Bank of Japan Releases Data on Failed Transactions and Buy-Ins in Japanese Government Bonds (JGBs)

The Bank of Japan’s Financial Markets Department has recently published data related to failed transactions and buy-ins in Japanese Government Bonds (JGBs) for the month of July 2023. The report sheds light on the occurrence of failed transactions, their settlement status, and the measures taken to resolve them, providing insights into the dynamics of the Japanese government bond market.

Key findings from the report include:

  • The survey encompassed financial institutions and select institutions participating in the JGB book-entry system, as well as users of the BOJ-NET JGB DVP services.
  • Failed transactions are instances where recipients of JGBs in a transaction do not receive the bonds from the delivering party on the scheduled settlement date.
  • Buy-ins, a procedure for settling failed transactions, involve purchasing the same or equivalent securities at market price, or purchasing JGBs by the JSCC or its participants, following regulations set by the JSDA.
  • The report provides detailed statistics on the number of failed transactions, total face value, average duration of fails, longest duration, and number of buy-ins. Figures are based on data collected through an survey.
  • The data encompassed transactions settled through system participants’ own accounts, customers’ accounts, and trust accounts.

The publication of this data provides valuable insights into the efficiency and effectiveness of the Japanese government bond market. It enables financial experts, policymakers, and market participants to assess the stability of the market and make informed decisions based on the trends observed in failed transactions and the resolution process.

As Japan’s financial markets continue to evolve, this data plays a crucial role in maintaining transparency, enhancing market integrity, and facilitating discussions on ways to improve settlement processes and market functioning. The Bank of Japan’s commitment to sharing such information contributes to the overall health and stability of the country’s financial landscape.