FT: Bank of Japan’s securities lending facility for ETFs set to avert liquidity squeeze

Japan acts to avert ETF market liquidity squeeze

The Bank of Japan has launched an unusual lending facility for exchange traded funds as it tries to mitigate the market impact of its ultra-aggressive monetary policy. Under the new facility, brokers will be able to borrow some of the central bank’s ¥28tn ($256bn) holdings in equity ETFs for up to a year, at interest rates to be determined by auction. The new facility, first announced in April, is intended to boost liquidity in a Japanese ETF sector dominated by the central bank, which owns two-thirds of the total outstanding stock and has come under fire for allegedly distorting the market.

The full article is available at https://www.ft.com/content/c679c726-220f-11ea-b8a1-584213ee7b2b

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