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Outline of Transactions for Sale of Bills

日本語

As of March 23, 2010
Bank of Japan
Financial Markets Department

I.  Introduction

This document is an outline of sale of bills, which the Bank of Japan conducts based on the "Principal Terms and Conditions Pertaining to the Sale of Bills." Please note that the following information may change in the future.

II.  Principles

A.  Location of sales

The Bank's Head Office (Operations Department).

B.  Bills to be sold

The Bank shall sell bills whose drawers, drawees, and payees are the Bank itself, and whose acceptance the Bank has completed. The date of maturity of the bills must be within three months from the day following the sale date.

C.  Selling method

Bills shall be sold through a discount method. The rate of discount is determined by a multiple-rate competitive auction under the conventional method.

III.  Auction

A.  Notification of auction guidelines (offer)

When conducting sales of bills, the Bank selects auction participants from eligible counterparties and notifies them of the following matters through the Bank of Japan Financial Network System (BOJ-NET).

  1. (a) Total amount of offer
  2. (b) Sale date and time
  3. (c) Maturity date and payment time
  4. (d) Bid-submission cut-off date and time
  5. (e) Other matters deemed necessary by the Bank

B.  Submission of bids

Auction participants notify the Bank of their desired rate of discount, desired amount of bills per desired rate of discount, and the total amount through the BOJ-NET by the bid-submission cut-off date and time notified in subsection A.

C.  Acceptance of bids (notification of respective results to auction participants)

The Bank, after receiving bids as described in subsection B, accepts bids by starting with the lowest desired rate of discount and continuing up until the total amount of bids accepted reaches the amount offered. However, the Bank reserves the right to reject all or some of bids which a counterparty submits when deemed appropriate.

When accepting bids, the Bank notifies auction participants who submitted bids as described in subsection B of the amount of bills it will sell, the rate of discount used for calculating the discount on bills, the discount on bills, and the purchasing price. Here and hereinafter, those who receive such notifications will be referred to as purchasers.

D.  Notification regarding bills to be sold

Purchasers notify the Bank to either deliver or hold in safekeeping, bills to be sold which they seek to purchase, by the time determined by the Bank. When requesting bills to be delivered, purchasers shall also notify the Bank of the number of bills to be sold per face value.

The above notice is unnecessary when purchasers have agreed with the Bank to request that all bills to be sold are to be held in safekeeping.

IV.  Sale and settlement of bills

A.  Sale of bills

1.  In the event of the purchaser requesting that bills be delivered:

The Bank, after receiving payment of the purchasing price from the purchaser, delivers the amount of bills per face value, notified by the purchaser as described in subsection III. D.

2.  In the event of the purchaser requesting that bills be held in safekeeping:

The Bank holds the bills in safekeeping from the sale date to the maturity date.

B.  Settlement of bills (maturity date)

1.  In the event of the purchaser requesting that bills be delivered:

Bills delivered to purchasers shall be presented for payment by purchasers at the Bank by the time determined by the Bank.

The Bank, after being presented with bills for payment from the purchaser, redeems the bills from them and pays the price equivalent to the face value of the bills at the payment time on the maturity date described in subsection III. A.

2.  In the event of the purchaser requesting that bills be held in safekeeping:

The Bank pays to the purchaser the price equivalent to the face value of the bills at the payment time on the maturity date described in subsection III. A.

V.  Operation Timetable

Please refer to the "Operation Timetable" for the timetable of operations described in section III and IV.