* FSA, BOJ to scrutinise entities over Archegos losses -
* Move underscores concern over potential global spillover
* Archegos-related losses caught many policymakers off-guard
TOKYO, April 7 (Reuters) - Japanese regulators are
heightening scrutiny of high-risk trades by domestic financial
institutions in the wake of the Archegos fallout, two sources
familiar with the matter said, as concern grows over huge losses
incurred by some big players.
Top investment bank and brokerage, Nomura Holdings,
was one of the highest-profile casualties while Mitsubishi UFJ
Financial Group (MUFG) warned of a loss of around $270
The Financial Services Agency (FSA) and the Bank of Japan
(BOJ) will scrutinise how financial institutions that incurred
losses had been managing transaction risks, the sources said on
condition of anonymity due to the sensitivity of the matter.
"We shouldn't be too complacent about the potential fallout
from the incident," one of the sources said. "There's a sense of
alarm among policymakers this could be the tip of an iceberg."
The Nikkei newspaper reported on Wednesday that Japanese
regulators will investigate high-risk trading by domestic
financial institutions including by conducting blanket checks to
see whether any other entities had suffered losses.
The move underscores the FSA's concern over the fact Japan's
major financial institutions faced a risk of losing several
hundred billion yen, the Nikkei said without citing sources.
Japanese authorities plan to work closely with overseas
counterparts to share information and ensure the spillover does
not trigger global market turbulence, the sources said.
The BOJ declined to comment. FSA officials were not
immediately available to comment.
The FSA and the BOJ have recently been enhancing cooperation
in overseeing Japan's banking sector to avoid overlaps in
inspections and address new risks that emerge as markets become
While Japanese authorities have been scrutinising incidents
involving domestic financial institutions on a regular basis,
they are still scrambling to gather information as the fallout
from Archegos caught many of them off guard, they said.
"It was something completely off the radar until just
recently," said another source, who said it was difficult for
authorities to keep track of incidents like Archegos.
(Reporting by Leika Kihara and Takahiko Wada; Additional
reporting by Kaori Kaneko and Makiko Yamazaki; editing by Jason
Neely and David Evans)