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Amendment to Margin Tables for Eligible Collateral and Study to Revise the Current Bill Purchasing Scheme

September 8, 2005
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided, to take the following measures in light of changes in market practices, with a view to facilitating smooth and efficient money market operations.

  1. The Bank shall amend margin tables used in accepting eligible collateral as well as in conducting repo operations and securities lending, in view of the time elapsed since the current tables were introduced, taking into account of developments in financial markets such as the volatility of market interest rates.
    Hereafter, the Bank shall review margin tables about once a year and amend them when necessary.
    See Attachment 1 for the outline of the amendment made to margin tables.
  2. The Bank shall conduct a study to revise the current bill purchasing scheme, its main funds-supplying operation, in order to make operation-related transactions paperless, taking into consideration requests from counterparties of money market operations in a situation where paperless transactions are progressing in financial markets.
    See Attachment 2 for the framework for revising the bill purchasing scheme.
    The Bank currently plans to introduce the new scheme in the middle of 2006 or later after completing the necessary preparations.

Attachment 1

Outline of the Amendment to Margin Tables

Given recent conditions in financial markets such as the volatility of market interest rates, margin tables used for calculating (1) prices of eligible collateral, (2) prices to purchase/sell Japanese government securities (JGSs) in conducting repo operations and securities lending, and (3) prices of margin collateral in conducting repo operations shall be amended as follows (figures in parentheses represent changes from the current ratios):

1. Margin Table for Calculating Prices of Eligible Collateral

(1) Bonds and FBs (Percentage of Market Value)

  • table

(2) Bills and Loans on Deeds (Percentage of the Face Value or Outstanding Balance)

  • table

2. Margin Table for Calculating Prices to Purchase/Sell JGSs in Conducting Repo Operations and Securities Lending (Ratio of Market Value/h3> Selling/Purchasing Price)

  • table

3. Margin Table for Calculating Prices of Margin Collateral in Conducting Repo Operations (Percentage of Market Value)

  • table

These amendments shall become effective no later than October 31, 2005 after completing the necessary preparations.

Attachment 2

Framework for Revising the Current Bill Purchasing Scheme

  • table