Principal Terms and Conditions for the Purchase/Sale of Short-Term Japanese Government Securities with Repurchase Agreements (Invalid)

March 25, 1999

Revision:March 19, 2001

1. Purpose

These Principal Terms and Conditions prescribe the principles for the Bank of Japan's purchase/sale of treasury bills <TBs> and financing bills <FBs> with repurchase agreements with the aim of facilitating money market operations.

2. Location of Purchases/Sales

At the Head Office (Operations Department) of the Bank.

3. Eligible Counterparties

Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Law, Law No.89, 1997, excluding the Resolution and Collection Corporation and the Kii Deposits Management Bank), domestic and foreign securities companies (Article 10, Paragraph 1, Clause 2 of the Bank of Japan Law Enforcement Order <Order No. 385, 1997> and Article 10, Paragraph 1, Clause 4 of the same Order, respectively), securities finance companies (Article 10, Paragraph 1, Clause 3 of the Order), and tanshi companies (Article 10, Paragraph 1, Clause 5 of the Order).

4. Securities to be Purchased/Sold

Short-term Japanese government securities (TBs and FBs).

5. Repurchase Agreements

Securities purchased/sold shall be resold/repurchased within six months from the next date of purchases/sales.

6. Method for Auctions

1. (1) Purchases with repurchase agreements A multiple-price competitive auction shall be conducted for each purchase where counterparties bid" purchasing yields" (yields for the period during which securities are held by the Bank).
2. (2) Sales with repurchase agreements A multiple-price competitive auction shall be conducted for each sale where counterparties bid"selling yields" (yields for the period during which securities are held by counterparties).

7. Purchasing/Selling and Reselling/Repurchasing Price

1. (1) Purchasing/Selling Price The purchasing/selling price for each issue is determined based on prevailing prices in financial markets.
2. (2) Reselling Price The reselling price is calculated by adding the amount obtained by multiplying the purchasing price by purchasing yields to the purchasing price.
3. (3) Repurchasing Price The repurchasing price is calculated by adding the amount obtained by multiplying the selling price by selling yields to the selling price.

8. Dates for Purchase/Sale, Amount of Securities to be Purchased/Sold, etc.

Taking into account conditions in financial markets, the Bank shall determine specifications necessary for purchases/sales, including dates, amount of securities to be purchased/sold, counterparties, and issues to be purchased/sold, for each purchase/sale.