Japan watchdog recommends $150,000 fine on Nomura's brokerage unit for alleged market manipulation

Japan's securities watchdog has recommended imposing a 21.8 million yen ($151,715) penalty on Nomura Holding's brokerage unit for alleged manipulation in the government bond futures market, it said on Wednesday.

The Securities and Exchange Surveillance Commission (SESC) made the recommendation to the banking regulator, the Financial Services Agency (FSA), which hands out such punishments in Japan, the SESC said at a briefing.

A SESC investigation found that a trader at Nomura, Japan's largest brokerage firm, had manipulated the price of 10-year government bond futures contracts in March 2021, it said.

The trader made a series of derivative transactions in order to induce others to buy or sell government bond future contracts, making a profit of 14.8 million yen ($102,777), the SESC said.

The watchdog recommended the fines be imposed on the company rather than the trader as the transactions were made on Nomura's own account and the profits went to the company.

The Yomiuri newspaper was first to report that the watchdog was expected to recommend imposing tens of millions of yen in penalties on Nomura's brokerage unit.

Following the newspaper report, Nomura said it was not in a position to comment but would take such allegations seriously including establishing the facts.

There have been four previous instances of alleged market manipulation by securities firms trading in Japanese government bond futures, with the FSA imposing fines on Citigroup in 2019 and Mitsubishi UFJ Morgan Stanley Securities in 2018.