1/84 FINANCIAL FUTURES - National Government Bonds

The securities industry has been holding further meetings on the future possibilities of introducing futures with respect to national government bonds. The catalyst for this movement is that the market for these bonds currently stands at a huge 400 trillion yen per year in annual trading. Moreover, with many of the bonds issued in the mid-1970s coming up for redemption (and most of this is expected to be new issues is expected to further balloon from 1985.) This is expected to increase price fluctuations and the risk in investment. making it increasingly unattractive for investors. Having a futures market is expected to smooth the operations of the market by helping reduce risk. The banking industry has also come up with a study group on the issue, primarily to make sure that the securities companies do not take the lead role in this area.

THE JAPAN LAWLETTER, January, 1984 . Roderick Seeman