the Violation of Laws and Ordinances
Nomura is a broker-dealer that has been registered with the Commissioner of the Kanto Local Finance Bureau as a Type I Financial Instruments Business operator.
Nomura, through its trader during the course of his duties, engaged in manipulative trading typically known as “layering” in 10-year Japanese Government Bond Futures in March 2021 (“JGB Futures”) listed on the Osaka Exchange (“OSE”) for the purpose of inducing others to buy or sell JGB Futures during the period from 8:45:49 a.m. to 2:16:59 p.m. on March 9, 2021.
The summary of misconduct is shown in
Chart.
Specifically, Nomura bought a total of 462 units at a lower price while placing a total of 2,466 unit sell orders layered at the best offer or inferior prices, and it also sold a total of 462 units at a higher price while placing a total of 1,619 unit buy orders layered at the best bid or inferior prices.
The behavior of misconduct is shown in
Appendix 1.
This constituted a series of derivative transactions that would potentially mislead others into believing that derivative transactions are thriving and cause fluctuations in prices of the financial instrument on the OSE.
The act by Nomura was found to constitute “a series of purchase and sales of securities, etc.” and “make an offer” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”).
Nomura, through its trader during the course of his duties, engaged in manipulative trading typically known as “layering” in 10-year Japanese Government Bond Futures in March 2021 (“JGB Futures”) listed on the Osaka Exchange (“OSE”) for the purpose of inducing others to buy or sell JGB Futures during the period from 8:45:49 a.m. to 2:16:59 p.m. on March 9, 2021.
The summary of misconduct is shown in
Chart.
Specifically, Nomura bought a total of 462 units at a lower price while placing a total of 2,466 unit sell orders layered at the best offer or inferior prices, and it also sold a total of 462 units at a higher price while placing a total of 1,619 unit buy orders layered at the best bid or inferior prices.
The behavior of misconduct is shown in
Appendix 1.
This constituted a series of derivative transactions that would potentially mislead others into believing that derivative transactions are thriving and cause fluctuations in prices of the financial instrument on the OSE.
The act by Nomura was found to constitute “a series of purchase and sales of securities, etc.” and “make an offer” conducted “in violation of Article 159(2)(i)” as stipulated under Article 174-2(1) of the Financial Instruments and Exchange Act (“FIEA”).
3. Calculation of the Amount of the Administrative Monetary Penalty
Pursuant to the FIEA, the amount of the administrative monetary penalty applicable to the above violation is a total of 21,760,000 yen.
The calculation is shown inAppendix 2.
The calculation is shown in
Appendix 2.
4. Acknowledgements
We appreciate the assistance of the Japan Exchange Regulation in this matter.
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