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Principal Terms and Conditions for Outright Purchases of Japanese Government Bonds and Treasury Discount Bills Conducted through the Asset Purchase Program (Invalid)

October 28, 2010

Revision:April 27, 2012
July 12, 2012
September 19, 2012
January 22, 2013

1. Purpose

The Terms and Conditions prescribe the principles for the Bank's outright purchases of Japanese government bonds (JGBs) and treasury discount bills (T-Bills, consisting of treasury bills and financing bills) without repurchase agreements through the Asset Purchase Program set forth in the "Principal Terms and Conditions for the Asset Purchase Program" (Policy Board Decision on October 28, 2010).

2. Application

The terms and conditions shall apply to the purchases of JGBs and T-Bills through the Asset Purchase Program, notwithstanding the "Principal Terms and Conditions for the Outright Purchase/Sale of Japanese Government Bonds" (Policy Board Decision on March 25, 1999) and the "Principal Terms and Conditions for the Outright Purchase/Sale of Treasury Discount Bills" (Policy Board Decision on October 27, 1999).

3. Location of Purchases

The Bank's Head Office (Operations Department).

4. Eligible Counterparties

Eligible counterparties shall, pursuant to the relevant rules of the Bank, be selected from financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Act, Act No. 89, 1997, excluding the Resolution and Collection Corporation and bridge banks [as defined in Article 2, Paragraph 13 of the Deposit Insurance Act, Act No. 34, 1971]), financial instruments firms (Article 10, Paragraph 1, Clause 2 of the Bank of Japan Act Enforcement Order [Order No. 385 of 1997]) that conduct the first financial instruments business (Article 28, Paragraph 1 of the Financial Instruments and Exchange Act, Act No. 25, 1948), securities finance companies (Article 10, Paragraph 1, Clause 3 of the Order), and tanshi companies (Article 10, Paragraph 1, Clause 4 of the Order).

5. Assets to Be Purchased

JGBs with coupons (2-year bonds, 5-year bonds, 10-year bonds, and 20-year bonds, with a remaining maturity of 1 year or more and up to 3 years) and T-Bills issued on or before the day of auction.

6. Maximum Outstanding Amount of JGBs and T-Bills to Be Purchased

The maximum outstanding amount of JGBs and T-Bills to be purchased by the Bank through the Asset Purchase Program shall be as prescribed in paragraph 4. of the "Principal Terms and Conditions for the Asset Purchase Program."

7. Method

A multiple-price competitive auction shall be conducted for each purchase where counterparties bid yield at which they desire to sell JGBs or T-Bills to the Bank.

8. Purchasing Price

The purchasing price for each issue of JGBs or T-Bills is calculated by using the yield derived from the method described in item 7.

9. Purchase Date, Amount of JGBs and T-Bills to Be Purchased, etc.

Taking into account conditions in financial markets, the Bank shall determine, at each purchase, necessary specifications, including dates, amount of JGBs and T-Bills to be purchased, eligible JGBs and T-Bills, and counterparties.

10. Miscellaneous

The outstanding amount of JGBs purchased through the program shall not be added to"the outstanding amount of long-term government bonds effectively held by the Bank, i.e., after taking account of the government bond sales under gensaki repurchase agreements" defined in"Change in the Guideline for Money Market Operations" (Policy Board Decision on March 19, 2001).

Supplementary Provision

These terms and conditions shall become effective today.