The Financial Markets Department of the Bank of Japan has released the basic figures on fails for the month of June 2023. The data provides insights into the number of fails, total face value, average duration, number of buy-ins, and the number of transactions related to failed settlements of Japanese Government Bonds (JGBs).
According to the survey conducted by the Bank of Japan, a fail occurs when the recipient of JGBs in a transaction does not receive the bonds from the delivering party on the scheduled settlement date. The figures collected through the “Survey on Fails” reflect the number of fails reported by the recipients of JGBs and include information on the total face value of the failed transactions.
In June 2023, there were a total of 3,058 fails, involving JGBs with a combined face value of ¥161,352,294 (100 million yen). The average duration of the fails was 1.49 business days, indicating the length of time between the scheduled settlement date and the resolution of the fail. The survey also revealed that there were 6,765 buy-ins conducted to settle the failed transactions.
A buy-in is a procedure for resolving failed transactions and involves the purchase of the same or equivalent securities at market prices or the purchase of JGBs by the Japan Securities Clearing Corporation (JSCC) or its participants, in accordance with the regulations set by the JSCC.
The data collected in the survey covers financial institutions and other institutions that are direct participants in the JGB book-entry system and users of the BOJ-NET JGB DVP services. The figures include settlements made through participants’ own accounts, customers’ accounts, and trust accounts.
These basic figures on fails provide valuable insights into the state of JGB settlements in the Japanese financial market. They help monitor and analyze the efficiency of settlement processes and identify areas for improvement.