The financial industry is looking to tighten oversight of trading in government bond futures, after Nomura Holdings joined a list of brokerages fined for manipulating the instruments.

The Japan Securities Dealers Association and Japan Exchange Group are discussing ways to prevent a banned trade known as spoofing, their officials said, asking not to be identified because the matter is private. They are considering revising a guideline for reviewing trading in Japanese government bond futures and other derivatives, as well as offering more thorough training for financial firms, the officials added.

Japan is stepping up efforts to stamp out impropriety in its financial markets after concluding last year that Nomura broke the law in 2021. Spoofing involves placing fake orders to give market participants a false impression about supply and demand to make profitable trades. The practice isn’t unique to Japan, and regulators in other markets have also been trying to curb it.

JSDA is an industry group that self-regulates brokerages in coordination with the Financial Services Agency. Japanese government bond futures are listed on a derivatives exchange in Osaka, and JPX has a regulatory arm called Japan Exchange Regulation that seeks to ensure securities transactions are fair.

Traders could also benefit from clearer guidance. The line between spoofing and regular transactions can be contentious — a former Nomura trader who is accused of having committed the act four years ago has insisted he is innocent. Some Japanese government bond traders have noted the rules were opaque enough that almost anyone could be tripped up and lose their job.

The guideline was created in 2020 by JPX for companies to review their own derivatives trades, after the FSA penalized Citigroup Inc. and Mitsubishi UFJ Financial Group in the preceding two years for spoofing JGB futures, the officials said. Any revision would be the first since it was formed, they added. JPX shares the guideline only with member firms, keeping it from the general public.

JSDA and JPX are examining whether the guideline needs revising for more effective screening of transactions, the officials said. They are also considering educating brokerages about best practices, rather than prescribing quantifiable benchmarks, such as a limit on a trader’s market share, the officials added.

The discussion are at an early stage and there is no specific deadline, according to the officials. Once ideas are finalized, they will probably discuss them with brokerages, they said.

JSDA is considering with other relevant parties how to deal with the matter, a spokesman said in a written response. A representative for JPX declined to comment.

The Securities and Exchange Surveillance Commission, the FSA’s investigative arm, asked JSDA to come up with preventive measures after Nomura paid a fine of ¥21.8 million ($147,000) in October, commission officials said, asking not to be identified due to their policy.

JSDA undertook a survey in February and March as a preparatory step, the officials said. It polled roughly 80 member firms that trade Japanese government bond futures, including brokerages and commercial banks. The queries focused on how the companies’ management and compliance officers as well as independent auditors oversee such transactions, JSDA officials said.

JPX is also looking into the need to toughen oversight on other financial products that are susceptible to spoofing, such as stocks, its officials said.