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Establishment of Principal Terms and Conditions for the Outright Purchase/Sale of Short-Term Japanese Government Securities

(For immediate release)

October 27, 1999
Bank of Japan

The Monetary Policy Meeting of the Policy Board has today decided to establish Principal Terms and Conditions for the outright purchase/sale of short-term Japanese government securities (purchase/sale of treasury bills and financing bills without repurchase agreements) as attached.

This decision was made in line with "Enhancement of Money Market Operations" decided at the Monetary Policy Meeting of the Policy Board on October 13, 1999.


Attachment

Principal Terms and Conditions for the Outright Purchase/Sale of Short-Term Japanese Government Securities

1. Purpose

These Principal Terms and Conditions prescribe the principles that are necessary for the Bank of Japan's outright purchase/sale of short-term Japanese government securities (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 financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Law (Law No.89, 1997)), securities companies (as defined in Article 10, Paragraph 1, Clause 2 of the Bank of Japan Law Enforcement Order (Order No. 385, 1997) and foreign securities companies as defined in Article 10, Paragraph 1, Clause 4 of the Order), securities finance companies (as defined in Article 10, Paragraph 1, Clause 3 of the Order), and tanshi companies (as defined in Article 10, Paragraph 1, Clause 5 of the Order).

4. Securities to be Purchased/Sold

Short-term Japanese government securities (TBs and FBs).

5. Purchasing/Selling Method

Securities shall be purchased/sold through competitive yield auction.

6. Purchasing/Selling Price

The purchasing/selling price shall be decided based on the interest rate determined by competitive yield auction.

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

Taking into account the prevailing situations 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 primarily based on remaining maturity.

(Supplementary Provision)

These Principal Terms and Conditions shall become effective October 27, 1999.