Nomura Securities has paid a 21.76 million yen administrative monetary penalty following unlawful trading of Japanese government bond futures in March 2021.
Japan’s Financial Services Agency issued the penalty on the advice of the Securities and Exchange Surveillance Commission, which made the recommendation in September. Earlier this month, the company also had its Special Entitlements of JGB Market Special Participants (Primary Dealer) suspended as part of the administrative action. The suspension lifts on 14 November.
READ MORE: Nomura Securities hit with special entitlements suspension
As well as the fine, Nomura is returning a portion of executive compensation.
In March 2021, a prop trading employee placed multiple JGB orders on the Osaka Exchange at best buy or inferior prices, layering the ask order book. At the same time, they purchased the bonds at a lower price and placed buy orders at best bid or inferior prices to layer the bid order book, selling the futures at a higher price. This ‘layering’ made futures trading appear more active, which could have influenced future prices on the exchange.
In all, 2,466 unit sell orders were made and 462 units bought. A total of 1,619 buy orders were made, and 462 units sold.
“Strict disciplinary action has been taken against the trader and relevant managers in accordance with internal rules and regulations,” Nomura affirmed. It also stated that it is taking a number of measures to prevent such an event recurring. These include updated training programmes, improvements to compliance systems, and the introduction of the Global Markets Surveillance Planning Department to oversee new initiatives.
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