Japan autocall curbs upend Nikkei vol

Lack of reinvestment alongside FSA review forces scramble to buy back hedges as products knock out

Nikkei screen

A crackdown on the sale of Japanese retail structured products may be contributing to an unusual dynamic in which Nikkei 225 volatility has risen alongside surging spot prices, forcing exotics desks to buy back hedges at elevated prices as legacy products knock out en masse.

Japan’s main equity benchmark has gained 20% since the start of April, when the Bank of Japan (BoJ) confirmed its commitment to ultra-low interest rates under incoming governor Kazuo Ueda, attracting a flood of foreign

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