Liquidity in the Japanese government bond (JGB) market has improved significantly as a result of a series of market reforms implemented since 2000. Market liquidity is a measure of "the level of ease with which trading can be conducted in the market." In order to facilitate trading in the JGB...

The Foreign Exchange Operations Section of the Financial Markets Department of the Bank of Japan monitors the foreign exchange market and other global financial markets. In recent years, the relatively sharp price movements observed on global financial markets have generally been accompanied by...

With the lowering volatilities in the foreign exchange and stock markets in recent years and historically low interest rates, investments in hedge funds and investment trusts (Japanese mutual funds) by Japanese investors have been increasing. For both hedge funds and investment trusts, investors...

The Financial Markets Department conducted its second census of stress tests to collect and analyse stress scenarios adopted by market participants. In a sense, the exercise was conceived as a market-wide "fire drill" assuming situations where serious shocks occur in financial markets. Through...

Hedge funds have changed their investment behavior in recent years stimulated, among other things, by large inflows of money and rising stock prices around the world. Database analyses indicate that they are expanding their long positions in equity markets, increasing their investments in...

Closer relationships are now being observed between the uncollateralized call rate, which is heavily influenced by the Bank of Japan's money market operations, and the Euroyen rate and the yen funding rate in the dollar/yen swap market, reflecting more dynamic arbitrage operations by...

One of the most important agendas for the revival of the Japanese economy is to improve direct financing channels for firms. Over the past few months, financial experts were invited to a "Study Group on the Securitization of Small to Medium-sized Enterprises' Receivables," held at the Financial...

The levels of long-term interest rates are determined by the daily movements in the government securities market. In order to understand the mechanics of how government securities are priced and how such prices would fluctuate, it is important to examine, for example, the arbitrage between cash,...

Japan's financial structure has changed since the later half of the 1990s. The results of the Japanese "Big Bang" initiative have gradually manifested themselves in the domestic financial structure. The key factor here was the financial crisis of 1997- 1998. Throughout the 1990s, the household...

Firms listed on JASDAQ can select either the order-driven (hereafter OD) system, where formal market makers are not involved, or the market-maker (hereafter MM) system for the trading of stocks. How differences in trading systems affect pricing and liquidity is a key issue in the study of market...