
“We are having discussions every day with each other,” said Hirokazu Wakamatsu, executive officer and general manager of market operation at Tokyo Tanshi Co. “Market participants used to be skeptical, but there is now an air of certainty among them that the change is sure to come.”
Expectations are building that the Bank of Japan will decide as early as Tuesday to scrap negative rates as accelerating wage growth adds to signs that the economy is escaping deflation.
Brokerages will benefit if volatility in Japan’s rate markets increases, spurring trading by their clients, according to Bloomberg Intelligence analyst Hideyasu Ban.
Over the past month, Tokyo Tanshi has seen a jump in queries from customers seeking advice on where rates are heading, Wakamatsu said in a phone interview. Its brokers are exploring the impact of potential changes to, for example, the way the BOJ sets rates on deposits held at the central bank by commercial lenders, he added.
Japan’s central bank cut its policy rate to -0.1% in 2016, penalising financial institutions on a portion of their excess cash parked at the BOJ.
Some 90% of BOJ watchers see the risk of authorities ending the negative rate on Tuesday. It is widely expected to switch its policy rate to the overnight unsecured call rate and set it in a range between zero and 0.1%.
Tokyo Tanshi has also stepped up efforts to approach corporate customers, including regional banks, that have kept away from money markets in the “abnormal world” of negative rates, Wakamatsu said.
“We are reaching out to those who have not taken action or have seen no need to take action until now, asking them what their stance would be should interest rates return to positive territory,” he said.