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Outline of Transactions for Outright Purchase/Sale of Treasury Discount Bills

日本語

As of October 12, 2018
Bank of Japan
Financial Markets Department

I.  Introduction

This document is an outline of outright purchases/sales of treasury discount bills (T-Bills), which the Bank of Japan conducts based on the "Principal Terms and Conditions for the Outright Purchase/Sale of Treasury Discount Bills." Please note that the following information may change in the future.

II.  Principles

A.  Location of purchases/sales

The Bank's Head Office (Operations Department).

B.  Bonds to be purchased/sold

T-Bills purchased/sold by the Bank shall be dealt with under the Japanese government bond (JGB) Book-Entry System.

C.  Method for auctions

A multiple-price competitive auction under the conventional method shall be conducted for each purchase/sale in which counterparties bid "yield spreads," which are calculated by subtracting "benchmark yields" (yields which the Bank determines separately) from the yields at which counterparties seek to purchase/sell securities from/to the Bank.

III.  Auction

A.  Notification of auction guidelines (offer)

When conducting outright purchases/sales of T-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) Type of offer (purchase or sale)
  2. (b) Total amount of offer
  3. (c) Issues to be purchased/sold
  4. (d) Purchase/sale date
  5. (e) Bid-submission cut-off date and time
  6. (f) Other matters deemed necessary by the Bank

B.  Submission of bids

Auction participants notify the Bank of their desired sale/purchase amount and yield per issue 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 (a) for purchases, starting with the highest desired yield spread without distinguishing between issues and continuing down until the total amount of bids accepted reaches the amount offered; and (b) for sales, starting with the lowest desired yield spread without distinguishing between issues 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 and yields at which it will purchase/sell per issue, and the purchasing/selling price. Here and hereinafter, those who receive such notifications will be referred to as purchasers/sellers.

IV.  Purchase/Sale of T-Bills

In the case of purchases:
On the settlement date notified in subsection III. A, the seller delivers T-Bills to the Bank simultaneously with the Bank's payment of the purchasing price to the seller.

In the case of sales:
On the settlement date notified in subsection III. A, the purchaser pays the selling price to the Bank simultaneously with the Bank's delivery of T-Bills to the purchaser.

V.  Operation Timetable

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