October 27, 1999
Revision:	March 19, 2001
	September 18, 2002
	September 19, 2007
	January 22, 2009
	February 18, 2014

1. Purpose

These Principal Terms and Conditions prescribe the principles for the Bank of Japan's outright purchase/sale of treasury discount bills (purchase/sale of treasury bills [TBs] and financing bills [FBs] without repurchase agreements) with the aim of facilitating money market operations.

2. Location of Purchases/Sales

At the Head Office (Operations Department) of the Bank.

3. Eligible Counterparties

Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from institutions satisfying one of the eligibility criteria listed below; however, the Resolution and Collection Corporation, bridge banks (as defined in Article 2, Paragraph 13 of the Deposit Insurance Act [Act No. 34, 1971]), and specified bridge financial institutions (as defined in Article 126-34, Paragraph 3, Clause 5 of the Act) shall be excluded from these institutions.

(1)	financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Act [Act No. 89, 1997])
(2)	financial instruments firms (as defined in Article 10, Paragraph 1, Clause 2 of the Order for Enforcement of the Bank of Japan Act [Order No. 385, 1997]) that conduct the type I financial instruments business (as defined in Article 28, Paragraph 1 of the Financial Instruments and Exchange Act [Act No. 25, 1948])
(3)	securities finance companies (as defined in Article 10, Paragraph 1, Clause 3 of the Order)
(4)	tanshi companies (as defined in Article 10, Paragraph 1, Clause 4 of the Order)

4. Securities to be Purchased/Sold

Treasury discount bills (TBs and FBs).

5. Purchasing/Selling Method

A multiple-price competitive auction shall be conducted for each purchase/sale where counterparties bid "yield spreads," which are calculated by subtracting the "benchmark yields" (yields which the Bank respectively determines for each issue with consideration for market price) from the yield at which counterparties desire to purchase/sell securities from/to the Bank.

6. Purchasing/Selling Price

The purchasing/selling price for each issue is calculated by using the yield obtained by adding the yield spread accepted by the Bank to the benchmark yield for the corresponding issue.

7. Dates for Purchase/Sale, Amount of Securities to be Purchased/Sold, etc.

Taking into account conditions in financial markets, the Bank shall determine specifications necessary for purchases/sales, including dates, amount of securities to be purchased/sold, counterparties, and issues to be purchased/sold, for each purchase/sale. With the aim of facilitating money market operations, issues to be purchased/sold shall be determined based on such factors as remaining maturity.