Nomura Securities is facing significant challenges after being suspended from participating in government bond auctions by Japan's Ministry of Finance for a month. According to Bloomberg, the market manipulation scandal has led several major financial institutions in Japan to halt transactions with Nomura, affecting its operations in the region.
At least ten companies, including leading life insurance firms, trust banks, and asset managers, have temporarily ceased certain business dealings with Nomura due to regulatory violations. However, they may resume trading of stocks or bonds with Nomura if the brokerage demonstrates corrective measures to prevent future incidents.
The Ministry of Finance announced the suspension of Nomura's qualifications as a special participant in the government bond market from October 15, 2024, to November 14, 2024. This decision relates to Nomura's activities in March 2021 concerning Japanese government bond futures trading.
The Securities and Exchange Surveillance Commission (SESC) recommended an administrative fine on September 25 for Nomura's alleged market manipulation, totaling 21.76 million yen. This action was based on findings from an investigation into Nomura's trading of 10-year Japanese government bond futures on the Osaka Exchange.
The investigation revealed that a Nomura trader engaged in "spoofing" practices intended to manipulate trading activities by creating misleading trades. This was said to potentially influence the financial instrument prices on the Osaka Exchange.
Nomura Holdings, founded in 1925, is a global financial services group operating in about 30 countries. It provides wealth management, investment management, and institutional services to various clients. Following the suspension, some firms, including Toyota Financial Services, have redirected their bond underwriting business from Nomura to other companies.
The company is set to disclose financial data up to the end of September on November 1. As the situation develops, it remains to be seen how this will impact Nomura's overall performance, though some market analysts believe the repercussions may not be too severe.
Previous similar cases include Citigroup and MUFG Securities, both of which faced suspensions and fines after market manipulation investigations. Recently, SMBC Nikko Securities incurred heavy fines due to stock price manipulation.
