Japanese brokerage firm Nomura Holdings has been excluded as the lead manager for several yen bond deals after authorities found market rule violations. This marks the second time this year that Japanese companies have cut ties with underwriters due to breaches. At least four Japanese firms, including Toyota Finance and Sumitomo Mitsui Trust Holdings, removed Nomura as bond manager after the violations were discovered. Japan’s securities watchdog investigated Nomura for suspected market manipulation in government bond futures, leading to the violations.
Following the news, Nomura’s shares experienced a significant drop, causing a broad selloff in Japanese stocks. Regulatory troubles have previously prompted Japanese companies to remove brokerages from debt underwriting mandates, as seen with Mitsubishi UFJ Morgan Stanley Securities earlier this year. Despite the setbacks, the yen corporate bond market remains active, with sales reaching record levels in the current fiscal year.
Despite the challenges, brokerages are gearing up for a busy period in the yen corporate bond market. Most recently, Hokkaido Electric Power also dropped Nomura as a manager for yen transition bonds, adding to the brokerage’s woes in the market.