Bond repo transactions
Bond repo transactions are the generic name for both " stock lending transactions against cash collateral," which started in April 1996, and "bond repurchase agreements," which have traditionally been conducted, and are traded by a wide range of domestic and foreign financial institutions. The lending transactions have long dominated in the bond repo market, but the shortening of the government bond settlement period (T+1) in May 2018 triggered a rapid expansion of repurchase agreements as an international trading method. The overall market balance has also continued to expand along with the increase in market participants and outstanding government bond issues, and the current figure is around the 100 trillion yen. In the bond repo market, Tokyo Tanshi act as a counterparty to both buyers and sellers of bonds.
Since 2009, Tokyo Tanshi has also been handling electronic trading operations in cooperation with J-Bond Totan Securities, a Totan Group company that operates a private trading system (“PTS”), thereby contributing to the improvement of liquidity through a "hybrid" style of voice and electronic brokerage. The Bank of Japan has chosen to conduct “Purchase/Sale of Japanese Government Securities with Repurchase Agreements” through Tokyo Tanshi, making it possible for the company to play an important role in routine monetary operations.
Treasury discount bill trading
Treasury discount bills ("T-bills") are short-term government bonds with a maturity of no more than one year. T-bills are popular among both Japanese and overseas investors as short-term financial instruments with little credit risk, high liquidity, and outstanding homogeneity.
Like securities firms and banks, Tokyo Tanshi participates in the bidding conducted by the Ministry of Finance Japan, buy and sell on the inter-dealer market as a dealer, and conduct over-the-counter transactions with investors. The Bank of Japan has chosen to conduct “Outright Purchase/Sale of Treasury Discount Bills” through Tokyo Tanshi, making it possible for the company to play an important role in routine monetary operations.
Since its creation in November 1987, the commercial paper ("CP") market has continued to grow as an important tool for businesses and financial institutions to raise short-term funds, and the current figure is around the 20 trillion yen. (In March 2003, trading of short-term corporate bonds (so-called dematerialized commercial paper) was introduced)
Negotiable certificate of deposits ("CD"s) were initially issued in May 1979 as a forerunner of the products that would be developed under liberalized interest rates. Since its creation, the CD market has grown every year, and CDs have become an important tool for financial institutions to raise short-term funds.
Tokyo Tanshi is a one of the entities through which the Bank of Japan conducts its purchases of CP with repurchase agreement and outright purchases of CP, and thus contributes to the BOJ's financial market operations.
Equity repo transactions
In the equity repo market (market for lending equities backed by cash), parties lend and borrow equities, exchange-traded funds, convertible bonds, etc., using cash as collateral. The lending of equities provides liquidity to the secondary market and is even used as a method to flexibly procure and manage short-term funds. The market is now about 10 trillion yen. With a focus on the convenience and security of equity repo transactions, Tokyo Tanshi wants to continue to meet the needs of market participants and contribute to the expansion and development of the market.