MNI BRIEF: BOJ's New Operation Targets JGB Short Sellers
The Bank of Japan on Monday unveiled a new market operation it hopes will deter traders from using the Securities Lending Facilities to short government bonds or engage in speculative trading.
The BOJ announced guidelines for a new market operations for the No. 367 10-year bonds, which will be excluded from the three on-the-run issues after new 10-year bonds are issued. The BOJ will conduct a fixed-rate bond buying operations if necessary to restore functioning in bond markets.
“From April 5, 2023, the Bank of Japan will implement the following measures concerning the Securities Lending Facility (SLF) and fixed-rate purchase operations for consecutive days for 10-year Japanese government bonds #367 as needed, in order to ensure the use of the SLF in line with its purpose and facilitate the Bank's money market operations,” the BOJ said in a statement.