* FSA, BOJ to scrutinise entities over Archegos losses - sources

* 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 million.

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 globalised.

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)