0001163653 us-gaap:CollateralizedDebtObligationsMemberOtherLiabilitiesMember 2021-03-31 0001163653 nmr:OtherLiabilitiesMeasuredAtFairValueUsingTheFairValueOptionMember 2019-04-01 2020-03-31 0001163653 us-gaap:FairValueMeasurementsRecurringMember nmr:CounterpartyCashCollateralNettingMember 2021-03-31NoncontrollingInterestMember 2022-03-31
Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
20-F
 
 
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 20212022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
            to            
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of event requiring this shell company report
Commission file number:
1-15270
 
 
Nomura Horudingusu Kabushiki Kaisha
(Exact name of registrant as specified in its charter)
 
 
Nomura Holdings, Inc.
(Translation of registrant’s name into English)
 
 
 
Japan
 
13-1,
Nihonbashi
1-chome
Chuo-ku,
Tokyo
103-8645
Japan
(Jurisdiction of incorporation or organization)
 
(Address of principal executive offices)
Takumi Kitamura,
81-3-5255-1000,
81-3-6746-7850
(Name, Telephone,
E-mail
and/or Facsimile number and Address of Company Contact Person)
 
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange On Which Registered
American Depositary Shares
Common Stock*
 
NMR
 
New York Stock Exchange
 
*
Not for trading, but only in connection with the registration of the American Depositary Shares, each representing one share of Common Stock.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
 
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of March 31, 2021, 3,063,155,434 2022, 3,017,804,012
shares of Common Stock were outstanding, including 34,687,33536,833,403 shares represented by 34,687,33536,833,403 American Depositary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒  Yes
☐  No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ☐  Yes
☒  No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☒
No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
  ☒
    
No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
 
Large accelerated filer  ☒  Accelerated filer  ☐  
Non-accelerated
filer  ☐		  Emerging growth company  ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP  ☒
  
International Financial Reporting Standards as issued
by the International Accounting Standards Board  ☐
  Other  ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.     ☐  Item 17    ☐  Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    ☐  Yes
☒  No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    ☐  Yes
    
☐  No
 
 
 
Table of Contents
TABLE OF CONTENTS
 
     
Page
 
PART I
  
Item 1.
 
Identity of Directors, Senior Management and Advisers
  2
Item 2.
 
Offer Statistics and Expected Timetable
  2
Item 3.
 
Key Information
  2
Item 4.
 
Information on the Company
  2322
Item 4A.
 
Unresolved Staff Comments
  4649
Item 5.
 
Operating and Financial Review and Prospects
  4649
Item 6.
 
Directors, Senior Management and Employees
  88
Item 7.
 
Major Shareholders and Related Party Transactions
  111115
Item 8.
 
Financial Information
  112116
Item 9.
 
The Offer and Listing
  113117
Item 10.
 
Additional Information
  113117
Item 11.
 
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
  121125
Item 12.
 
Description of Securities Other Than Equity Securities
  136144
 
PART II
  
Item 13.
 
Defaults, Dividend Arrearages and Delinquencies
  138146
Item 14.
 
Material Modifications to the Rights of Security Holders and Use of Proceeds
  138146
Item 15.
 
Controls and Procedures
  138146
Item 16A.
 
Audit Committee Financial Expert
  139146
Item 16B.
 
Code of Ethics
  139146
Item 16C.
 
Principal Accountant Fees and Services
  139147
Item 16D.
 
Exemptions from the Listing Standards for Audit Committees
  140148
Item 16E.
 
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  140148
Item 16F.
 
Change in Registrant’s Certifying Accountant
  141149
Item 16G.
 
Corporate Governance
  141149
Item 16H.
 
Mine Safety Disclosure
  143150
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
150
 
PART III
  
Item 17.
 
Financial Statements
  144151
Item 18.
 
Financial Statements
  144151
Item 19.
 
Exhibits
  145151
Index to the Consolidated Financial Statements
  
F-1
 
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As used in this annual report, references to th
e
“Company”
, “
Nomura
”
, the
“
Nomura Group
”
,
“
we
”
,
“
us
”
and “our
”
are to Nomura Holdings, Inc. and, except as the context otherwise requires, its consolidated subsidiaries. As part of certain line items in Nomura’s financial statements and information included in this annual report, references to “NHI” are to Nomura Holdings, Inc.
As used in this annual report, “yen” or “¥” means the lawful currency of Japan, “dollar” or “$” means the lawful currency of the United States of America (“U.S.”), and “EUR” means the lawful currency of the member states of the European Monetary Union.
As used in this annual report, “ADS” means an American Depositary Share, currently representing one share of the Company’s common stock, and “ADR” means an American Depositary Receipt evidencing one or more ADSs.
As used in this annual report, except as the context otherwise requires, the “Companies Act” means the Companies Act of Japan and the “FSA” means the Financial Services Agency of Japan.
Amounts shown in this annual report have been rounded to the nearest indicated digit unless otherwise specified. In tables and graphs with rounded figures, sums may not add up due to rounding.
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. Selected Financial Data
The following table presents selected financial information as of and for the years ended March 31, 2017, 2018, 2019, 2020 and 2021 which is derived from our consolidated financial statements. The consolidated balance sheets for the years ended March 31, 2020 and 2021, the consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years ended March 31, 2019, 2020 and 2021, and notes thereto appear elsewhere in this annual report. These financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). Certain reclassifications of previously reported amounts have been made to conform to the current period presentation.
2
Table of Contents
The selected consolidated financial information set forth below should be read in conjunction withSee Item 5. “
Operating“Operating and Financial Review and ProspectsReview—A. Operating Results—Other operating results—Selected Financial Data.”
” in this annual report and our consolidated financial statements and notes thereto included in this annual report.
  
Millions of yen, except per share data and percentages
 
  
Year ended March 31
 
  
2017
  
2018
  
2019
  
2020
  
2021
 
Statement of income data:
     
Revenue
 ¥1,715,516  ¥1,972,158  ¥1,835,118  ¥1,952,482  ¥1,617,235 
Interest expense
  312,319   475,189   718,348   664,653   215,363 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
  1,403,197   1,496,969   1,116,770   1,287,829   1,401,872 
Non-interest
expenses
  1,080,402   1,168,811   1,154,471   1,039,568   1,171,201 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
  322,795   328,158   (37,701)   248,261   230,671 
Income tax expense
  80,229   103,866   57,010   28,894   70,274 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss)
 ¥242,566  ¥224,292  ¥(94,711)  ¥219,367  ¥160,397 
Less: Net income attributable to noncontrolling interests
  2,949   4,949   5,731   2,369   7,281 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss) attributable to Nomura Holdings, Inc. (“NHI”) shareholders
 ¥239,617  ¥219,343  ¥(100,442)  ¥216,998  ¥153,116 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance sheet data (period end):
     
Total assets
(1)
 ¥42,531,972  ¥40,343,947  ¥40,969,439  ¥43,999,815  ¥42,516,480 
Total NHI shareholders’ equity
  2,789,916   2,749,320   2,631,061   2,653,467   2,694,938 
Total equity
  2,843,791   2,799,824   2,680,793   2,731,264   2,756,451 
Common stock
  594,493   594,493   594,493   594,493   594,493 
Per share data:
     
Net income (loss) attributable to NHI shareholders—basic
 ¥67.29  ¥63.13  ¥(29.90)  ¥67.76  ¥50.11 
Net income (loss) attributable to NHI shareholders
—
diluted
  65.65   61.88   (29.92)   66.20   48.63 
Total NHI shareholders’ equity
(2)
  790.70   810.31   794.69   873.26   879.79 
Cash dividends
(2)
  20.00   20.00   6.00   20.00   35.00 
Cash dividends in USD
(3)
 $0.18  $0.19  $0.05  $0.19  $0.32 
Weighted average number of shares outstanding (in thousands)
(4)
  3,560,776   3,474,593   3,359,565   3,202,370   3,055,526 
Return on equity
(5)
:
  8.7%   7.9%   (3.7%)   8.2%   5.7% 
(1)
Due to Accounting Standards Update
2014-09,
“
Revenue from Contracts with Customers
” and the changes in our accounting policy which Nomura adopted on April 1, 2018, certain reclassifications of previously reported amounts have been made to conform to the current year presentation.
(2)
Calculated using the number of shares outstanding at year end.
(3)
Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
(4)
The number shown is used to calculate basic earnings per share.
(5)
Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity.
B. Capitalization and Indebtedness.
Not applicable.
C. Reasons for the Offer and Use of Proceeds.
Not applicable.
 
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D. Risk Factors.
Risk Factors
You should carefully consider the risks described below before making an investment decision. If any of the risks described below actually occurs, our business, financial condition, results of operations or cash flows could be adversely affected. In that event, the trading prices of our shares could decline, and you may lose all or part of your investment. In addition to the risks listed below, risks not currently known to us or that we now deem immaterial may also harm us and affect your investment.
INDEX
 
· 
Risks Relating to the Business Environment
 
1
Our business may be materially affected by financial markets, economic conditions and market fluctuations in Japan and elsewhere around the world
 
 (1)
The
COVID-19
pandemic has affected our business, clients and employees and this may continue in the future
 
 (2)
Natural disaster, terrorism, military dispute and infectious disease other than
COVID-19
could adversely affect our business
 
 (3)
Governmental fiscal and monetary policy changes in Japan, or in any other country or region where we conduct business may affect our business, financial condition and results of operations
 
 (4)
Brexit may adversely affect our business on various fronts
(5)
Transition from U.S. Dollar LIBOR to alternative rate indices or among IBORs may adversely affect our business
 
 (6)(5)
Extended market declines and decreases in market participants can reduce liquidity and lead to material losses
(6)
The consequences of Brexit may adversely affect our business on various fronts
 
2
The financial services industry faces intense competition
 
 (1)
Competition with other financial firms and financial services by
non-financial
companies is increasing
 
 (2)
Increased consolidation, business alliance and cooperation in the financial services industry mean increased competition for us
 
 (3)
Our global business continues to face a challenging environmentintense competition and may require further revisions to its business model
 
3
Event risk may cause losses in our trading and investment assets as well as market and liquidity risk
 
4
Environmental, Social and Governance (“ESG”) factors including climate change and broader associated policy changes in each jurisdiction could adversely affect our business
 
· 
Risks Relating to Our Businesses
 
5
Our business may incur losses due to various factors in the conduct of its operations
 
 (1)
We may incur significant losses from our trading and investment activities
 
 (2)
Holding large and concentrated positions of securities and other assets may expose us to large losses
 
 (3)
Our hedging strategies may not prevent losses
 
 (4)
Our risk management policies and procedures may not be fully effective in managing risk
 
 (5)
Market risk may increase other risks that we face
 
 (6)
Our brokerage and asset management revenues may decline
 
43
Table of Contents
 (7)
Our investment banking revenues may decline
 
 (8)
Our electronic trading business revenues may decline
 
6
We may be exposed to losses when third parties do not perform their obligations to us
 
 (1)
Defaults by a large financial institution could adversely affect the financial markets generally and us specifically
 
 (2)
There can be no assurance as to the accuracy of the information about our credit risk, or the sufficiency of the collateral we use in managing our credit riskit
 
 (3)
Our clients and counterparties may be unable to perform their obligations to us as a result of political or economic conditions
 
7
We are a holding company and depend on payments from our subsidiaries
 
8
We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity securities and
non-trading
debt securities
 
9
We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer
 
· 
Risks Relating to Our Financial Position
 
10
We may have to recognize impairment losses with regard to the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets
 
11
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
 
 (1)
We may be unable to access unsecured or secured funding
 
 (2)
We may be unable to sell assets
 
 (3)
Lowering of our credit ratings could impact our funding
 
12
Equity investments in affiliates and other investees accounted for under the equity method in our consolidated financial statements may decline significantly over a period of time and result in us incurring impairment losses
 
· 
Risks Relating to Legal, Compliance and Other Operational Issues
 
13
Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our reputation in the market and our relationships with clients could be harmed
 
14
A failure to identify and appropriately address conflicts of interest could adversely affect our business
 
15
Our business is subject to substantial legal, regulatory and reputational risks
 
 (1)
Legal liability may occur due to events such as market downturn and could adversely affect our business, financial condition and results of operations
 
 (2)
Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses
 
 (3)
Tightening of regulations applicable to the financial system and financial industry could adversely affect our business, financial condition and results of operations
 
 (4)
Deferred tax assets may be impacted due to a change in business condition or in laws and regulations, resulting in an adverse effect on our operating results and financial condition
 
(5)
Defects in our anti-money laundering and counter-terrorism financing measures could have serious consequences such as, administrative penalties or punitive fines.
4
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16
Unauthorized disclosure or misuse of personal information held by us may adversely affect our business
 
5
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17
System failure, information leakage and the cost of maintaining sufficient cybersecurity could adversely affect our business
 
18
Our business may be adversely affected if we are unable to hire, retain and develop qualified personnel
· 
Risks Related to Holding or Trading of our Shares and ADRsADSs
 
1819
Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of the Company’s common stock at a particular price on any particular trading day, or at all
 
1920
Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are subject to transfer, voting and other restrictions
 
2021
As a holder of ADRs,ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to exercise these rights
 
2122
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions
 
2223
The Company’s shareholders of record on a record date may not receive the dividend they anticipate
 
2324
It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or the Company’s directors or executive officers, or to enforce against the Company or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S.
 
· 
Special Note Regarding Forward-looking Statements
 
· 
Risks Relating to the Business Environment
 
1.
Our business may be materially affected by financial markets, economic conditions and market fluctuations in Japan and elsewhere around the world
Our business and revenues may be affected by any adverse changes or volatility in the Japanese and global economic environments and financial markets. In addition, not only purely economic factors but also wars, acts of terrorism, economic or political sanctions, pandemics, forecasts of geopolitical risks and geopolitical events which have actually occurred, natural disasters or other similar events could have an effect on the financial markets and economies of each country. If any adverse events including those discussed above were to occur, a market or economic downturn may last for a long period of time, which could adversely affect our business and can result in us incurring substantial losses. In addition to conditions in financial markets, social conditions such as the long-term trends of population aging and population decline faced by Japan are expected to continue to put downward pressure on demand in the businesses in which we operate, including, in particular, our Retail business. The following are certain risks related to the financial markets and economic conditions for our specific businesses.
(1) The
COVID-19
pandemic has affected our business, clients and employees and this may continue in the future
The
COVID-19
pandemic that began in 2020, and governmental measures to prevent its spread, have significantly affected the operating environment, for example causing volatility in global equity prices, interest rates and elsewhere and a widening of credit spreads. The
COVID-19
Government responses to the pandemic, has led such as lockdowns on buildings and cities, or curfews or other restrictions on movement in areas affected by the pandemic, continue
5
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to in many affected areas, successive widespread lockdowns and similar government action worldwide, including Japan, Europe, America and elsewhere, and continues in many of these places.occur. In response to the pandemic and subsequent lockdowns,such measures, we have activated contingency plans, and have implemented robust arrangements for our employees to work remotely. However, these measures may not be successful or sufficient, and may cause additional risks, such as challenges in supervision over employees working remotely or increased risk of cyberattacks. The continuation of such measures, even if limitedAdditionally, new strains or variants may arise, leading governments to certain regions, will continue toimpose new or additional restrictions which may impact societal and economic functions which has and is expected to continue to adversely affect our business, and results of operations. Even
6
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whileoperations and financial condition. While the spread or impact of the disease may gradually subside as vaccination efforts progress, ongoing negative effects on markets, economic activity or the operating environment could further adversely affect our business, results of operations and financial condition.
(2) Natural disaster, terrorism, military dispute and infectious disease other than
COVID-19
could adversely affect our business
We have developed a contingency plan for addressing unexpected situations.situations and conduct crisis management exercises including staff notification tests. We also developed a business resilience framework which includes an establishment of an emergency command center in the event of an actual disaster to account for the safety of our employees and their families. However, disaster, terrorism, military disputes or widespread infectious diseases afflicting our management and employees could exceed the assumptions of our plan and our framework, and could adversely affect our business. In addition, there is a possibility that unknown infectious diseases other than
COVID-19
pandemic may hinder the operational duties byof our management and employees.
(3) Governmental fiscal and monetary policy changes in Japan, or in any other country or region where we conduct business may affect our business, financial condition and results of operations
We engage in our business globally through domestic and international offices. Governmental fiscal, monetary and other policy changes in Japan, or in any other country or region where we conduct business may affect our business, financial condition and results of operations. In addition, any changes to the monetary policy of the Bank of Japan or central banks in major economies worldwide, which could potentially be followed by volatility of interest rate or yields may negatively affect our ability to provide asset management products to our clients as well as our and our clients’ trading and investment activities, for example by decreased returns for fixed income products in the prolonged low interest rate environment in Japan.
(4) Brexit may adversely affect our business on various fronts
On January 31, 2020, the United Kingdom (“U.K.”) withdrewTransition from the European Union (“EU”) under the Withdrawal Agreement between the U.K. and the EU (“Brexit”). On December 31, 2020, a transition period during which the rules and regulations of the EU continued to apply to the U.K expired. Although the U.K. and EU entered a trade and cooperation agreement governing their relationship prior to the expiration of the transition period, such agreement does not comprehensively address the financial industry, and there continues to be uncertainty as to the longer term consequences that Brexit may have on our business. Prior to Brexit, we conducted business in Europe primarily through Nomura International plc (“NIP”), our broker-dealer arm established in London, as our regional hub; but following the end of the transition period, we moved to a structure that provides client-facing services and other services centered on Nomura Financial Products Europe GmbH (“NFPE”), our licensed broker-dealer in Germany. Although we are taking various measures to manage the risks associated with Brexit and to mitigate the impacts of uncertainty in the market as a whole, delays or other issues in our transition of business to NFPE as well as the risks to the broader financial system associated with the transition may adversely affect our business, results of operations and financial condition.
(5) Transition fromU.S. Dollar LIBOR to alternative rate indices or among IBORs may adversely affect our business
We trade derivatives including interest rate swaps and underwrite bonds and loans which refer to Interbank Offered RatesThe United Kingdom (“IBORs”U.K.”) such as the London Interbank Offered Rate (“LIBOR”). Following the LIBOR manipulation scandal in 2012, Financial Conduct Authority confirmed on March 5, 2021 the cessation effective dates of allthat U.S. Dollar LIBOR currencies and tenors. Regulators in each country including Japan have expressed their intention to request that financial transactions that refer to LIBOR be converted to alternative rate indices and that measures be taken in preparation for the permanent cessation of LIBOR.settings will cease after June 30, 2023. All transaction agreements which refer to U.S. Dollar LIBOR and remain after LIBORits cessation are expected to be revisedamended to refer alternative reference rates; or to be amendedaltered by adding a clause of “fallback” ratefallback provisions that isare agreed between the contracting parties in advance of the cessation of LIBOR. However, the details of calculation methodologies of alternative rate indices are under discussion in each country currently, and such transfers will involve the development of new calculation methods for alternative rates, revisions to relevant
7
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contracts and modifications to the application of accounting principles to the relevant transactions.advance. These changes could require us to incur additional costs and subject us to risks associated with systematic reform, operational application and client disclosure, or adversely impact the pricing, volatility and liquidity of financial products including derivatives, bonds and loans which reference IBORs.U.S. Dollar LIBOR. Therefore, our business, financial condition and results of operations could be materially and adversely affected and/or we could be subject to disputes, litigation or other actions with counterparties or relative participants. In addition, transactions referring to the alternative rate indices are not yet widely familiar in the market, and there is significant uncertainty regarding their application and acceptance, and we may not be successful in managing this transition without potentially serious disruption to our business.
(6)(5) Extended market declines and decreases in market participants can reduce liquidity and lead to material losses
Extended market declines can reduce the level of market activity and the liquidity of the assets traded in those markets in which we operate. Market liquidity may also be affected by decreases in market participants that could occur, for example, if financial institutions scale back market-related businesses due to increasing regulation or other reasons. As a result, it may be difficult for us to sell, hedge or value such assets held. Also, in the event that a market fails in pricing such assets, it will be difficult to estimate their value. If we cannot properly close out or hedge our associated positions in a timely manner or in full, particularly with respect to
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Over-The-Counter
(“OTC”) derivatives, we may incur substantial losses. Further, if the liquidity of a market significantly decreases and the market may become unable to price financial instruments held by us, this could lead to unanticipated losses.
(6) The consequences of Brexit may adversely affect our business on various fronts
On January 31, 2020, the U.K. withdrew from the European Union (“EU”) under the Withdrawal Agreement between the U.K. and the EU (“Brexit”), followed by a 12 month transition period during which the rules and regulations of the EU continued to apply to the U.K. up to December 31, 2020. Although the U.K. and EU entered a trade and cooperation agreement governing their new relationship, such agreement does not comprehensively address the financial industry, and there continues to be uncertainty as to the longer term consequences that Brexit may have on our business. Prior to Brexit, we conducted business in Europe primarily through Nomura International plc, our broker-dealer arm established in London, as our regional hub; but following the end of the transition period, we moved to a structure that provides client-facing services and other services centered on Nomura Financial Products Europe GmbH, our licensed broker-dealer in Germany. Although we have taken various measures to manage the risks associated with Brexit and to mitigate the impacts of uncertainty in the market as a whole, further developments including further adjustments to the operating boundaries between the U.K. and EU may adversely affect our business, results of operations and financial condition.
 
2.
The financial services industry faces intense competition
Our businesses are intensely competitive, and are expected to remain so. We compete on the basis of a number of factors, including transaction execution capability, our products and services, innovation, reputation and price. We have experienced intense price competition, particularly in brokerage, investment banking and other businesses.
(1) Competition with other financial firms and financial services by
non-financial
companies is increasing
Since the late 1990s, the financial services sector in Japan has undergone deregulation. Banks and certain other financial institutions became able to enter into the securities brokerage business in 2004 and firewalls between commercial banks and securities firms were deregulated in 2009, increasing the ability of securities firms with affiliated commercial banks to cooperate more closely them. As a result, securities subsidiaries of commercial banks and
non-Japanese
firms with increased competitiveness have been affecting our market shares in the sales and trading, investment banking and retail businesses. In recent years, competition is intensifyinghas intensified beyond the traditional financial sector based on the increasing digitalization of the industry, not only with the rise of online securities firms but also FinTech companies and the entry of
non-financial
companies into the financial services sector. In order to address such changes in the competitive landscape, we have already begun various efforts to these changes in the competitive environment. However, these measures may not be successful in growing or maintaining our market share in this increasingly fierce competitive environment, and we may lose business or transactions to our competitors, harming our business and results of operations.
(2) Increased consolidation, business alliance and cooperation in the financial services industry mean increased competition for us
There has been substantial consolidation and convergence among companies in the financial services industry. In particular, a number of large commercial banks and other broad-based large financial services groups have established or acquired broker-dealers or have consolidated with other financial institutions. These large financial services groups continue to develophave developed business linkage within their respective groups in order to provide
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comprehensive financial services to clients, offering a wide range of products, including loans, deposit-taking, insurance, brokerage, asset management and investment banking services within their group, which may enhance their competitive position compared with us. They also have the ability to supplement their investment banking and brokerage businesses with commercial banking and other financial services revenues in an effort to gain
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market share. In addition, the financial services industry has seen collaboration beyond the borders of businesses and industries, such as alliances between commercial banks and securities companies outside of framework of existing corporate groups and recent alliances with
non-financial
companies including emerging companies. Our competitiveness may be adversely affected if our competitors are able to expand their businesses and improve their profitability through such business alliances.
(3) Our global business continues to face a challenging environmentintense competition and may require further revisions to its business model
We continue to believe there are significant opportunities in the international markets, but there is also significant competition associated with such opportunities. In order to take advantage of these opportunities, we will have to compete successfully with financial services firms based in important
non-Japanese
markets, including the U.S., Europe and Asia. For example, as a means to bolsterDespite our international operations, we acquired certain Lehman Brothers operations in Europe, the Middle East and Asia in 2008.
After the acquisition, however, market structures have changed drastically due to the scaling back of market-related businesses by European financial institutions and the monetary easing policies by European central banks, resulting in decline in whole market liquidity and, despite our efforts facing competition, we recognized an impairment loss on goodwill attributable to previous overseas acquisitions of ¥81,372 million in the fiscal year ended March 31, 2019 in respect of these businesses.
2019. Since April 2019, we have been working to rebuild our global business platform, under which we aim to simplify our operating model, transform our business portfolio and pivot towards client businesses and growth areas, which we believe has been successful. In order to support further development of our international operations, Nomura continues to grow its business organically and inorganically such as acquisition of Greentech Capital Advisors in 2020. We will continue to review our entire business portfolio while looking at the competitive environment, and intend to implement our strategies in consideration of potential risks. However, the risk remains that we may be required to incur greater expenses than expected, or to commit greater financial, management and other resources to the strategies than expected, which could adversely affect our business and results of operations. Moreover, the assumptions and expectations upon which the strategies are based may not be correct, which could lead to us realizing fewer benefits than expected or could even harm our business and results of operations overall. Furthermore, to the extent we reduce compensation or headcount as part of this strategy, our ability to attract and retain the employees needed to successfully run our businesses could be adversely affected. We may also be unsuccessful in designing a streamlined management structure, which could harm our ability to properly control or supervise our many businesses across the world.
 
3.
Event risk may cause losses in our trading and investment assets as well as market and liquidity risk
Event risk refers to potential losses we may suffer through unpredictable events that cause large unexpected market price movements such as natural or
man-made
disasters, epidemics, acts of terrorism, armed conflicts or political instability, as well as adverse events specifically affecting our business activities or counterparties. These events include not only significant events such as the Great East Japan Earthquake in March 2011, the increasing tensions on Korean Peninsula following North Korean nuclear tests in 2017, sudden and unexpected developments in global trade or security policies such as tensions between the United States and China since 2018, and the
COVID-19
pandemic in 2020, and the invasion of Ukraine by the Russian Federation in 2022, but also more specifically the following types of events that could cause losses in our trading and investment assets:
 
sudden and significant reductions in credit ratings with regard to financial instruments held by our trading and investment businesses by major rating agencies,
 
sudden changes in trading, tax, accounting, regulatory requirements, laws and other related rules which may make our trading strategy obsolete, less competitive or no longer viable, or
 
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an unexpected failure in a corporate transaction in which we participate resulting in our not receiving the consideration we should have received, as well as bankruptcy, deliberate acts of fraud, and administrative penalty with respect to the issuers of our trading and investment assets.
 
4.
Environmental, Social and Governance (“ESG”) factors including climate change and broader associated policy changes in each jurisdiction could adversely affect our business
Increasing attention onto the management of Environmental, Social and Governance (“ESG”) factors in the business makes it imperative that we continue to develop policies and capabilities in these areas, and that we
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position ourselves in a positive light to interested stakeholders including our shareholders, clients and society at large. LackAmid rapidly changing circumstances around ESG, lack of sufficient focus on ESG considerations may not only impede our ability to build a sustainable business model, but may also increaseadversely affect our vulnerability to ESG relatedreputation, results of operations and financial condition. Reputational risks such as risksalso include the risk associated with climate change in the medium- to long-term.over-stating our credentials, or not delivering on commitments made (also known as “greenwashing”).
We consider climate change one of the most important global challenges facing society. The direct impact of climate change, and the resulting changes in the business environment could cause us to incur losses. Climate change relatedrisks are widely recognized to have two aspects – physical and transition risks. Physical risk refers to the risk of loss or damage driven by extreme weather events, such as hurricane, flood, drought, heatwave or frost, or from the longer term shifts in climate patterns and rising sea levels. Transition risk is broadly divided into two parts, namely Physical Risksthe risk associated with the transition to a
low-carbon
economy, and Transition Risks, either of which may materially and adversely affect us.
could result from changing government policies, technologies or changes to consumer demand.
 
·-
Physical Risk: The risk of physical damage or the impairment of the operating capability of the assets of Nomura Group, clients and business partners due to climate change. This includes the potential impact of extreme weather events, fire and sea level flooding.
 -
Transition Risk: The risks associated with accelerated policy and external changes associated with the move towards addressing climate risk. This includes changes in government policies, industrial policy or carbon based taxes, changes in social or other preferences and rapid changes in technologies which have the potential to leave stranded assets that are no longer viable.
Risks Relating to Our Businesses
 
5.
Our business may incur losses due to various factors in the conduct of its operations.
(1) We may incur significant losses from our trading and investment activities
We maintain trading and investment positions in fixed income, equity and other markets, both for proprietary purposes and for the purpose of facilitating our clients’ trades. Our positions consist of various types of assets, including securities, derivatives transactions with equity, interest rate, currency, credit and other underliers, as well as loans, and reverse repurchase agreements. Fluctuations in the markets where these assets are traded can adversely affect the value of our positions, in these assets, with downturns potentially negatively affecting long positions and upturns potentially negatively affecting short positions. Although we continue to mitigate these position risks with a variety of hedging techniques, we may also incur losses if the value of these assets fluctuatefluctuates or if the financial system is overly stressed and the markets move in a way we have not anticipated.
Our businesses have been, and may continue to be, affected by changes in market volatility levels. Certain of our trading businesses such as those engaged in trading and arbitrage opportunities depend on market volatility to generate revenues. Lower volatility may lead to a decrease in business opportunities which may affect the results of operations of these businesses. On the other hand, while higher volatility can increase trading volumes and spreads, it also increases risk as measured by
Value-at-Risk
(“VaR”) and may expose us to higher risks in connection with our market-making and proprietary businesses. Higher volatility can also cause us to reduce the outstanding positions or size of these businesses in order to avoid increasing our VaR.
For example, in March 2021, following the default of a U.S. prime brokerage client in respect of a margin call, we issued a
close-out
event notice to such client, and proceeded to wind down positions held as hedges for
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transactions with the client.client, leading us to recognize significant trading losses on the unwinding of the underlying positions and a provision for expected credit losses to reflect a shortfall in the value of securities pledged by the client as collateral against financing provided to it. We refer to this event and the losses caused as the “U.S. Prime Brokerage Event.” See Item 5.11. “
OperatingQuantitative and Financial Review—Executive Summary—U.S. Prime Brokerage EventQualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. Despite our efforts to wind down the relevant positions in a way that would limit losses to us and impacts on the market, volatility in the underlying securities led us to recognize a trading loss of ¥204.2 billion during the year ended March 31, 2021. We also recognized a provision for current expected credit losses ¥41.6 billion during the same period to reflect a shortfall in the value of securities pledged as collateral by the client against financing provided to the client, caused by a decrease in the value of such securities before we were able to liquidate them. The unwinding of the underlying positions was completed in the first quarter of the fiscal year ending March 31, 2022, and we expect to recognize additional losses of approximately ¥65 billion in the three months ending June 30, 2021 as a result. Despite our actions in response to the U.S. Prime Brokerage Event, including to improve our risk management activities, our business model necessarily involves significant trading activity, and we may record significant losses as a result of such trading activity again in the future.
Furthermore, we commit capital to take relatively large positions for underwriting or warehousing assets to facilitate certain capital market transactions. We also structure and take positions in pilot funds for developing financial investment products and invest seed money to set up and support financial investment products. We may incur significant losses from these positions in the event of significant market fluctuations.
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In addition, if we are the party providing collateral in a transaction, significant declines in the value of the collateral or a requirement to provide additional collateral due to a decline in our creditworthiness (by way of a lowered credit rating or otherwise) can increase our costs and reduce our profitability. On the other hand, if we are the party receiving collateral from our clients and counterparties, such declines may also affect our profitability due to decrease in client transactions. Following the U.S. Prime Brokerage Event, multiple ratings agencies downgraded their outlook with regards to our ratings, which, if not resolved positively, may lead to downgrades in our ratings. See also “
—Risks Relating to Our Financial Position—Liquidity risk could impair our ability to fund operations and jeopardize our financial condition—(3) Lowering of our credit ratings could impact our funding
”.
(2) Holding large and concentrated positions of securities and other assets may expose us to large losses
We regularly hold large and concentrated positions of certain securities in our businesses such as market-making, block trading, underwriting, asset securitization, prime brokerage, acquiring newly-issued convertible debt securities through third-party allotment or providing business solutions to meet clients’ needs. We have committed substantial amounts of capital to these businesses. This often requires us to take large positions in the securities of a particular issuer or issuers in a particular industry, country or region. Fluctuations in the prices of these securities can significantly affect the prices at which we are able to liquidate them when needed, resulting in the recording of significant trading losses, such as occurred in connection with the U.S. Prime Brokerage Event. See Item 11. “
I
tem 5. OperatingQuantitative and Financial Review—Executive Summary—U.S. Prime Brokerage EventQualitative Disclosures about Market, Credit and Other Risk
”. for further information on the nature of this event. We generally have higher exposure to those issuers engaged in financial services businesses, including commercial banks, broker-dealers, clearing houses, exchanges and investment companies. There may also be cases where we hold relatively large amounts of securities by issuers in particular countries or regions due to the business we conduct with our clients or our counterparties. In addition, we may incur losses due to market fluctuations on asset-backed securities such as residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”).
(3) Our hedging strategies may not prevent losses
We use a variety of financial instruments and strategies to hedge our exposure to financial risks arising from the financial instruments we enter into for proprietary purposes or for our clients. If our hedging strategies are not effective, we may incur losses. We base many of our hedging strategies on historical trading patterns and correlations. For example, if we hold an asset, we may hedge this position by taking a position in another asset
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which has, historically, moved in a direction that would offset a change in value of the former asset. However, historical trading patterns and correlations may not continue, as seen in the case of past financial crises, and these hedging strategies may not be fully effective in mitigating our risk exposure because we are exposed to all types of risk in a variety of market environments. Moreover, not all hedging strategies are effective against all kinds of risk, and certain strategies may, if the risk is not otherwise appropriately managed, increase our risk. For example, many of the transactions leading to the U.S. Prime Brokerage Event entailed providing the client with “total return swap” derivative exposure to certain equities. See Item 5.11. “
OperatingQuantitative and Financial Review—Executive Summary—U.S. Prime Brokerage EventQualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. In order to hedge the “total return” payments we were obligated to make to the client, we held cash positions in the underlying equities. However, this specific hedging strategy was not intended to hedge the risk of a default by the client and the potential need to liquidate the underlying positions in a volatile market environment. When such risk was realized, our hedging strategy of holding the underlying securities meant that we were exposed to such market fluctuations, contributing to the losses we recognized.
(4) Our risk management policies and procedures may not be fully effective in managing risks
Our policies and procedures to identify, monitor and manage risks may not be fully effective. Although some of our methods of managing risk are based upon observed historical market data, the future movements in the financial markets may not be the same as was observed in the past. As a result, we may suffer large losses through unexpected future risk exposures. Other risk management methods that we use also rely on our
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evaluation of information regarding markets, clients or other matters, which is publicly available or otherwise accessible by us. This information may not be accurate, complete,
up-to-date
or properly evaluated, and we may be unable to properly assess our risks, and thereby suffer large losses. Furthermore, certain factors, such as market volatility, may render our risk evaluation model unsuitable for a new market environment. In such event, we may become unable to evaluate or otherwise manage our risks adequately. Moreover, regardless of how well policies and procedures are designed, they must be properly implemented and followed in order to be effective, which may not always occur despite our diligent efforts. Further, potential weaknesses in our organisationorganization structures and governance frameworks may lead to misunderstanding over roles and responsibilities.
For example, with respect to the U.S. Prime Brokerage Event, we suffered significant losses through exposures to the client’s counterparty risk and market risks relating to the securities underlying the prime brokerage transactions with the client. We have reviewed and are in the process of completing a number of actions to comprehensively review, revise and strengthen our risk management policies and procedures and the implementation thereof. See Item 4.11. “
Business—Management StrategiesQuantitative and Challenges—Urgent Priority Issues—Risk ManagementQualitative Disclosures about Market, Credit and Compliance, etc.Other Risk
” for further information on the nature and status of these review procedures. Such actions remain ongoing, however, and when completed, may not be sufficient to prevent similar exposure to such risks in the future, including to identify and rectify potential shortcomings, whether within the same business or among our many other business units, impairing the ability of such policies and procedures to prevent future losses.
(5) Market risk may increase other risks that we face
In addition to the potentially adverse effects on our businesses described above, market risk could exacerbate other risks that we face. For example, the risks inherent in financial instruments developed through financial engineering and innovation may be increased by market risk.
Also, if we incur substantial trading losses caused by our exposure to market risk, our need for liquidity could rise sharply while our access to cash may be impaired as a result of market perception of our credit risk.
Furthermore, in a downturn in the market overall or for specific securities, our clients and counterparties could incur substantial losses or experience other adverse events of their own, thereby weakening their financial condition and, as a result, increasing the credit risk they pose to us, such as occurred as part of the U.S. Prime Brokerage Event.
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(6) Our brokerage and asset management revenues may decline
A market downturn could result in a decline in the revenues generated by our brokerage business because of a decline in the volume and value of securities that we broker for our clients. Also, within our asset management and investment management business, in most cases, we charge fees and commissions for managing our clients’ portfolios that are based on the market value of their portfolios. A market downturn that reduces the market value of our clients’ portfolios may increase the amount of withdrawals or reduce the amount of new investments in these portfolios, and would reduce the revenue we receive from these businesses. Also, any changes in our clients’ investment preference on their asset portfolios, including shifting investment assets to stable assets such as deposits and/or passive funds, which bring us relatively low commission rates,fee revenue, may reduce our revenue as well.
(7) Our investment banking revenues may decline
Changes in financial or economic conditions would likely affect the number and size of transactions for which we provide securities underwriting, financial advisory and other investment banking services. Our investment banking revenues, which include fees from these services, are directly related to the number and size of the transactions in which we participate and would therefore decrease if there are financial and market changes unfavorable to our investment banking business and our clients.
For example, net revenue from our investment banking activities declined during the year ended March 31, 2020 compared to the year ended March 31, 2019 primarily due to a market downturn from February 2020 as a
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result of the
COVID-19
pandemic. While our investment banking net revenues have increased during the yearyears ended March 31, 2021 compared to the year ended March 31, 2020,and 2022, M&A activities and other investment banking activities are expected to continue to be negatively impacted by the pandemic for the foreseeable future.
(8) Our electronic trading business revenues may decline
Electronic trading is essential for our business in order to execute trades faster with fewer resources. Utilizing these systems allows us to provide an efficient execution platform and
on-line
content and tools to our clients via exchanges or other automated trading facilities. Revenue from our electronic trading, which includes trading commissions and
bid-offer
spreads is directly correlated with the number and size of the transactions in which we participate. Competition in electronic trading is intense and the introduction of highly discounted or
no-commission
trades at competitors has and will continue to exert pressure on our electronic and traditional trading revenue. Moreover, such revenue would decrease if there are financial market or economic changes that would cause our clients to trade less frequently or in a smaller amounts. Even if trade volumes increase due to the convenience of electronic trading, this may not be sufficient to offset margin erosion in our execution business, leading to a potential decline in revenue generated from this business. We continue to invest in developing technologies to provide an efficient trading platform;platform, however, we may fail to maximize returns on these investments due to this increased pressure on lowering margins.
 
6.
We may be exposed to losses when third parties do not perform their obligations to us
Our counterparties are from time to time indebted or otherwise owe certain obligations (such as with regards to the posting of collateral) to us as a result of transactions or contracts, including loans, commitments to lend, other contingent liabilities and derivative transactions. We may incur material losses when our counterparties default or fail to perform on their obligations to us due to their filing for bankruptcy, a deterioration in their creditworthiness, lack of liquidity, operational failure, an economic or political event, repudiation of the transaction or for other reasons. The U.S. Prime Brokerage Event, during which a U.S. prime brokerage client defaulted on obligations to us to post additional margin in respect of trading activities as well as to repay amounts lent against collateral held by us, is an example. See Item 5.11. “
OperatingQuantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. Although we establish and maintain allowances for credit losses, such allowances reflect management judgments and assumptions based on information available to us, which may provide incorrect or incomplete, and these judgments and assumptions may prove to be incorrect, potentially significantly so.
Credit risk may also arise from:
holding securities issued by third parties, or
the execution of securities, futures, currency or derivative transactions that fail to settle at the required time due to
non-delivery
by the counterparty of Nomura, such as financial institutions and hedge funds, or to systems failure by clearing agents, exchanges, clearing houses or other financial infrastructure.
Issues related to third party credit risk may include the following:
(1) Defaults by a large financial institution could adversely affect the financial markets generally and us specifically
The commercial soundness of many financial institutions is closely interrelated as a result of credit, trading, clearing or other relationships among the institutions. As a result, concern about the creditworthiness of or a default by, a certain financial institution could lead to significant liquidity problems or losses in, or defaults by, other financial institutions. This may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which we interact on a daily basis. Actual defaults, increases in perceived default risk and other similar events could arise in the future and could have an adverse effect on the financial markets and on us. Our funding operations may be adversely affected if major financial institutions, Japanese or otherwise, fail or experience severe liquidity or solvency problems.
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(2) There can be no assurance as to the accuracy of the information about our credit risk, or the sufficiency of the collateral we use in managing it
We regularly review our credit exposure to specific clients or counterparties and to specific countries and regions that we believe may present credit concerns. Default risk, however, may arise from events or circumstances that we do not detect, such as account-rigging and fraud. We may also fail to receive full information with respect to the risks of a counterparty, or to accurately manage and assess such information internally. For example, our credit risk assessments with respect to the client whose default led to the U.S. Prime Brokerage Event did not reflect the full extent of the client’s relevant trading activity. In addition, in cases where we have extended credit against collateral, we may fall into a deficiency in value in the collateral if sudden declines in market values reduce the value of our collateral, as was the case with loans extended to the prime brokerage client leading in part to the U.S. Prime Brokerage Event. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event.
(3) Our clients and counterparties may be unable to perform their obligations to us as a result of political or economic conditions
Country, regional and political risks are components of credit risk, as well as market risk. Political or economic pressures in a country or region, including those arising from local market disruptions or currency crises, may adversely affect the ability of clients or counterparties located in that country or region to obtain credit or foreign exchange, and therefore to perform their obligations owed to us.
7.
We are a holding company and depend on payments from our subsidiaries
We are a holding company and heavily depend on dividends, distributions and other payments from our subsidiaries to make payments on our obligations. Regulatory and other legal restrictions, such as those under the Companies Act, may limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, many of our subsidiaries, including our broker-dealer subsidiaries, are subject to laws and regulations, including regulatory capital requirements, that authorize regulatory bodies to block or reduce the flow of funds to the parent holding company, or that prohibit such transfers altogether in certain circumstances. For example, Nomura Securities Co., Ltd. (“NSC”), Nomura Securities International, Inc., Nomura International plc and Nomura International (Hong Kong) Limited, our main broker-dealer subsidiaries, are subject to regulatory capital requirements and changes in such regulatory capital requirements and the required level could limit the transfer of funds to us. While we monitor and manage the transfer of funds among Nomura Group on the basis of the relevant laws and regulations on a daily basis, these laws and regulations may hinder our ability to access funds needed to make payments on our obligations.
8.
We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity securities and
non-trading
debt securities
We hold substantial investments in equity securities including private equity investments and
non-trading
debt securities. Under U.S. GAAP, depending on market conditions, we may recognize significant unrealized gains or losses on our investments in equity securities and debt securities, which could have an adverse impact on our financial condition and results of operations. For example, in the fiscal year ended March 31, 2020, we recognized a loss of ¥16.4 billion related to our investment in American Century Investments and ¥16.6 billion on our investments in equity securities resulting from market declines arising from the
COVID-19
pandemic. Depending on the market conditions, we may also not be able to dispose of these equity securities and debt securities when we would like to do so, as quickly as we may wish or at the desired price.
9.
We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer
Cash reserve funds, such as money market funds and money reserve funds are categorized as low risk financial products. As a result of a sudden rise in interest rates, such cash reserve funds may fall below par value
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due to losses resulting from price decreases of debt securities in the portfolio, defaults of debt securities in the portfolio or charges of negative interest. If we determine that a stable return cannot be achieved from the investment performance of cash reserve funds, we may accelerate the redemption of, or impose a deposit limit on, such cash reserve funds.
In addition, debt securities that we offer may default or experience delays in the payment of interest and/or principal.
These events above may result in the loss of client confidence and lead to an outflow of client assets from our custody or preclude us from increasing such client assets.
·
Risks Relating to Our Financial Position
10.
We may have to recognize impairment losses with regard to the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets
We have purchased all or a part of the equity interests in, or operations from, certain other companies in order to pursue our business expansion, and expect to continue to do so when and as we deem appropriate. We account for certain of those and similar purchases and acquisitions as a business combination under U.S. GAAP by allocating our acquisition costs to the assets acquired and liabilities assumed and recognizing the remaining amount as goodwill. On April 1, 2020, Nomura acquired 100% of Greentech Capital, LLC (“Greentech”) and goodwill of ¥12,480 million is reported on our consolidated balance sheet. We also possess tangible and intangible assets other than those stated above.
We may have to recognize impairment losses, as well as other losses associated with subsequent transactions, with regard to the amount of goodwill, tangible and intangible assets and, recognized on our consolidated group balance sheet which may adversely affect our financial condition and results of operations. For example, during the year ended March 31, 2019, we recognized an impairment loss on goodwill in our Wholesale segment attributable to previous overseas acquisitions of ¥81,372 million.
11.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
Liquidity, or having ready access to cash, is essential to our business. We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of our creditworthiness or deterioration in market conditions. In addition to maintaining a readily available cash position, we seek to secure ample liquidity through repurchase agreements and securities lending transactions, long-term borrowings and the issuance of long-term debt securities, diversification of our short-term funding sources such as commercial paper, and by holding a portfolio of highly liquid assets. We bear the risk that we may lose liquidity under certain circumstances, including the following:
(1) We may be unable to access unsecured or secured funding
We continuously access unsecured funding from issuance of securities in the short-term credit markets and debt capital markets as well as bank borrowings to finance our
day-to-day
operations, including refinancing. We also enter into repurchase agreements and securities lending transactions to raise secured funding for our trading businesses. An inability to access unsecured or secured funding or funding at significantly higher cost than normal levels could have a substantial negative effect on our liquidity. For example, lenders could refuse to extend the credit necessary for us to conduct our business based on their assessment of our long-term or short-term financial prospects if:
We incur large trading losses,
The level of our business activity decreases due to a market downturn,
Regulatory authorities take significant action against us, or
Our credit rating is downgraded.
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In addition to the above, our ability to borrow in the debt capital markets could also be adversely impacted by factors that are not specific to us, such as increases in market interest rates, reductions in banks’ lending capacity, a severe disruption of the financial and credit markets, negative views about the general prospects for the investment banking, brokerage or financial services industries, or negative market perceptions of Japan’s financial soundness.
(2) We may be unable to sell assets
If we are unable to raise funds or if our liquidity declines significantly, we will need to liquidate assets or take other actions in order to meet our maturing liabilities. In volatile or uncertain market environments, overall market liquidity may decline. In a time of reduced market liquidity, we may be unable to sell some of our assets, or we may have to sell at depressed prices, which could adversely affect our results of operations and financial condition. Our ability to sell assets may also be adversely impacted by other market participants seeking to sell similar assets into the market at the same time.
(3) Lowering of our credit ratings could impact our funding
Our funding depends significantly on our credit ratings. Rating agencies may reduce or withdraw their ratings or place us on “credit watch” with negative implications. For example, following the U.S. Prime Brokerage Event, in March 2021, Fitch Ratings, Inc. placed our credit ratings on negative watch and Moody’s Investors Service, Inc. changed the outlook on our credit ratings to negative, which may lead either agency to downgrade our credit ratings in the future. See Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
” for further information on the nature of this event. Future downgrades could increase our funding costs and limit our funding. This, in turn, could adversely affect our result of operations and our financial condition. In addition, other factors which are not specific to us may impact our funding, such as negative market perceptions of Japan’s financial soundness.
12.
Equity investments in affiliates and other investees accounted for under the equity method in our consolidated financial statements may decline significantly over a period of time and result in us incurring impairment losses
We have affiliates and investees accounted for under the equity method in our consolidated financial statements and whose shares are publicly traded. If there is a decline in the market price, of the shares we hold in such affiliates over a period of time, and we determine that the decline is other-than-temporary, then we recognize an impairment loss for the applicable fiscal period which may have an adverse effect on our financial condition and results of operations. For example, we recognized an impairment loss of ¥47,661 million against its investment in Nomura Real Estate Holdings, Inc. during the year ended March 31, 2021.
·
Risks Relating to Legal, Compliance and Other Operational Issues
13.
Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our reputation in the market and our relationships with clients could be harmed
We always face the risk that our employees, directors or officers, or any third party, could engage in misconduct that may adversely affect our business. Misconduct by an employee, director or officer includes conduct such as entering into transactions in excess of authorized limits, acceptance of risks that exceed our limits, or concealment of unauthorized or unsuccessful activities. The misconduct could also involve the improper use or disclosure of
non-public
information relating to us or our clients, such as insider trading improper transmission of such information and the recommendation of trades based on such information, as well as other crimes, which could result in regulatory sanctions, legal liability and serious reputational or financial damage to us.
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For example, on March 5, 2019, a researcher at Nomura Research Institute, Ltd. (“NRI”), our equity-method affiliate, revealed information that there was a high possibility that the standard for designating the top market of the Tokyo Stock Exchange (the “TSE”) would fall to ¥25 billion, which had been under review at the TSE, to a chief strategist (the “NSC Strategist”) in the research division of NSC. The researcher at NRI was a member of the Advisory Group to Review the TSE Equity Market Structure and received this information in such capacity. On the same day and the next day, the NSC Strategist communicated the information to certain people including members of Japanese stock sales team of NSC and Nomura International (Hong Kong) Limited, some of whom provided the information to their institutional investor clients. Although the provision of the information did not represent a violation of law, they were inappropriate conducts and impaired the implicit trust placed in us and our employees by other market participants. Following a special internal investigation conducted by external experts, on May 24, 2019, we announced a remediation plan and the reduction of compensation of certain of our executives and those of NSC. On May 28, 2019, the FSA issued a business improvement order to us and to NSC, requiring us to clarify responsibility for this incident, develop and submit a detailed improvement plan, and report periodically on the implementation and effectiveness of measures for improvement, and on August 28, 2019, a fine of ¥10 million was imposed by Tokyo Stock Exchange, Inc. as a penalty.
Third parties may also engage in fraudulent activities, including devising a fraudulent scheme to induce our investment, loans, guarantee or any other form of financial commitment, both direct and indirect. Because of the broad range of businesses that we engage in and the large number of third parties with whom we deal in our
day-to-day
business operations, such fraud or any other misconduct may be difficult to prevent or detect, and our future reputation and financial condition could be adversely affected, which could result in serious reputational or financial damage to us in the future.
Measures we have implemented or additional measures that may be implemented in the future may not be effective in preventing or managing the risk of misconduct or fraud in all cases, and we may not always be able to detect or deter misconduct or fraud by an employee, director, officers, or third parties. If any administrative or judicial sanction is issued against us as a result of such fraudulent or misconduct, we may lose business opportunities, and our future revenue and results of operations may be materially and adversely affected, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions.
14.
A failure to identify and appropriately address conflicts of interest could adversely affect our business
We are a global financial institution that provides a wide range of products and services to a diverse group of clients, including individuals, corporations, other financial institutions and governmental institutions. As such, we face potential conflicts of interest in the ordinary course of our business. Conflicts of interests can arise when our services to a particular client conflict or compete, or are perceived to conflict or compete, with our own interests. In addition, where
non-public
information is not appropriately restricted or shared within the firm, conflicts of interest can also arise where a transaction within the Nomura Group and or a transaction with another client conflict or compete, or is perceived to conflict or compete, with a transaction with a particular client. A failure, or a perceived failure, to identify, disclose and appropriately address such conflicts could adversely affect our reputation, the willingness of current or potential clients to do business with us and our revenues and results of operations. In addition, conflicts of interest could give rise to regulatory actions or litigation.
15.
Our business is subject to substantial legal, regulatory and reputational risks
Substantial legal liability or a significant regulatory action against us could have a material adverse effect on our business, financial condition or results of operations, or cause reputational harm to us. Also, material changes in regulations applicable to us or to the markets in which we operate could adversely affect our business. See Note 20
“Commitments, contingencies and guarantees”
in our consolidated financial statements included in this annual report for further information regarding the significant investigations, lawsuits and other legal proceedings that we are currently facing.
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We face significant legal risks in our businesses. These risks include liability under securities or other laws in connection with securities underwriting and offering transactions, liability arising from the purchase or sale of any securities or other financial products, disputes over the terms and conditions of complex trading arrangements or the validity of contracts for our transactions, disputes with our business alliance partners and legal claims concerning our other businesses.
(1) Legal liability may occur due to events such as market downturn and could adversely affect our business, financial condition and results of operations
During a prolonged market downturn or upon the occurrence of an event that adversely affects the market, we would expect claims against us to increase. We may also face significant litigation. The cost of defending such litigation may be substantial and our involvement in litigation may damage our reputation. For example, during the fiscal year ended March 2022, approximately ¥62.0 billion related to legacy transactions in the U.S. from before the global financial crisis (2007 – 2008) was recognized including legal expenses as well as certain transactions intended to mitigate future losses. In addition, even legal transactions might be subject to adverse public reaction according to the particular details of such transactions. These risks may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time.
(2) Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses
The financial services industry is subject to extensive regulation. We are subject to increasing regulation by governmental and self-regulatory organizations in Japan and in virtually all other jurisdictions in which we operate, and such governmental and regulatory scrutiny may increase as our operations expand or as laws change. In addition, while regulatory complexities increase, possibilities of extra-territorial application of a regulation in one jurisdiction to business activities outside of such jurisdiction may also increase. These regulations are broadly designed to ensure the stability of financial systems and the integrity of the financial markets and financial institutions, and to protect clients and other third parties who deal with us, and often limit our activities and/or affect our profitability, through net capital, client protection and market conduct requirements. In addition, on top of traditional finance-related legislation, the scope of laws and regulations applying to, and/or impacting on, our operations may become wider depending on the situation of the wider international political and economic environment or policy approaches taken by governmental authorities in respect of regulatory application or law enforcement. In particular, the number of investigations and proceedings against the financial services industry by governmental and self-regulatory organizations has increased substantially and the consequences of such investigations and proceedings have become more severe in recent years, and we are subject to face the risk of such investigations and proceedings. For example, the U.S. Department of Justice (the “DOJ”) conducted an investigation regarding residential mortgage-backed securities securitized by some of our U.S. subsidiaries prior to 2009. On October 15, 2018, the U.S. subsidiaries settled the investigation with the DOJ and agreed to pay $480 million. We may not always be able to prevent such violations, and we could be fined, prohibited from engaging in some of our business activities, ordered to improve our internal governance procedures or be subject to revocation of our license to conduct business. Our reputation could also suffer from the adverse publicity that any administrative or judicial sanction against us may create, which may negatively affect our business opportunities and ability to secure human resources. As a result of any such sanction, we may lose business opportunities for a period of time, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions. In addition, certain market participants may refrain from investing in or entering into transactions with us if we engage in business activities in regions subject to international sanctions, even if our activities do not constitute violations of sanctions laws and regulations.
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(3) Tightening of regulations applicable to the financial system and financial industry could adversely affect our business, financial condition and results of operations
If regulations that apply to our businesses are introduced, modified or removed, we could be adversely affected directly or through resulting changes in market conditions. The impact of such developments could make it economically unreasonable for us to continue to conduct all or certain of our businesses, or could cause us to incur significant costs to adjust to such changes.
Furthermore, the exact details of the implementation of proposals for regulatory change and its impact on us will depend on the final regulations as they become ultimately adopted by various governmental agencies and oversight boards. See Item 4.B “
Business Overview
—
Regulation
” in this annual report for more information about such regulations.
New regulations or revisions to existing regulations relating to accounting standards, regulatory capital adequacy ratios, liquidity ratios and leverage ratios applicable to us could also have a material adverse effect on our business, financial condition and results of operations. Such new regulations or revisions to existing regulations include the
so-called
Basel III package formulated by the Basel Committee on Banking Supervision (“Basel Committee”) and the finalized Basel III reforms published in December 2017. Furthermore, in October 2012, the Basel Committee developed and published a set of principles on the assessment methodology and higher loss absorbency requirements for domestic systemically important banks
(“D-SIBs”),
and, in December 2015, the FSA identified us as a
D-SIB
and imposed a surcharge of 0.5% on our required capital ratio after March 2016 with
3-year
transitional arrangement. In addition, FSB published the final standard requiring global systemically important banks
(“G-SIBs”)
to maintain a certain level of total loss-absorbing capacity (“TLAC”) upon their failure in November 2015. Under the FSA’s policy implementing the TLAC framework in Japan as updated in April 2018, the TLAC requirements in Japan apply not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. Based on the revised policy, in March 2019, the FSA published the notices and guidelines of TLAC regulations in Japan. According to these notices and guidelines, Nomura is subject to the TLAC requirements in Japan from March 31, 2021 although Nomura is not identified as a
G-SIB
as of the date of this annual report. These changes in regulations may increase our funding costs or require us to liquidate financial instruments and other assets, raise additional capital or otherwise restrict our business activities in a manner that could adversely affect our operating or financing activities or the interests of our shareholders.
(4) Deferred tax assets may be impacted due to a change in business condition or in laws and regulations, resulting in an adverse effect on our operating results and financial condition
We recognize deferred tax assets in our consolidated balance sheets as a possible benefit of tax relief in the future. If we experience or forecast future operating losses, if tax laws or enacted tax rates in the relevant tax jurisdictions in which we operate change, or if there is a change in accounting standards in the future, we may reduce the deferred tax assets recognized in our consolidated balance sheets. As a result, it could adversely affect our financial condition and results of operations. See Note 15
“Income taxes”
in our consolidated financial statements included in this annual report for further information regarding the deferred tax assets that we currently recognize.
(5) Defects in our anti-money laundering and counter-terrorism financing measures could have serious consequences such as, administrative penalties or punitive fines.
In recent years, financial crimes have become more sophisticated, complex, and diverse. As the world faces growing threats of war, terrorism, and cyberattacks, it is highly important to counter the financing of crimes and terrorism. Financial institutions around the world are expected to take strong measures to combat money laundering and terrorist financing. Despite our efforts to improve our anti-money laundering and counter-terrorism financing measures, which we have implemented consistently across Nomura Group in accordance
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with the Recommendations provided by the Financial Action Task Force (FATF) and the FSA’s “Guidelines on Anti-Money Laundering and Terrorist Financing”, there remains a risk that such measures will not be fully effective in preventing or detecting all violations in a timely manner. As a consequence, we could be subject to administrative penalties or punitive fines. See “
15.Our business is subject to substantial legal, regulatory and reputational risks—(2) Extensive regulation of our businesses limits our activities and may subject us to significant penalties and losses
” for further information regarding regulatory actions and other legal proceedings as well as consequences thereof.
16.
Unauthorized disclosure or misuse of personal information held by us may adversely affect our business
We keep and manage personal information obtained from clients in connection with our business. In recent years, there have been many reported cases of personal information and records in the possession of corporations and institutions being improperly accessed disclosed or misused.
Although we exercise care to protect the confidentiality of personal information and have in place policies and procedures designed to safeguard such information and ensure that it is used in compliance with applicable laws, rules and regulations, were any unauthorized disclosure or misuse of personal information to occur, our business could be adversely affected. For example, we could be subject to government actions such as administrative actions or penalties in case there is any violation of applicable personal data protection laws, rules and regulations or be subject to complaints and lawsuits for damages from clients if they are adversely affected due to the unauthorized disclosure or misuse of their personal information (including leakage of such information by an external service provider). In addition, we could incur additional expenses associated with changing our security systems, either voluntarily or in response to administrative guidance or other regulatory initiatives. Moreover, restrictions on our ability to use personal information collected from clients may adversely affect our existing businesses or to develop new ones. Furthermore, any damage to our reputation caused by such unauthorized disclosure or misuse could lead to a decline in new clients and/or a loss of existing clients, as well as to increased costs and expenses incurred for public relations campaigns designed to prevent or mitigate damage to our corporate or brand image or reputation.
17.
System failure, the information leakage and the cost of maintaining sufficient cybersecurity could adversely affect our business
Our businesses rely on secure processing, storage, transmission and reception of personal, confidential and proprietary information on our systems. We have been in the past and may again become the target of attempted unauthorized access, computer viruses or malware, and other cyber-attacks designed to access and obtain information on our systems or to disrupt and cause other damage to our services. For example, in June 2018, one of our foreign subsidiaries experienced a spear phishing incident that resulted in the unauthorized access to the firm’s desktop network, requiring us to immediately launch an internal investigation to assess and remediate the incident, notify the appropriate authorities of its occurrence and communicate with clients and other individuals whose data may have been impacted. In response to the
COVID-19
pandemic, many of our employees now work remotely using networking or other technologies, and these technologies have become even more critical to our business. The implementation of remote work arrangements may also increase the possibility that we will be subject to cyber-attacks and other information security breaches. Although these threats may originate from human error or technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or third parties, including foreign
non-state
actors and extremist parties. Additionally, we could also be adversely impacted if any of the third-party vendors, exchanges, clearing houses or other financial institutions to whom we are interconnected are subject to cyber-attacks or other informational security breaches. Such events could cause interruptions to our systems, reputational damage, client dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect our financial condition and operations.
While we continue to devote significant resources to monitor and update our systems and implement information security measures to protect our systems, there can be no assurance that any controls and procedures
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we have in place will be sufficient to protect us from future security breaches. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modify or enhance our systems in the future.
18.
Our business may be adversely affected if we are unable to hire, retain and develop qualified personnel
Nomura believe that our people are our greatest asset and we implement various talent management initiatives in a comprehensive manner. Any failure to hire, retain, and develop qualified personnel may materially and adversely affect our business, financial condition and results of operations. There is significant competition for such personnel, based on factors such as compensation, the working environment, training and benefits available to employees and our reputation as an employer. Spending on our human resource initiatives may harm our profitability. Moreover, developing our human resources and instilling in them a uniform corporate culture is a continuous, intensive process, and we may not be successful in doing so.
·
Risks Related to Holding or Trading of our Shares and ADSs
19.
Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of the Company’s common stock at a particular price on any particular trading day, or at all
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. For the purpose of protecting investors from excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.
20.
Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are subject to transfer, voting and other restrictions
The Company’s Articles of Incorporation, as permitted under the Companies Act, provide that 100 shares of the Company’s stock constitute one “unit.” The Companies Act imposes significant restrictions and limitations on holdings of shares that constitute less than a whole unit. Holders of shares constituting less than one unit do not have the right to vote or any other rights relating to voting. Under the unit share system, any holders of shares constituting less than a unit may at any time request the Company to purchase their shares. Also, holders of shares constituting less than a unit may request the Company to sell them such number of shares that the Company may have as may be necessary to raise such holder’s share ownership to a whole unit. Shares constituting less than a unit are transferable under the Companies Act, but may not be traded on any Japanese stock exchange.
21.
As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to exercise these rights
The rights of shareholders under Japanese law to take actions including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the company’s accounting books and records and exercising appraisal rights are available only to holders of record. Because the depositary, through its custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying
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your ADSs as instructed by you and will pay you the dividends and distributions collected from the Company. However, in your capacity as an ADS holder, you will not be able to bring a derivative action, examine the Company’s accounting books or records or exercise appraisal rights except through the depositary.
22.
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions
The Companies Act and the Company’s Articles of Incorporation and Regulations of the Board of Directors govern the Company’s corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties and shareholders’ rights may be different from those that would apply to a
non-Japanese
company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of other jurisdictions, including jurisdictions within the U.S. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.
23.
The Company’s shareholders of record on a record date may not receive the dividend they anticipate
The customary dividend payout practice of publicly listed companies in Japan may significantly differ from that widely followed or otherwise deemed necessary or fair in foreign markets. The Company’s dividend payout practice is no exception. The Company ultimately determines whether the Company will make any dividend payment to shareholders of record as of a record date and such determination is made only after such record date. For the foregoing reasons, the Company’s shareholders of record as of a record date may not receive the dividends they anticipate. Furthermore, the Company does not announce any dividend forecasts.
24.
It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or the Company’s directors or executive officers, or to enforce against the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S.
The Company is a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of the Company’s directors and executive officers reside in Japan. Many of the Company’s assets and the assets of these persons are located in Japan and elsewhere outside the U.S. It may not be possible, therefore, for U.S. investors to obtain personal jurisdiction over the Company or these persons within the U.S. or to enforce against the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S. The Company believes that there is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of U.S. court judgments, of liabilities predicated solely upon the federal securities laws of the U.S.
·
Special Note Regarding Forward-looking Statements
This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business, our industry and capital markets around the world. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “plan” or similar words. These statements discuss future expectations, identify strategies, contain projections of our results of operations or financial condition, or state other forward-looking information.
Known and unknown risks including the
COVID-19
pandemic, uncertainties and other factors may cause our actual results, performance, achievements or financial position to differ materially from any future results, performance, achievements or financial position expressed or implied by any forward-looking statement contained in this annual report. Such risks, uncertainties and other factors are set forth in this Item 3.D and elsewhere in this annual report.
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Item 4. Information on the Company
A. History and Development of the Company.
The Company (previously known as The Nomura Securities Co., Ltd.) was incorporated in Japan on December 25, 1925 under the Commercial Code of Japan when the securities division of The Osaka Nomura Bank, Ltd. became a separate entity specializing in the trading and distribution of debt securities in Japan. The Company was the first Japanese securities company to develop its business internationally with the opening in 1927 of a representative office in New York. In Japan, we broadened the scope of our business when we began trading in equity securities in 1938 and when we organized the first investment trust in Japan in 1941.
We have played a leading role in most major developments in the Japanese securities market. These developments include the resumption of the investment trust business in the 1950s, the introduction of public stock offerings by Japanese companies in the 1960s, the development of the
over-the-counter
bond market in the 1970s, the introduction of new types of investment trusts such as the medium-term Japanese government bond investment trust in the 1980s, and the growth of the corporate bond and initial public offering markets in the 1990s.
Our expansion overseas accelerated in 1967, when the Company acquired a controlling interest in Nomura International (Hong Kong) Limited for the purpose of conducting broker-dealer activities in the Hong Kong capital markets. Subsequently, we established a number of other overseas subsidiaries, including Nomura Securities International, Inc. in the U.S. in 1969 as a broker-dealer and Nomura International Limited, now Nomura International plc, in the U.K. in 1981, which acts as an underwriter and a broker, as well as other overseas affiliates, branches and representative offices.
On October 1, 2001, we adopted a holding company structure. In connection with this reorganization, the Company changed its name from “The Nomura Securities Co., Ltd.” to “Nomura Holdings, Inc.” The Company continues to be listed on the Tokyo Stock Exchange and other stock exchanges. A wholly-owned subsidiary of the Company assumed the Company’s securities businesses and was named “Nomura Securities Co., Ltd.”
The Company has proactively engaged in establishing a governance framework to ensure transparency in the Company’s management. Among other endeavors, when the Company adopted a holding company structure and was listed on the New York Stock Exchange (“NYSE”) in 2001, the Company installed Outside Directors. In addition, in June 2003, the Company further strengthened and increased the transparency of the Company’s oversight functions by adopting the Company with Three Board Committees (previously known as the Committee System), a system in which management oversight and business execution functions are clearly separated.
In 2008, to pave the way for future growth, the Company acquired and integrated the operations of Lehman Brothers in Asia Pacific, Europe and the Middle East.
The address of the Company’s registered office is
13-1,
Nihonbashi
1-chome,
Chuo-ku,
Tokyo
103-8645,
Japan, telephone number:
+81-3-5255-1000.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. Our corporate website is https://www.nomuraholdings.com.
B. Business Overview.
Overview
We are one of the leading financial services groups in Japan and we operate offices in countries and regions worldwide including Japan, the U.S., the U.K., Singapore and Hong Kong Special Administrative Region (“Hong Kong”) through our subsidiaries.
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Our clients include individuals, corporations, financial institutions, governments and governmental agencies.
Our business consists of Retail, Investment Management, and Wholesale, which are described in further detail below. See also Note 21 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Corporate Goals and Principles
① Fundamental Management Policy
In Fundamental Management Policy formulated by the Board of Directors, our company has set the following Management Vision and Basic Vision of Group Management.
Fundamental Management Policy of Nomura Holdings, Inc.
(Management Vision)
Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in the firm and increasing satisfaction of stakeholders, including that of shareholders and clients.
As a global investment bank, the Company will provide high value-added solutions to clients globally, and recognizing its wider social responsibility, the Company will continue to contribute to the economic growth and development of society.
To enhance its corporate value, the Company utilizes return on equity (“ROE”) as a management indicator and will strive for sustainable business transformation.
(Basic Vision of Group Management)
(1) Nomura Group will establish its modernized growth model by itself through realizing expansion of its business in new domains. Nomura Group will also establish earning structure not subject to market condition with proper cost control and risk management.
(2) Nomura Group will aim to serve its customers at the highest level in every investment, by paying thorough attention to the needs of its customers and the market and by providing its customers with highly value-added solutions in financial and capital markets.
(3) Nomura Group will emphasize compliance with applicable laws and regulations and proper corporate behavior to carry out compliance and conduct risk management in daily business operations. Each company of Nomura Group shall respect customers’ interests and comply with applicable laws and regulations relating to the business.
(4) Nomura Group seeks to ensure effective management oversight and increase management transparency.
(5) Nomura Group will contribute to expanding securities markets through daily business and continuously engage in educational activities regarding investment in order to broaden participation in the securities market.
We have established the following management vision based on the management goals.
② Management Vision
Our diverse businesses rely on the trust of our clients and all stakeholders. We recognize that raising our corporate value and ensuring sustainable growth of society as a whole are closely linked together. This is why our management vision is to achieve sustainable growth by helping resolve social issues.
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Our Business Divisions
Retail
In our Retail Division, we conduct business activities by delivering a wide range of financial products and high quality investment services mainly for individuals and corporations in Japan primarily through a network of nationwide branches of NSC. The total number of local branches, including our head office, was 119 as of the end of March 2022. We offer investment consultation services to meet the medium and long-term needs of our clients. We discuss retail client assets in “
Retail Client Assets
” under Item 5.A of this annual report.
We will strengthen our operating model to provide solutions and services that enable us further flexible approaches to the entire balance sheet of our clients.
Investment Management
Our Investment Management Division is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of our clients in the broad asset management business. By combining our expertise in traditional assets such as stocks and bonds to alternative assets such as private equity, we provide added value and offer advanced services and solutions to meet the diverse needs of our clients. Within the Investment Management Division, Nomura Asset Management Co., Ltd. (NAM) and many of our other investment and asset management companies maintain their independence while driving progress within the asset management industry, increasing collaboration within the division, and leveraging our comprehensive capabilities elsewhere in the Nomura Group.
We are committed to providing high-quality investment strategies, products and services to a wide range of investors. Along with delivering investment trusts for individual investors through financial institutions in Japan, we provide various investment solutions, both in public and private market asset classes, to pension funds, institutional investors, and financial intermediaries globally.
Our revenues are mainly from asset management fees we receive from our clients or funds we manage. Typically, our asset management fees are based on fixed annual rates calculated based on the amount of assets under our management. Also, we occasionally receive success or performance-linked fees depending on the investment performance we deliver to our clients. We also seek to generate investment gains through our own investments. We often
co-invest
in private market funds we manage alongside external investors to demonstrate our commitment in the underlying investment strategies of those funds.
In 2016, we acquired a
non-controlling
economic interest in American Century Investments (“ACI”), an independent investment management firm based in the U.S. and announced a strategic partnership with ACI. We seek to deepen our strategic alliance from a “complementary” relationship to an “integrated” one as we continue to work together to further serve our clients. We include investment gains and losses from our investment in ACI as part of our Investment Management Division’s revenue.
Wholesale
Our Wholesale Division consists of two businesses, Global Markets, which is engaged in the trading, sales and structuring of financial products, and Investment Banking which is engaged in financing and advisory businesses.
Global Markets
Global Markets provides sales, trading, agency execution, and market-making of fixed income and equity-related products.
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Our global fixed income offerings include, among other products, government securities, interest rate derivatives, investment-grade and high-yield corporate debt securities, credit derivatives,
G-10
and emerging markets foreign exchange, asset-backed securities and mortgage-related products, in
over-the-counter
(“OTC”) and listed markets. We are primary dealers in the Japanese government securities market as well as in the Asian, European and U.S. markets.
Our global equity-related products include equity securities, Exchange Traded Funds (“ETFs”), convertible securities, listed and OTC equity derivatives, and prime services. In addition, we offer execution services based on cutting-edge electronic trading technology to help clients navigate through the complex market structure and achieve best execution. In order to provide extensive market access to our clients, we are also a member of various exchanges around the world, with leading positions on the Tokyo Stock Exchange.
These product offerings are supported by electronic/digital technology, and our global structuring and quants function which provide tailored ideas and trading strategies for our institutional and corporate clients as well as our retail franchise.
Investment Banking
We offer a broad range of investment banking services to a diverse range of corporations, financial institutions, sovereigns, financial sponsors and others. We aim to establish and cultivate strong, long-term relationships with our clients by providing them with our extensive resources for each bespoke solution.
Underwriting.
We underwrite offerings of a wide range of securities and other financial instruments, including various classes of shares, convertible and exchangeable securities, investment grade and high yield debt, sovereign and emerging market debt, structured securities and other securities in the Asian, European, U.S. and other financial markets. We also arrange private placements and engage in other capital raising activities.
Financial Advisory
 & Solutions Services.
We provide financial advisory services on business transactions including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts and risk solutions. Our involvement in reorganizations and other corporate restructurings related to industry consolidation enhances our opportunities to offer clients other advisory and investment banking services.
On April 1, 2020, we completed the acquisition of Greentech Capital, LLC, an M&A boutique that is strong in sustainable technology and infrastructure. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
Our Research Activities
We have an extensive network of intellectual capital with key research offices in Tokyo, Hong Kong and other major markets in the Asia-Pacific region, as well as in London and New York. We are recognized as a leading content provider with an integrated global approach to providing capital markets research. Our analysts collaborate closely across regions and disciplines to track changes and spot future trends in politics, economics, foreign exchange, interest rates, equities, and credit, and also provide quantitative analysis.
Our Information Technology
We believe that information technology is one of the key success factors for our overall business and intend to maintain and enhance our solid technology platform to ensure that we are able to fulfill and exceed the various needs of our clients. Accordingly, we will continue to invest, enhance and adapt our technology platform to ensure it remains suitable for each division and proactively seek and implement innovative financial technology to improve the operations of our business.
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In our Retail Division, we continually invest and enhance our core system and related systems to improve efficiency in our business operations. We are also continuously working on improving our internet-based and smartphone platforms.
In our Investment Management Division, we continue to invest and enhance our technology platforms related to our core businesses leveraging third-party services to improve our capabilities and efficiency. We are also continuously working on digital marketing to expand business opportunities, and utilizing advanced technology to automate and sophisticate operations for investment management.
In our Wholesale Division, we continually invest and enhance our technology platforms to provide better risk management, improved data governance and also to increase trading capabilities through platforms allowing direct market access and algorithmic trading. In order to ensure the support level of our Wholesale operations, we will continue to maintain utilization of our offshore service entities in India and enhance our regional support based capabilities.
Furthermore, our digital transformation efforts are directly linked to the competitiveness of financial institutions in the future, and we will continue to promote a wide range of initiatives based on our strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of added value created by the Nomura Group even in a world where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications.
Competition
The financial services industry is intensely competitive and we expect it to continue remain so. We compete globally with other brokers and dealers, investment banking firms, commercial banks, investment advisors and other financial services firms. We also face competition on regional, product and niche bases from local and specialist firms. A number of factors determine our competitive position against other firms, including:
the quality, range and prices of our products and services,
our ability to originate and develop innovative client solutions,
our ability to maintain and develop client relationships,
our ability to access and commit capital resources,
our ability to retain and attract qualified employees, and
our general reputation.
Our competitive position is also affected by the overall condition of the global financial markets, which are influenced by factors such as:
the monetary and fiscal policies of national governments and international economic organizations,
economic, political and social developments both within and between Japan, the U.S., Europe and other major industrialized and developing countries and regions, such as the
COVID-19
pandemic since 2020, and
increasing digitalization beyond the traditional financial sector
In Japan, we compete with other Japanese and
non-Japanese
securities companies and other financial institutions. Competition has become more intense due to deregulation in the Japanese financial industry since the late 1990s and the increased presence of global securities companies and other financial institutions. In particular, major global firms have increased their presence in securities underwriting, corporate advisory services (particularly, mergers and acquisitions advisory) and secondary securities sales and trading.
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There has also been substantial consolidation and convergence among financial institutions, both within Japan and globally and this trend continued as the credit crisis caused mergers and acquisitions and asset acquisitions in the industry. The growing presence and scale of financial groups which encompass commercial banking, securities brokerage, investment banking and other financial services has led to increased competition. Through their broadened offerings, these firms are able to create good client relationships and leverage their existing client base in the brokerage and investment banking business as well.
In addition to the breadth of their products and services, these firms have the ability to pursue greater market share in investment banking and securities products by reducing margins and relying on their commercial banking, asset management, insurance and other financial services activities. This has resulted in pricing pressure in our investment banking and trading businesses and could result in pricing pressure in other areas of our businesses. We have also competed, and expect to compete, with other financial institutions which commit capital to businesses or transactions for market share in investment banking activities. In particular, corporate clients may seek loans or commitments in connection with investment banking mandates and other assignments.
Moreover, the trend toward consolidation and convergence has significantly increased the capital base and geographic reach of some of our competitors, hastening the globalization of the securities and financial services markets. To accommodate this trend, we will have to compete successfully with financial institutions that are large and well-capitalized, and that may have a stronger local presence and longer operating history outside Japan.
Regulation
Japan
Regulation of the Securities Industry and Securities Companies
. Pursuant to the Financial Instruments and Exchange Act (“FIEA”), the Prime Minister of Japan has the authority to supervise and regulate the securities industry and securities companies, and delegates its authority to the Commissioner of the FSA. The Company, as a holding company of a securities company, as well as subsidiaries such as NSC and Nomura Financial Products & Services, Inc. (“NFPS”), are subject to such supervision and regulation by the FSA. The Commissioner of the FSA delegates certain authority to the Director General of Local Finance Bureaus to inspect local securities companies and branches. Furthermore, the Securities and Exchange Surveillance Commission, an external agency of the FSA which is independent from the Agency’s other bureaus, is vested with authority to conduct
day-to-day
monitoring of the securities markets and to investigate irregular activities that hinder the fair trading of securities, including inspection of securities companies. Securities companies are also subject to the rules and regulations of the Japanese stock exchanges and the Japan Securities Dealers Association, a self-regulatory organization of the securities industry.
To enhance investor protection, each Japanese securities company is required to segregate client assets and to hold membership in an Investor Protection Fund approved by the government under the FIEA. The Investor Protection Fund is funded through assessments on its securities company members. In the event of failure of a securities company that is a member of the fund, the Investor Protection Fund provides protection of up to ¥10 million per client. The Investor Protection Fund covers claims related to securities deposited by clients with the failed securities company and certain other client claims.
Regulation of Other Financial Services
. Securities companies are not permitted to conduct banking or other financial services directly, except for those which are registered as money lenders and engaged in money lending business under the Money Lending Business Act or which hold permission to act as bank agents and conduct banking agency activities under the Banking Law. Among the subsidiaries of the Company in Japan, NSC is a securities company that is also registered as a money lender and holds permission to act as a bank agent. Another subsidiary of the Company, The Nomura Trust & Banking holds a banking license and trust business license.
Financial Instruments and Exchange Act
. The FIEA widely regulates financial products and services in Japan under the defined terms “financial instruments” and “financial instruments trading business”. It regulates
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most aspects of securities transactions and the securities industry, including public offerings, private placements and secondary trading of securities,
on-going
disclosure by securities issuers, tender offers for securities, organization and operation of securities exchanges and self-regulatory associations, and registration of securities companies. In addition, to enhance fairness and transparency in the financial markets and to protect investors, the FIEA provides for, among other things, penalties for misrepresentations in disclosure documents and unfair trading, strict reporting obligations for large shareholders and corporate information disclosure systems, including annual and quarterly report systems, submission of confirmation certificates concerning the descriptions in securities reports, and internal controls over financial reporting.
The FIEA also provides for corporate group regulations on securities companies the size of which exceeds specified parameters (Tokubetsu Kinyu Shouhin Torihiki Gyosha, “Special Financial Instruments Firm”) and on certain parent companies designated by the Prime Minister (Shitei Oyagaisha, “Designated Parent Companies”) and their subsidiaries (together, the “Designated Parent Company Group”). The FIEA aims to regulate and strengthen business management systems, compliance systems and risk management systems to ensure the protection of investors. The FIEA and its related guidelines also provide reporting requirements to the FSA on the Designated Parent Company Group’s business and capital adequacy ratios, enhanced public disclosures as well as restrictions on compensation all of which are designed to reduce excessive risk-taking by executives and employees of a Designated Parent Company Group. We were designated as the Designated Parent Company of NSC in April 2011 and were designated as the Designated Parent Company of NFPS in December 2013. As the Designated Parent Company and the final parent company within a corporate group (Saishu Shitei Oyagaisha, “a Final Designated Parent Company”), we are subject to these requirements. A violation of the FIEA may result in various administrative sanctions, including the revocation of registration or license, the suspension of business or an order to discharge any director or executive officer who has failed to comply with the FIEA.
Orderly Resolution Regime. On March 6, 2014, amendments to the FIEA and the Deposit Insurance Act, which included the establishment of an “Orderly Resolution Regime for Financial Institutions” to prevent a financial crisis that may spread across financial markets and may seriously impact the real economy, took effect. Under the Orderly Resolution Regime, the Financial Crisis Response Council, chaired by the Prime Minister, will take measures such as providing liquidity to ensure the performance of obligations for critical market transactions where it is considered necessary to prevent severe market disruption. Such measures will be funded by the financial industry, except in special cases where the government will provide financial support.
TLAC. In April 2016, the FSA published its policy describing its approach and framework for the introduction of the TLAC requirements in Japan applicable to Japanese
G-SIBs
and, in April 2018, released revisions to such policy that extended the coverage of the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. Based on the revised policy, in March 2019, the FSA finally published the notices and guidelines of TLAC regulations in Japan (including TLAC holding regulations). Although Nomura is not identified as a
G-SIB
as of the date of this annual report, Nomura is subject to the TLAC regulations in Japan, and is required to meet a minimum External TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Regulatory Changes. On May 31, 2019, a bill to amend the FIEA and the Payment Services Act, etc. was passed by the Diet of Japan. The amendment to the FIEA includes establishing the concept of “electronically recorded transferable rights” (
denshi kiroku iten kenri
, “ERTRs”) and treating ERTRs as Securities defined in Paragraph 1 of the FIEA. As a result, ERTRs are subject to requirements of the Disclosure of Corporate Affairs and Other Related Matters, and regulations for Financial Instruments Business Operators Engaged in Type I Financial Instruments Business apply to institutions dealing in ERTRs. Additionally, “crypto assets” (
“angou shisan”
) are now included in the definition of “Financial Instruments”, and derivatives transactions related to crypto assets are subject to the provisions of the FIEA. As a result of the amendment, certain special provisions
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concerning the crypto asset-related business have been introduced, whereby Financial Instruments Business Operators, etc. must explain the nature of crypto assets and must not make any representation that may mislead their customers about the nature of crypto assets. Moreover, regulations governing unfair acts in respect of crypto asset and crypto asset derivative transactions are introduced. The amendment became effective on May 1, 2020.
Overseas
Our overseas offices and subsidiaries are also subject to various laws, rules and regulations applicable in the countries where they conduct their operations, including, but not limited to those promulgated and enforced by the Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), the U.S. Treasury, the New York Stock Exchange, the Chicago Mercantile Exchange and other exchanges and/or clearinghouses, the Financial Industry Regulatory Authority (“FINRA”) (a self-regulatory organization (“SRO”) for the U.S. securities industry), the National Futures Association (“NFA”) (an SRO for the U.S. derivatives industry) in the U.S.; by the Prudential Regulation Authority (“U.K. PRA”) and the Financial Conduct Authority (“U.K. FCA”) in the U.K; and by a number of EU regulators including Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marches Financiers (AMF). We are also subject to international money laundering and related regulations in various countries. For example, the USA PATRIOT Act of 2001 contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations and creating crimes and penalties. Failure to comply with such laws, rules or regulations could result in fines, suspension or expulsion, which could materially and adversely affect us.
Regulation in the United States
In the U.S., the SEC is the federal agency responsible for the administration of the federal securities laws, and the CFTC is the federal agency responsible for the administration of laws relating to commodity futures, commodity options and swaps industry. In addition, FINRA and the NFA are SROs that are actively involved in the regulation of financial services businesses (securities businesses in the case of FINRA and commodities/futures businesses in the case of the NFA). In addition to federal regulation, we are subject to state securities regulations in each state and U.S. territory in which we conduct securities or investment advisory activities. The SEC, FINRA, CFTC, NFA and state securities regulators conduct periodic examinations of broker-dealers, investment advisors, futures commission merchants (“FCMs”), swap dealers and security-based swap (“SBS”) dealers (“SBS dealers”). Financial services businesses are also subject to regulation and examination by state securities regulators and, in some cases, investigations and reviews by attorneys general in those states in which they do business. In addition, broker-dealers, investment advisors, FCMs, swap dealers and SBS dealers must also comply with the rules and regulation of clearing houses, exchanges, swap execution facilities and trading platforms of which they are a member.
Broker-dealers are subject to SEC, FINRA and state securities regulations that cover all aspects of the securities business, including sales and trading methods, publication of research reports, trade practices, among broker-dealers, risk management, use and safekeeping of customers’ funds and securities, capital structure and requirements, anti-money laundering efforts, recordkeeping and the conduct of broker-dealer personnel including officers and employees.
Our U.S. subsidiaries Nomura Securities International, Inc. (“NSI”) and Instinet, LLC (“ILLC”) are registered as broker-dealers with the SEC. U.S. subsidiary Nomura Global Financial Products Inc. (“NGFP”) is an “OTC derivatives dealer,” which is a class of broker-dealer exempt from certain broker-dealer requirements, including membership in an SRO, regular broker-dealer margin rules and application of the Securities Investor Protection Act of 1970, but are subject to special requirements, including limitations on the scope of their securities activities, specified internal risk management control systems, recordkeeping obligations and reporting responsibilities. OTC derivatives dealers are also subject to alternative net capital treatment.
Registered investment advisors are subject to, among other requirements, SEC regulations concerning marketing, transactions with affiliates, custody of client assets, disclosures to clients, conflict of interest, insider
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trading and recordkeeping. Investment advisors that are also registered as commodity trading advisors or commodity pool operators are also subject to regulation by the CFTC and the NFA. Certain of our subsidiaries, including NSI as well as Nomura Asset Management Co., Ltd., Nomura Asset Management U.S.A. Inc. and other asset management subsidiaries, are registered as investment advisors with the SEC.
FCMs, introducing brokers and swap dealers that engage in commodity options, futures or swap transactions are subject to regulation by the CFTC and the NFA. CFTC rules require registration of swap dealers, mandatory clearing and execution of certain default swaps through regulated clearing houses and execution facilities, real-time public reporting and adherence to business conduct standards for all
in-scope
swaps. A number of these requirements, particularly those regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. CFTC rules establishing capital requirements for swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB, became effective in October 2021. The CFTC has also adopted financial reporting requirements for covered swap entities and amended existing capital rules for CFTC-registered FCMs to provide explicit capital requirements for proprietary positions in swaps and security-based swaps that are not cleared by a clearing organization. Swap dealers that are not subject to the jurisdiction of a Prudential Regulator are subject to the margin rules issued by the CFTC (which covers
non-bank
swap dealers, such as our subsidiaries). The rules for variation margin have become effective, and those for initial margin are in the process of being phased in through September 2022, depending on certain activity levels of the swap dealer and the relevant counterparty. Inter-affiliate transactions under the CFTC margin rules are generally exempt from initial margin requirements under certain conditions. NSI is registered as an FCM with the CFTC. NGFP and Nomura International plc, a U.K. subsidiary, are registered as swap dealers with the CFTC. ILLC is registered as an introducing broker with the CFTC.
SEC rules constituting its SBS regulatory regime, which set registration and other compliance dates for SBS dealers and major SBS participants, generally came into effect by November 1, 2021. Under these rules, SBS dealers are subject to regulation by the SEC, including (i) capital, margin and segregation requirements; (ii) recordkeeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the application of risk mitigation techniques to uncleared portfolios of SBSs. In the fourth quarter of 2021, certain of our subsidiaries registered with the SEC as SBS dealers and became subject to the SEC’s regulations regarding SBSs. NGFP is registered as an SBS dealer with the SEC, and Nomura International plc is registered as an SBS dealer with the SEC.
The CFTC and the SEC have adopted rules relating to cross-border regulation of swaps, SBSs, business conduct and registration requirements. The CFTC and the SEC have entered into agreements with certain
non-U.S.
regulators regarding the cross-border regulation of derivatives and the mutual recognition of certain cross-border execution facilities and certain clearing houses, and have approved substituted compliance with certain
non-U.S.
regulations related to certain business conduct requirements and margin rules.
Additional legislation or rules promulgated by the SEC, FINRA, CFTC, NFA, other SROs and state securities regulators, or changes in such legislation or rules or in the interpretation or enforcement of existing legislation or rules may directly affect our operations and profitability. The SEC, CFTC, FINRA, NFA, state securities regulators and state attorneys general may conduct administrative proceedings or initiate civil litigation that can result in adverse consequences for us, our subsidiaries and our and their respective officers and employees (including, without limitation, injunctions, censures, fines, suspensions, directives that impact business operations (including proposed expansions), membership expulsions, or revocations of licenses and registrations).
Further, The Foreign Account Tax Compliance Act (“FATCA”), which was enacted in 2010, requires foreign financial institutions (“FFIs”) to report to the U.S. Internal Revenue Service information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As a result, Nomura is subject to certain reporting requirements consistent with a mutual agreement between Japanese governmental authorities and the U.S. Treasury Department.
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Proposed Changes to U.S. Regulation 
In 2016, the SEC adopted Rule 613 to create a consolidated audit trail (“CAT”) intended to allow regulators to track all activity throughout the U.S. markets in National Markets Systems securities. Following system development and implementation, the CAT is now live, and the final phased on compliance periods will end in
mid-2022.
In June 2016, the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. The effectiveness of the Rule 4210 margin requirements has been delayed a number of times. Most recently, FINRA published a notice of filing of proposed changes to the margin rule on February 25, 2022, delaying the date of effectiveness to October 26, 2022.
In January 2021, CFTC adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control, or trading in coordination with each other. Swap dealers may currently claim an exemption from the position limits for the bona fide hedging of swap-related risks, but this exemption will be eliminated in 2023. The CFTC position limits apply to futures on specified physical commodities and options on such futures, and these limits apply to both physically and cash settled positions. In addition, in 2023, the position limit rules will become applicable to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and
non-
spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that
non-spot
month limits will at some point be adopted for futures and swaps on other physical commodities.
In November 2021, the SEC published proposed Exchange Act Rule
10c-1,
which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, such as the Financial Industry Regulatory Authority. The registered national securities association would then make the material terms of the securities lending transaction available to the public.
In December 2021, the SEC proposed rules to prevent fraud, manipulation and deception in connection with security-based swaps, to prevent undue influence over the chief compliance officer (CCO) of SBS dealers and major SBS swap participants, and to require any person with a large security-based swap position to publicly report certain information related to the position.
Regulation in the U.K. and Europe
As part of global efforts to establish a framework to improve authorities’ capacity to resolve failing SIFIs, the U.K. implemented the EU Bank Recovery and Resolution Directive (“BRRD”), which was published on June 12, 2014. The BRRD also aims to implement FSB recommendations on recovery and resolution regimes for financial institutions. The BRRD applies to banks and investment firms operating in EU member states, including EU branches and subsidiaries of third country firms. It includes requirements for the preparation of recovery and resolution plans (“RRPs”) by institutions and regulators. It also creates various powers for EU regulators to intervene to resolve institutions at risk of failure, including the ability to sell or transfer all or part of an institution and the introduction of a debt write down or
bail-in
tool.
As part of the
bail-in
rules, firms will be required to maintain capital resources sufficient to meet the stipulated minimum requirement for eligible liabilities (“MREL”). The MREL overlaps with the global capital standards on total loss absorbing capacity (“TLAC”) for
G-SIBs
issued by the FSB on November 9, 2015. As
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Nomura Group has adopted a single point of entry resolution strategy, European subsidiaries are subject to internal MREL. The internal MREL became applicable in the U.K. for all U.K. incorporated institutions from January 1, 2019 for firms whose failure would have a significant impact on the U.K. financial system and for certain overseas firms where the Bank of England (“BOE”) would support a home resolution authority in carrying out a cross-border resolution. From January 1, 2020, Nomura is required to hold internal MREL resources above the regulatory capital requirements for the material subsidiaries in the U.K., identified as Nomura Europe Holdings plc (“NEHS”) on a
sub-consolidated
basis and NIP.
In July 2019, the BOE and U.K. PRA published a policy statement on the Resolvability Assessment Framework (“RAF”). The proposals for the RAF bring together existing policies such as MREL and Operational Continuity in Resolution (“OCIR”) as well as other new resolution policies in order to follow the resolution principles set out by the FSB. Under the policy, it is expected firms perform an assessment of their preparations for resolution and the BOE provide a public statement concerning resolvability of each firm. The BOE and U.K. PRA may consider, in consultation with Financial Services Agency (“FSA”), apply some or all of the requirements set out in the policy statement to NEHS.
EU banks and investment firms including those located in the U.K. have been subject to the current prudential regulatory capital regime since the introduction of the Capital Requirements Regulation and Capital Requirements Directive (collectively, “CRD IV”) in January 2014. The aim of CRD IV was to strengthen the resilience of the EU banking sector so it would be better placed to absorb economic shocks while also ensuring that banks continued to finance economic activity and growth. CRD IV sets out regulations for minimum capital requirements for banks and investment firms and also introduced new capital and liquidity buffers.
In November 2016 the European Commission proposed amendments to this regulation in a “CRRII” package of reforms. Together with the updates to the Bank Recovery and Resolution Directive (“BRRD II”) and Single Resolution Mechanism Regulation (“SRMR”) this package is an important step towards the completion of the European post-crisis regulatory reforms and implements some of the outstanding global reforms agreed by the Basel Committee and the FSB. The EU views the amendments as essential to making its financial system more stable and resilient, and the financial institutions more resolvable. These updates entered into force in June 2019 with the majority of changes being introduced two years later in June 2021.
Among other things these proposed changes include the introduction of binding minimum leverage and net stable funding ratios, changes to the calculations for counterparty credit risk of derivatives, a tightening of large exposure limits, introduction of new reporting requirements for market risk and the introduction of a new EU intermediate parent undertaking requirement. These reforms are generally expected to lead to an increase in local capital and liquidity requirements and increased costs of compliance.
Subsequent to the finalization of work on the CRRII package in October 2021 the EU introduced a first draft of proposals to introduce a “CRRIII/CRDVI” package of reforms to implement all outstanding elements of the Basel III framework including changes to the calculations for Operational Risk, CVA, Credit Risk, FRTB capital requirements and the introduction of an output floor to modelled calculations. The draft rules also include proposals to strengthen the resilience of the banking sector to environmental, social and governance (“ESG”) risks and to enhance the strength of supervision within the EU to better protect financial stability. The proposals are proposed for implementation in Jan 2025.
Since Brexit, the CRR and subsequent amendments are no longer applicable in the U.K. HMT and the PRA have published updated rules for implementation of similar reforms to the CRRII in the U.K. which were implemented from Jan 2022. Subsequent to this, HMT and the PRA will also consult towards the end of 2022 on implementing the final elements of the Basel III framework equivalent to those in the EU CRRIII package with a proposed implementation date of Jan 2025.
The revised MiFID II, which is split into the Markets in Financial Instruments Directive (“MiFID”) and the Markets in Financial Instruments Regulation (“MiFIR”) was published in the EU Official Journal on June 12,
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2014 and entered into force on July 2, 2014. The majority of the new rules under MiFID II and MiFIR took effect from January 3, 2018, with Member States required to implement MiFID II through national legislation by July 3, 2017. The legislation sought to introduce wide-reaching changes to markets, including the extension of market transparency rules into
non-equities
and potentially reducing the size of the OTC derivative market by mandating the clearing of standardized OTC transactions through central clearing counterparties and their trading through regulated trading venues. The new framework introduced a market structure which was intended to close certain loopholes and ensure that trading, wherever appropriate, takes place on regulated platforms. It has introduced rules on high frequency trading with a view to improving the transparency and oversight of financial markets. The revised MiFID also aimed to strengthen the protection of investors by introducing more robust organizational and conduct requirements and by strengthening the role of management bodies. The new framework also increased the role and supervisory powers of regulators and established powers to prohibit or restrict the marketing and distribution of certain products in well-defined circumstances. A harmonized regime for granting firms from third countries access to EU professional markets, based on an equivalence assessment of third-country jurisdictions by the Commission, was also introduced.
Following a range of consultations and technical advice published by the European Securities and Markets Authority (“ESMA”), in April 2016 the European Commission adopted a MiFID Delegated Directive (“Directive”). The Directive contains provisions on investor protection, notably on safeguarding of clients. The Commission also adopted a delegated regulation supplementing MiFID II. This regulation was aimed at specifying, in particular, the rules relating to exemptions, the organizational requirements for investment firms, and conduct of business obligations in the provision of investment services. In May 2016, the Commission adopted a further delegated regulation supplementing MiFIR. This regulation aims at specifying, in particular, the rules relating to determining liquidity for equity instruments, the rules on the provision of market data on a reasonable commercial basis, the rules on publication, order execution and transparency obligations for systematic internalisers, and the rules on supervisory measures on product intervention by the ESMA, the European Banking Authority (‘EBA’) and national authorities, as well as on position management powers by the ESMA.
After two years, the EU Commission is required to evaluate the overall functioning of the MiFID II/ MiFIR regime, in particular, addressing those areas where challenges still exist, and present a report to the European Parliament and Council together with a legislative proposal to reform the regime if required (the so called ‘MiFID Refit’). As part of this process, ESMA has already launched a number of consultations on specific areas, which will feed into the Commission’s reports.
Certain amendments to support economic recovery from the
COVID-19
pandemic, including via relief from administrative requirements on firms, has been published in the EU Official Journal on February 26, 2021 (MiFID
‘Quick-Fix’).
EU Member States were required to transpose the quick fix amendments into their national frameworks by November 28, 2021 and apply them by February 28, 2022. Alongside this on November 25, 2021, the EU Commission published its legislative proposal for a review of MiFID II/MiFIR. Key proposals include refinements to the scope of the Securities Trading and Derivatives Trading Obligations, adjustments to the transparency regime and reporting requirements and considerations around establishment of a Consolidated Tape. Since Brexit, these amendments will not be applicable in the U.K. and the FCA has consulted on proposed changes to the conduct and organizational rules under in the U.K. MiFID, specifically relating to research and best execution reporting. On November 30, 2021 the FCA published the Policy Statement (“PS”) on changes to U.K. MiFID’s conduct and organizational requirements. The PS sets out changes to best execution reporting requirements and research inducement rules. Effective from December 1 2021, U.K. firms are no longer required to produce best execution reports. In addition, from March 1, 2022, asset managers and research firms will be able to exercise the options on exempting inducement rules on research. This means U.K. firms will be able to provide research on FICC instruments to clients without it being subject to
un-bundling.
On July 1, 2021 the U.K. HMT launched a Wholesale Market Review Consultation. The consultation is part of the Government’s commitment to improving the competitiveness of the U.K. as a hub for capital markets, and
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is a central part of the Government’s post-Brexit strategy for financial services. It has a wide ranging focus, including the regulatory framework for trading venues, systematic internalizers, market data, and fixed income, equity, derivative and commodity markets. It proposes a number of amendments to the U.K.’s onshored MiFID regime and asks for industry input on a range of other topics.
The European Market Infrastructure Regulation (“EMIR”) became effective on August 16, 2012, and applies to any entity established in the EU that is a legal counterparty to a derivative contract, even when trading with
non-EU
firms. EMIR was created with the intention of stabilizing OTC markets found within EU member states. Although the majority of EMIR regulations have already been implemented, on May 28, 2019, Regulation (EU) 2019/834 (EMIR REFIT) was published in the EU’s Official Journal, with the aim of amending EMIR to make some of its requirements simpler and more proportionate, particularly for
non-financial
counterparties (“NFCs”). With a few exceptions, the majority of the provisions in the Regulation entered into force on June 17, 2019.
Following the announcement made by BCBS and the International Organization of Securities Commissions (‘IOSCO’) on April 3, 2020 to defer by one year, the deadline for completing the final two implementation phases of the bilateral margin requirements, the European Supervisory Authorities (ESMA, EBA and the European Insurance and Occupational Pensions Authority) have published joint draft Regulatory Technical Standards to amend the Delegated Regulation on the risk mitigation techniques for
non-centrally
cleared OTC derivatives (bilateral margining), under EMIR to incorporate in the EU, the one year deferral. Phase 6 represents the final stage of the
phase-in
of the rules and applies from September 1, 2022.
On January 12, 2016, the Securities Financing Transactions Regulation (“SFTR”), which forms part of the EU’s package of legislation targeted at reforming shadow banking and aims to improve transparency in the securities financing transactions (“SFTs”) market, came into force subject to a range of transitional provisions over a number of years. On April 11, 2019, the final regulatory technical standards entered into force and MiFID firms were due to commence their reporting one year later on April 11, 2020. However, due to the
COVID-19
pandemic, the reporting under the SFTR was extended until July 13, 2020. Other reporting counterparties were phased in over the following months, ending with NFCs on January 11, 2021.
On November 25, 2020, the FCA issued a statement explaining what trade repositories, and the U.K. counterparties that use them, should do to ensure they are compliant with the U.K. SFTR reporting obligations from the end of the Brexit transition period. All U.K. SFTR counterparties that enter into securities financing transactions that are in scope of the U.K. SFTR are required to report details of those transactions to an
FCA-registered,
or recognised, trade repositories.
On September 17, 2014, the Central Securities Depositories Regulation (“CSDR”) came into force, in the EU. It aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. CSDR plays a pivotal role for post-trade harmonisation efforts in Europe, as it will enhance the legal and operational conditions for cross-border settlement in the EU. On February 5, 2020, ESMA has published a Final Report on draft regulatory technical standards (“RTS”) on postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) to February 1, 2021. It has been endorsed by the European Commission on May 8, 2020 and is now subject to the
non-objection
of the European Parliament and of the Council. Furthermore, on August 28, 2020, ESMA published another Final Report on draft RTS definitively postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until February 1, 2022. On January 27, 2021, the EU Commission published a delegated act confirming the entry into force of CSDR Settlement Discipline to February 1, 2022. On September 24, 2021 ESMA wrote to European Commission regarding the implementation of the Central Securities Depositories Regulation, urging it to consider a delay of the mandatory
buy-in
regime. ESMA is in favor of delaying the entry into force of the
buy-in
requirements—scheduled on February 1, 2022—while applying the other settlement discipline requirements, such as settlement fails reporting and cash penalties regime, as planned. On
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November 24, 2021, the EU Commissioner announced that the mandatory
buy-in
regime would not enter into force on February 1, 2022. On December 17, 2021, ESMA issued a public statement informing national competent authorities (NCAs) not to prioritize supervisory actions in relation to the application of the
buy-in
regime until the provision for postponing the application of the
buy-in
regime is formally in place. The remaining requirements of CSDR settlement discipline, in particular the settlement fails reporting and the cash penalties regimes, will go ahead as planned.
In the U.K., on June 23, 2020, the Government confirmed that it will not implement the CSDR Settlement Discipline. U.K. firms will continue to apply the existing
industry-led
framework.
On February 8, 2022, the EU Commission announced a decision to extend equivalence for U.K. central counterparties (“CCPs”) until June 30, 2025. The equivalence will apply from July 1, 2022. At the same time, the EU Commission launched a targeted public consultation and a call for evidence on ways to expand central clearing activities in the EU and improve the attractiveness of EU CCPs in order to reduce the EU’s overreliance on systemic third-country CCPs.
The Fifth Money Laundering Directive (“5MLD”), came into force in the EU on April 26, 2018 and for implementation by EU Member States by January 10, 2020. However, the U.K. government has enacted the regulations bringing into force the 5MLD and the provisions are contained in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The changes impose additional obligations within the financial services sector. 5MLD amends 4MLD, and includes provisions that enhance the required level of transparency around beneficial ownership of corporates and trusts, tightens some controls relating to Politically-Exposed Persons and high risk third countries and also addresses risks associated with certain technological innovation, particularly virtual currencies.
On October 2018 the 6th Money Laundering Directive (“6MLD”) was approved by the European Parliament and Council. EU member states had until December 3, 2020 to implement this upcoming Directive into national law, whilst regulated entities had a deadline of June 3, 2021.The U.K. has decided to opt out of complying with this further AML Directive as the Government assesses that the domestic legislation is already largely compliant with the Directive’s measures. The 6MLD complements the criminal aspects of the 5MLD and has been introduced to focus on the definition of these crimes and their sanctions. It also gives financial institutions more responsibility in the fight against financial crime and aims to promote the collaboration of member states when tackling money laundering.
The Senior Managers and Certification Regime (“SM&CR”) came into force on March 7, 2016 with the aim of reducing the risk of harm to consumers and strengthening market integrity by making firms, and individuals within those firms, more accountable for their conduct and competence. In July 2018, the U.K. FCA and U.K. PRA published near-final rules extending SM&CR to cover all financial services firms in the U.K. to apply from December 9, 2019. On March 8, 2019, the U.K. FCA announced its final rules on its proposed Directory—a new public register that will enable consumers, firms and other stakeholders to find information on key individuals working in financial services who are not otherwise appointed and publicly registered under the SM&CR. Firms were to submit data on Directory individuals in December 2019, and the Directory was expected to go live in March 2020. However, due to the
COVID-19
pandemic, the implementation date of the directory of certified and assessed persons had been delayed and the Directory is now live since March 31, 2021.
Since 2012, the European Commission sought to establish a modern and harmonized data protection framework across the EU to replace the existing Directive. On May 4, 2016, the official texts of the new EU General Data Protection Regulation (“GDPR”) were published in the EU Official Journal in all the official languages and it came into force on May 25, 2016. GDPR took effect across the EU member states on May 25, 2018. GDPR included a number of important changes to existing data protection legislation including new obligations on data processors, restrictions on the transfer of personal data outside the EEA and the introduction of new concepts such as “accountability” (and related record-keeping), the “right to be forgotten” and a
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requirement for data breach notifications to the relevant Regulators. Enforcement of GDPR is carried out by both national regulators (for the U.K., the Information Commissioner) and the European Commission, and the regulators also have the power to impose greater fines for any breaches of the data protection requirements of up to 4% of a firm’s global turnover.
The EU Benchmark Regulation (“BMR”) entered into force on June 30, 2016 and has applied in the U.K. since January 1, 2018. Global regulators have imposed fines on firms following attempted manipulation of the London Inter-bank Offered Rate (“LIBOR”), gold and foreign exchange benchmarks, and have taken action against individuals for misconduct related to benchmarks. The objectives of the EU BMR include, but are not limited to: (i)improving governance and controls over the benchmarking process to ensure that administrators avoid/manage conflicts of interest, (ii)improving the quality of input data and methodologies used by benchmark administrators, (iii)ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, and (iv)protecting consumers and investors through greater transparency and adequate rights of redress.
Furthermore, in November 2019, the EU BMR was amended to include two new types of “climate benchmarks”—‘Paris-Aligned’ Benchmarks (“PABs”) and Climate Transition Benchmarks (“CTBs”). The
Low-Carbon
Benchmarks Regulation introduced the requirement (under Article 13 of the BMR) that administrators of benchmarks (save interest rate and foreign exchange benchmarks) must provide an explanation of how the key elements of their benchmark methodologies reflect ESG factors. The requirements are to be complied with by April 30, 2020. However, since the draft regulatory technical standards were still subject to a public consultation and a number of important details are subject to these delegated acts, ESMA issued a ‘No Action Letter’ encouraging EU national regulators not to force these ‘Level 1’ requirements until these delegated acts are finalized. The Delegated Acts were finalized and published on December 3, 2021.
In addition, interest rate benchmarks including, among others, the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”), the Euro Overnight Index Average (“EONIA”) and certain other Interbank Offered Rates (“IBORs”) are being reformed. The U.K. is due to make the transition from LIBOR to Sterling Overnight Index Average (“SONIA”) by the end of 2021 although certain interim milestones have been extended due to the
COVID-19
pandemic. To avoid disruption to legacy contracts that reference the
1-,
3-
and
6-month
sterling and Japanese yen LIBOR settings, on September 30, 2021 the U.K. FCA announced that it will require the LIBOR benchmark administrator to publish these settings under a ‘synthetic’ methodology, based on term risk-free rates, for the duration of 2022. These six LIBOR settings will be available only for use in some legacy contracts, and are not for use in new business.
On January 1, 2022, the U.K. FCA issued notices under Article 23C and Article 23D of the UK BMR on the calculation and permitted the legacy use of the six sterling and Japanese yen LIBOR settings.
In the Eurozone, €STR (Euro Short Term Rate) is set to gradually replace the Euro Overnight Index Average (EONIA) and serve as a fallback for the Euro Interbank Offered Rate (“EURIBOR”). EONIA will effectively be pegged against €STR until January 3, 2022, when EONIA ceases to apply.
On July 22, 2020, the U.K. Government published a policy statement extending the transitional period for third-country benchmarks under the U.K. BMR from December 31, 2022 to December 31, 2025, thus allowing U.K. firms to continue using benchmarks provided by administrators located outside the U.K. in new financial contracts and instruments without these benchmarks being registered with the FCA until
end-2025.
On October 21, 2020, the U.K. Government published a policy statement making amendments to BMR to allow for the orderly winding down of LIBOR, including providing new powers for the U.K. Financial Conduct Authority (“FCA”). The proposed framework in the policy document allows the FCA to take an appropriate course of action to direct a change in the methodology of a critical benchmark and extend its publication, for a limited time period, for those contracts that face insurmountable barriers to transition from LIBOR (Tough Legacy Contracts). The FCA consulted on its proposal to use two new powers relating to the use of critical
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benchmarks that are being wound down. The powers are part of a wider package of amendments to the BMR in the Financial Services Act 2021, intended to ensure that the FCA has the appropriate regulatory powers to help reduce risk in the wind-down period before LIBOR ceases permanently. The final Statements of Policy were published in September 29, 2021 (Statement of Policy on the FCA’s power under Article 23C BMR and Statement of Policy on the FCA’s power under Article 21A BMR).
In the U.K. as a follow up to the Fair and Effective Markets Review (established by the Chancellor of the Exchequer), the Fixed Income, Currencies and Commodities (“FICC”) Markets Standards Board (“FMSB”) was established in 2015 as a private sector response to the conduct problems revealed in global wholesale FICC markets after the financial crisis. The function of the FMSB is to help raise standards of conduct in global wholesale markets by producing voluntary Standards and other guidance in areas of uncertainty that are developed by the membership and designed to illustrate best practices to all market participants. These Standards are intended to reduce the continuing uncertainty about acceptable practices in opaque and unregulated areas, which is a hazard for FMSB members, as well as other market participants. The Standards published to date cover topics including the new issue process, binary options for the commodities markets, reference price transactions for the fixed income markets and secondary market trading error compensation. The published Standards do not have legal or regulatory force and do not replace existing legislation; rather, they are intended to supplement the rules already in place. The Standards are implemented by way of FMSB member firms, including Nomura International plc, making an adherence statement on an annual basis.
Following Brexit, on March 26, 2021, the U.K. Government announced that technical negotiations on the text of the
U.K.-EU
memorandum of understanding (“MoU”) establishing a framework for regulatory cooperation in financial services have concluded. Among other things, the MoU will establish a Joint
U.K.-EU
Financial Regulatory Forum to serve as a platform to facilitate dialogue on financial services issues. The MoU makes limited reference to access, saying that both sides will “jointly endeavor to pursue a robust and ambitious bilateral regulatory cooperation”.
In response to heightened global focus on the issues of climate change, and a growing demand for standards associated with ESG factors and reporting, a number of global regulatory initiatives are being developed. These regulations cover both prudential frameworks including assessment and management of climate risks associated with Nomura businesses, such as the PRA SS3/19 regulations; and also labelling, disclosure and reporting regulations which includes but is not limited to the EU Taxonomy Regulation, the EU Sustainable Finance Disclosure Regulation and the EU Corporate Sustainability Reporting Directive.
Regulatory Capital Rules
Japan
In March 2022, the FSA announced one year delay of the implementation date of the finalised Basel III standards for internationally active banks, to March 31, 2024. Also the FSA announced the exclusion of deposits with the Bank of Japan from the total exposure used to calculate the leverage ratio until March 31, 2024.
The FIEA requires that all Financial Instruments Firms (Category I) (“Financial Instruments Firms I”), a category that includes NSC and NFPS, ensure that their capital adequacy ratios do not fall below 120% on a
non-consolidated
basis. The FIEA also requires Financial Instruments Firms I to file monthly reports regarding their capital adequacy ratios with the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, and also to disclose their capital adequacy ratios to the public on a quarterly basis. In addition, if the capital adequacy ratio of a Financial Instruments Firm I falls below 140%, it must file a daily report with the authorities. The FIEA provides for actions which the Prime Minister, through the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, may take if any Financial Instruments Firm I fails to meet the capital adequacy requirement. More specifically, if the capital adequacy ratio of any Financial Instruments Firms I falls below 120%, the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau may order the Financial Instruments Firm I to change its business conduct, to deposit its
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property in trust, or may issue any other supervisory order that such authorities deem necessary and appropriate to protect the interests of the general public or investors. If the capital adequacy ratio of a Financial Instruments Firm I falls below 100%, the authorities may take further action, including the issuance of orders to temporarily suspend its business and the revocation of its registration as a Financial Instruments Firm I under the FIEA.
Under the FIEA and regulations thereunder, the “capital adequacy ratio” means the ratio of adjusted capital to a quantified total of business risks. Adjusted capital is defined as net worth less illiquid assets. Net worth mainly consists of stated capital, additional
paid-in
capital, retained earnings, reserves for securities transactions, certain allowances for doubtful current accounts, net unrealized gains/losses in the market value of investment securities, and subordinated debt. Illiquid assets generally include
non-current
assets, certain deposits and advances and prepaid expenses. Business risks are divided into three categories: (i) market risks (i.e., risks of asset value changes due to decline in market values and other reasons), (ii) counterparty risks (i.e., risks of delinquency of counterparties and other reasons) and (iii) basic risks (i.e., risks in carrying out daily business activities, such as administrative problems with securities transactions and clerical mistakes), each quantified in the manner specified in a rule promulgated under the FIEA.
The FSA reviewed the FIEA and regulations thereunder in line with Basel 2.5 framework and the revised regulations for Basel 2.5 were implemented at the end of December 2011. Market risks increased significantly as a result of the Basel 2.5 rule implementation.
We closely monitor the capital adequacy ratio of NSC and NFPS on a continuous basis. Since the introduction of the capital adequacy requirement in Japan in 1989, we have at all times been in compliance with all appropriate requirements. We believe that we will continue to be in compliance with all applicable capital adequacy requirements for the foreseeable future.
As discussed above, the FSA amended the FIEA and introduced new rules on consolidated regulation and supervision of securities companies on a consolidated basis on April 1, 2011 to improve the stability and transparency of Japan’s financial system and ensure the protection of investors. Following introduction of these rules, NSC was designated as a Special Financial Instruments Firm, following which we have been designated as a Final Designated Parent Company. As such, we are required to calculate consolidated regulatory capital adequacy ratio according to the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby”(2010 FSA Regulatory Notice No. 130;“Capital Adequacy Notice on Final Designated Parent Company”). Accordingly, since our designation as a Final Designated Parent Company in April 2011, we now calculate our Basel rule-based consolidated regulatory capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company.
The FSA also amended the FIEA to include reporting on consolidated regulatory capital for the Final Designated Parent Companies, effective April 1, 2011. We are subject to this reporting requirements as well as the capital adequacy requirements described above.
The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III, and we have calculated a Basel
III-based
consolidated capital adequacy ratio since the end of March 2013. Basel 2.5 includes significant changes in the method of calculating market risk and Basel III includes redefinition of capital items for the purpose of requiring higher levels of capital and expansion of the scope of credit risk-weighted assets calculation.
If our capital ratios fall to the minimum level required by the FSA, our business activities may be impacted. However, these ratios are currently at well capitalized levels. We have met all capital adequacy requirements to which we are subject and have consistently operated in excess of the FSA’s capital adequacy requirements. Subject to future developments in regulatory capital regulations and standards, there has been no significant change in our capital ratios which management believes would have material impact on our operations.
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The Basel Committee has issued a series of announcements regarding a broader program to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises, as described in “
Consolidated Regulatory Capital Requirements
” under Item 5.B of this annual report. The Capital Adequacy Notice on Final Designated Parent Company is expected to incorporate the series of rules and standards in line with the schedule proposed by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The FSB also announced the group of
G-SIBs
will be updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIB.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important banks
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
Overseas
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a futures commission merchant with the Commodity Futures Trading Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s Uniform Net Capital Rule (“Rule
15c3-1”)
and other related rules, which require net capital, as defined under the alternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from client transactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or $1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, or other various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934. NGFP registered with the Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer on October 6, 2021 and registered with the Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule
18a-1
and CFTC rule 23.101 and requires the greater of $20,000,000, 2% of the SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
15c3-1
which requires the maintenance of minimum net capital, as defined under the alternative method, equal to the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount of adjusted net capital required by a futures association of which it is a member; and the amount of net capital required by Rule
15c3-1(a).
As of March 31, 2021 and 2022, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”) as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Financial Services and Markets Act 2000, U.K. Capital Requirements Regulations and the PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. As a
non-U.S.
swap dealer and securities based swap dealer NIP is also subject to the regulations of the CFTC and SEC under the Dodd Frank Act. In addition, Nomura Bank International plc (“NBI”), another
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subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”) and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 2021 and 2022, NEHS, NIP, NBI, NFPE and BNF were in compliance with relevant regulatory capital related requirements.
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) are regulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank regulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its regulated activities including, among others, securities brokerage and dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on a standalone basis by the MAS in Singapore. NIHK and NSL have always been compliant with relevant regulatory capital related requirements.
In addition, certain of our other subsidiaries are subject to various securities and banking regulations, and the capital adequacy requirements established by the regulatory and exchange authorities of the countries in which those subsidiaries operate. We believe that each such subsidiary is, and will in the foreseeable future be, in compliance with these requirements in all material respects.
Management Challenges and Strategies
Management vision
Our business environment is undergoing significant changes. We will continue to respond to it flexibly while maintaining an appropriate financial standing and effectively utilizing management resources through improved capital efficiency. In addition, we are never satisfied with ourselves and will constantly implement new initiatives with the aim of expanding existing businesses and providing value-added services to clients.
(1) Urgent Priority Issues
As a global financial services group, we continue to seek to deliver value-added products and services to our clients globally. Given the diversification of its products and services, as well as the multifaceted nature and expansion of global business, enhancing risk management is essential for us.
In response to the U.S. Prime Brokerage Event in 2021, we immediately launched a thorough review of our business management processes as well as our procedures and organizational structure. Based on this review, we analyzed a number of areas, such as how we manages our business in the current environment, communication and coordination across departments, and allocation of management resources. In light of this, we have taken steps to further enhance our risk management including revamping our organizational structure and realigning headcount in related departments.
We see enhanced risk management as an urgent key management project and one of the top priorities for us over the medium to long-term. Our senior management is committed to leveraging the full capabilities of the group to strengthen risk management, including building a stronger risk culture and raising the risk awareness our employees and executive officers. See Item 11.
“Quantitative and Qualitative Disclosures about Market, Credit and Other Risk—Risk Management”
for further information about this review.
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(2)
Medium-to
Long-term Priority Issues to respond to changed environment
① The Group’s growth strategy for the sustainable improvement of our corporate value
Our vision is to take Nomura to the next stage. To realize this, we launched a new strategy of expanding into private markets to complement our businesses in the public markets. We are committed to strengthening the provision of bespoke services and solutions made for each specific client, through a three-pronged approach, namely the expansion of our client base, expansion of products and services, and delivery utilizing digital technology. Based on this strategy, for instance, we are starting to see results from the following efforts.
For more information on the strategies in each division, please refer to the challenges and strategies in each division.
Strengthening Investment Management Division
We newly established our Investment Management Division, in April 2021, aiming to meet our clients’ diverse needs, as part of our management strategy: Expanding our scope of business from public to private. This division aims not only to expand and strengthen traditional investment products but also to provide investment opportunities into private section such as alternative assets. Nomura Babcock & Brown Co., Ltd, which conducts aircraft leasing and was not under any business division before the establishment of Investment Management Division, was consolidated into Investment Management as a key company under the new division. By bringing together diverse expertise under the same structure, we aim to deliver even greater added value.
Shifting to asset consulting business
We are shifting to an asset consulting business for domestic individual customers. We provide asset consulting services that we believe provide preferable
medium-to
long-term solutions for our clients. We support clients in increasing their assets, and we aim to increase the fee income we receive as a result by increasing assets under custody. The steady increase in income from stock assets such as investment trusts, for which fees such as management and administration expenses are charged for assets under management, contributes to more stable revenue stream for us. We also established our Chief Investment Office (“CIO”) Group in July 2020 to provide consulting services similar to those already offered towards institutional investors, to individual investors. In November 2020, we introduced the CIO services for discretionary investment services to improve operational performance. We are also promoting the introduction of “Nomura Navigation”, a tool that helps clients manage their portfolios and enhance their consulting services. Besides, in addition to the existing commission system which requires payment every time a transaction is made, we are introducing a new fee system that allows customers to select a level fee based on level of client assets. In April 2022, all of our branches began offering this product. In addition to ensuring quality through CIO services, we are building a structure that provides advice that aligns the interests of customers and our company more closely than ever before.
Diversifying Wholesale revenues
In our Wholesale Division, we are diversifying our revenue sources while maintaining a high market share in core products. Capital-light origination business, including M&A advisory, grow global business centered on Americas. Especially, in the U.S., we acquired Greentech Capital, LLC, a firm with a solid presence in sustainable technology and infrastructure, and launched Nomura Greentech in April 2020. We will seamlessly provide financial and other solutions to our global customer base. In addition, regarding solutions business that is less suspectable to changes in market environment, we build up experience in structured finance including infrastructure finance.
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② Digitalization to provide new value-added services and convenience to our clients
Our digital transformation efforts are directly linked to our competitiveness with other financial institutions in the future, and we will continue to promote a wide range of initiatives based on our strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of the added value created by the Nomura Group even in a world of increasing where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications. In addition, we established “Digital Company” in April 2022, aiming to strengthen collaboration in the digital domain across group entities, including in our international operations, while also bolstering initiatives in focus areas. Our efforts to promote digitalization are as follows.
Streamline and enhance internal operations
We are working to focus on high value-added analysis and advisory services by promoting the automation and efficiency of internal operations. We also aim to provide services through highly satisfactory communication methods by improving existing services. For instance, our Retail Division utilizes “Remote Consulting” which is original system supporting sales representatives. In addition, we have launched an internal Digital IQ program to support digital
e-learning
with the aim of lifting the base-level knowledge of digital initiatives across the Group.
Attracting a new client base
We have developed a platform to deliver services for young people and the working generations, who we have not provided with many products and services, by utilizing digital technology. We expand to utilize LINE Securities Corporation established together with LINE Financial Corporation, OneStock which is an asset management smartphone application, FINTOS! which is an investment information application.
Participation in Digital Asset Business
Nomura and BOOSTRY Co., Ltd., which is a joint venture between Nomura and Nomura Research Institute, Ltd. have provided technical infrastructure and other support on digital asset bond and digital bond offerings. This is the first bond offering using blockchain technology by a Japanese issuer. Through our approach to the digital asset business, we aim to provide new added value that goes beyond the boundaries of conventional finance by utilizing advanced technologies and our network. Going forward, we will continue to build a system that can respond to diversifying client needs through products and services in the digital asset value chain, from origination to custody. In addition, in order to systematically accelerate such efforts, we established “Digital Company Strategy Department” and “Digital Asset Strategy Office”, effective April 1, 2022.
③ Initiatives for Sustainability
Our management vision for 2025 is to achieve sustainable growth by helping resolve social issues, and we have integrated sustainability into our management strategy. We now make decisions on sustainability issues at through our Sustainability Committee, which comprises Executive Management Board members, and therefore, we are responding to our own sustainable development issues and other broad social issues in a timely manner. Sustainability promotion in Nomura has value in two ways. One is to support the sustainability efforts of our clients and various stakeholders. The second is to promote the sustainability efforts in our own operations.
Supporting the sustainability efforts of our clients and stakeholders
Our core role as a financial services group is to support clients through the flow of funds and capital. We believe it is important to strengthen our functions to promote the sustainable circulation of
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capital by underwriting green bonds and social bonds issued by companies and financial institutions, providing strategic advisory services such as M&A advisory, and by developing
ESG-related
funds as investments and providing them to individual investors. In addition, we will take advantage of our comprehensive strengths in providing solutions to social issues by leveraging the functions we have cultivated over many years, including support for business succession, promoting innovation in the fields of regional revitalization, agriculture and medical care, and our expertise and knowledge in the field of research and analysis. Since the 1990s, we have been providing financial and economics education programs in Japan for elementary and junior high school students as well as adults. Starting from April 2022, Japanese high schools have classes on financial education, based on the new guidelines of education. In response to this policy, we have appointed Executive in charge of Financial Education, and will continue to strengthen initiatives to improve the financial literacy of society as a whole.
Our company’s own efforts
We have committed to achieve net zero greenhouse gas (“GHG”) emissions for our own operations by 2030, and to transition attributable GHG emissions from our lending and investment portfolios to align with pathways achieving net zero by 2050. To materialize these initiatives, we joined the
Net-Zero
Banking Alliance (“NZBA”) in 2021. We participate in and endorse numerous initiatives besides NZBA to further promote the realization of a sustainable environment and society in cooperation with stakeholders regarding how we will address social issues.
The challenges and strategies in each division are as follows:
Retail Division
Based on the basic concept of “Enriching clients by responding to their concerns about assets”, our Retail Division aims to become a financial institution fulfilling the needs of many people. We will continue working on improving the skills of our clients, and enhance our wide range of products and services in order to accurately respond to diversifying clients’ asset issues such as inheritance or anxiety about lack of funds after retirement. In addition, we will enhance online services and remote consulting service through contact centers.
Investment Management Division
Our Investment Management Division is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of our clients in the broad asset management business. By combining our expertise in traditional assets such as stocks and bonds to alternative assets such as private equity, we provide added value and offer advanced services and solutions to meet the diverse needs of our clients. In the public market business, we aim to strengthen existing businesses and improve through digital transformation. In the private market business, we will strive to expand our product offerings as investors’ demand for alternative investments increases. We will also seek to execute inorganic strategies (such as alliances and equity investments) to expand our product offerings and client base.
Wholesale Division
Our Wholesale Division faces challenges presented by increasingly sophisticated client needs and technological advancement, coupled with uncertainty in the market environment and the possibility of an economic downturn. To ensure continuity of service as well as added value to clients, we will continue to enhance collaboration across regions and divisions while ensuring tight risk control. We will continue efforts to diversify our business portfolio through targeted growth in areas including private markets as well as deploy financial resources to selective, high growth opportunities.
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Global Markets aims to provide uninterrupted liquidity to our clients while reinforcing risk control and governance. Additionally, we aim to further diversify our business portfolio, reinforce global connectivity and cross-sell to leverage our global platform and client franchise, pursue growth opportunities such as structured financing and solution business as well as international wealth management business, and continue to build on the strength of our Flow businesses.
Investment banking aims to provide advisory services and financing to domestic as well as crossborder restructurings and industry-wide consolidations, as well as interest rate and FX solutions related to these transactions as volatile business environments impact our clients’ businesses. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
Risk Management and Compliance, etc.
We have defined our risk appetite in our Risk Appetite Statement which includes the types and level of risk that the Nomura Group is willing to assume in pursuit of our strategic objectives and business plans. Further, we continue to develop our risk management framework in a way that is strategically aligned to our business plans and incorporates decision-making by senior management, thereby securing capital soundness and enhancing our corporate value.
We recognized substantial losses during the years ended March 31, 2021 and 2022 as a result of the U.S. Prime Brokerage Event (as described in Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
”).
To address this issue, we have launched an extensive internal remediation and enhancement program (The “Risk Management Enhancement Program” or “RMEP”) in order to identify specific issues which may have contributed to the loss and areas of improvement in order to strengthen our risk management.
As a part of RMEP, we have clearly defined in our Risk Appetite Statement that all executives and employees must actively engage in risk management through our Three Lines of Defense framework and have provided extensive training to all executives and employees affected by RMEP.
With regard to compliance, we continue to focus on improving the management structure to comply with local laws and regulations in the countries where we operate. We also continue to review our internal systems and rules so that all executive management and employees can work autonomously with high ethical standards.
In order to ensure not only compliance with laws and regulations, but also that all directors, officers and employees are able to act in accordance with social norms, we have established the “Nomura Group Code of Conduct” as guidelines for actions to be taken, and through associated trainings and other measures, we are working to promote appropriate actions (“Conduct”) based on the Code of Conduct. At the ‘Nomura Founding Principles and Corporate Ethics Day’ held in every August, all directors, officers and employees reaffirm the lessons learned from past incidents and renew our determination to prevent similar incidents then to maintain and gain the trust society places in us; discussions are held regarding the proper way to conduct after looking back on past incidents, and a pledge is made to comply with the Code of Conduct.
In order for us to be able to respond to the changing demands of society, the Code of Conduct is regularly reviewed to constantly examine ourselves and to ensure that our thinking aligns with society’s norms. In March 2022, we added a new item “Managing Risks Appropriately” to instill a robust risk culture within Nomura Group, and articulated in writing that each executive and employee will deepen one’s knowledge and understanding on risks, properly recognize and evaluate them, and actively engage in risk management to prepare for all possible contingencies.
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By addressing and resolving the above issues, we will strive for the stability and further development of financial markets as well as the sustainable growth of the Nomura Group.
(3) Human Capital Initiatives
① Nomura’s Approach to Human Resources
Philosophy of “Human resources is the greatest asset”
With the belief that our people are our most valuable asset, we consistently aim to create a workplace where our employees can build long-term careers and play an active role in our business and are implementing various initiatives to enhance the physical and mental health of our employees.
Talent Management Based on Corporate Philosophy
We regard “We help to enrich society through our expertise in capital markets” as our social mission in our corporate philosophy. To realize this mission, we have set “Entrepreneurial Leadership,” “Teamwork” and “Integrity” as being core values that must be maintained at all times, and established the Nomura Code of Conduct to provide clear guidelines for connecting our corporate philosophy with these values. As talent management embodies these needs, we are working on the following various initiatives to foster and embed these values in our employees.
② Talent Management Initiatives
We are working on the following Initiatives to foster values of “Entrepreneurial Leadership,” “Teamwork,” and “Integrity” that must be maintained at all times.
Main ObjectiveExamples of Initiatives
Securing diverse human resources
•  
Internship and Nomura passport
We offer internship programs in Nomura Securities which offer students the opportunity to experience working in various areas of our business, and to deepen their knowledge of the financial services industry. In addition to this, students also learn about the roles and purpose of the securities industry. This helps students broaden their knowledge and experience and gives them the opportunity to think about their future careers.
We have also introduced an employment program called “Nomura Passport” for students pursuing doctoral degrees in the fields of science and technology in order to identify talent with expertise in such areas as AI development, data science and digitalization which will be increasingly critical to our business going forward.
Providing and supporting growth opportunities and developing professional human resources
•  
Training
In addition to training programs for new hires, training programs in Japan mainly consist of group training and
on-the-job
training to develop and train our employees. Global training is conducted separately by year of entry and position. Additionally, we conduct a leadership program aimed at developing our next generation of leaders and a program to support the development of women as executives with participants selected based on their performance and potential. We also offer a global program that is held annually
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Main ObjectiveExamples of Initiatives
in our Tokyo headquarters for managers of our overseas entities. In addition, we have established a self-improvement support system, consisting of a large number of external training and correspondence courses as well as voluntary group training on weekends at our company training facilities, in order to support the development of our employees on a voluntary basis.
•  
Study-abroad program
Over the past 60 years, more than 600 Nomura Securities employees have studied at business and law schools in more than 20 countries and regions, mainly in the United Kingdom and the United States.
•  
Global Mobility (International Transfer)
In addition to transferring from Japan to overseas, we actively provide opportunities for employees of our overseas entities to transfer to Japan to develop employees with experience of working in different countries and cultures.
•  
Digital IQ program
As we enter an era in which digital-related knowledge determines the competitiveness of global financial institutions, we have introduced the “Digital IQ” Program. This program is an online program for all of our global employees to improve their knowledge and skills.
Proper evaluation and treatment
•  
Compensation system based on the
pay-for-performance
principle
Based on our principle that employees are paid based on their performance, we ensure our compensation policies and practices are sound and competitive from a market perspective. This helps us realize our business strategy and generate long-term profits, with the aim of achieving sustainable growth and improving enterprise value over the medium to long term.
•  
360-degree
evaluation
We conduct a “360 degree evaluation” in which relevant managers are evaluated by colleagues other than their immediate superiors. This leads to further skill development and behavioral change for managers.
•  
ERCC goal
We have introduced a standard ERCC goal, which set goal from the perspectives of ethics, risk management, compliance, and conduct. We aim to raise the awareness of the Code for each employee and to instill the concept of the Code throughout our business, thereby creating an environment in which employees can speak out.
Employee engagement
•  
Employee engagement survey
We conduct the “Nomura Group Employee Survey” to monitor, maintain and improve the status of communication across our
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Main ObjectiveExamples of Initiatives
business and to understand the level of our employee satisfaction. As part of the most recent survey conducted during the year ended March 31, 2022, many employees responded positively to the question, “I am proud to work for the firm.”
Fostering a risk culture
•  
Fostering a risk culture
We have made it an objective for all of our global employees to foster a risk culture within our business by encouraging respectful relationships (Respect), reporting to their manager (Escalate), and performing constructive checks (Challenge).
DE & I, Health &Productivity Management, and provision of equal opportunities and prohibition of discrimination
•  
DE&I
As we have employees from about 90 different nationalities across our business, the development of human resources that respect diversity is one of our most important issues. These diverse human resources are our greatest asset. We believe that through mutual recognition and cooperation with others who have different backgrounds and values, we can meet the diverse needs of our clients and provide higher value-added services.
Based on this philosophy, our Sustainability Committee, chaired by the Group CEO, discuss and promote global strategies about DE&I. In addition, voluntary employee networks are promoting diversity issues in our offices globally. We are working on these issues from both a
top-down
and
bottom-up
approach. In accordance with the enactment of the “The Act on Promotion of Women’s Participation and Advancement in the Workplace” in Japan, we have formulated an action plan focused on the promotion of women’s participation and advancement and we are implementing various programs to achieve this.
•  
Health & Productivity Management
In July 2016, we adopted the Nomura Health & Productivity Declaration Statement as part of our efforts led by the Group Chief Health Officer (CHO) to maintain and improve the health of our employees. Starting in the year ended March 31, 2021, in order to work toward our management vision of “Achieve sustainable growth by helping resolve social issues,” we are communicating to all employees our goal that “All people who work at Nomura will not simply be healthy, but also physically, mentally and socially sound (overall well-being).”
•  
Provision of equal opportunities and prohibition of discrimination
For each and every employee to be active and successful in utilizing their capabilities and personal strengths, we provide equal opportunities in recruitment, development, evaluation, promotion and assignment. As part of the “Respect diversity and human rights” Section of the Nomura Group Code of Conduct, we state that “We promote equal opportunity and do not discriminate on grounds
such as nationality, race, sex, gender identity, sexual orientation, creed, social status, or existence of or nonexistence of disability.”
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C. Organizational Structure.
The following table lists the Company and its significant subsidiaries and their respective countries of incorporation as of March 31, 2022. Indentation indicates the principal parent of each subsidiary. Proportions of ownership interest include indirect ownership.
Name
Country/Region
Ownership

Interest
(%)
Nomura Holdings, Inc.
Japan—  
Nomura Securities Co., Ltd.
Japan100
Nomura Asset Management Co., Ltd.
Japan100
The Nomura Trust & Banking Co., Ltd.
Japan100
Nomura Babcock & Brown Co., Ltd.
Japan100
Nomura Capital Investment Co., Ltd.
Japan100
Nomura Investor Relations Co., Ltd.
Japan100
Nomura Fiduciary Research & Consulting Co., Ltd.
Japan100
Nomura Research & Advisory Co., Ltd.
Japan100
Nomura Business Services Co., Ltd.
Japan100
Nomura Properties, Inc.
Japan100
Nomura Institute of Capital Markets Research
Japan100
Nomura Healthcare Co., Ltd.
Japan100
Nomura Agri Planning & Advisory Co., Ltd.
Japan100
Nomura Financial Products & Services, Inc.
Japan100
Nomura Institute of Estate Planning
Japan100
N-Village
Co., Ltd.
Japan100
Nomura Capital Partners Co., Ltd.
Japan100
Nomura Mezzanine Partners Co., Ltd.
Japan100
Corporate Design Partners Co., Ltd.
Japan100
Nomura Kagayaki Co., Ltd.
Japan100
Nomura Asia Pacific Holdings Co., Ltd.
Japan100
Nomura International (Hong Kong) Limited
Hong Kong100
Nomura Singapore Limited
Singapore100
Nomura Securities Singapore Pte. Ltd.
Singapore100
Nomura Australia Limited
Australia100
PT Nomura Sekuritas Indonesia
Indonesia96
Nomura Asia Investment (Fixed Income) Pte. Ltd.
Singapore100
Nomura Asia Investment (Singapore) Pte. Ltd.
Singapore100
Capital Nomura Securities Public Co., Ltd.
Thailand99
Nomura Financial Advisory and Securities (India) Private Limited
India100
Nomura Holding America Inc.
(1)
U.S.100
Nomura Securities International, Inc.
U.S.100
Nomura Corporate Research and Asset Management Inc.
U.S.100
Nomura Derivative Products Inc.
U.S.100
Nomura America Mortgage Finance, LLC
U.S.100
Nomura Global Financial Products, Inc.
U.S.100
NHI Acquisition Holding, Inc.
U.S.100
Instinet Incorporated
(1)
U.S.100
Nomura Europe Holdings plc
U.K.100
Nomura International plc
U.K.100
Nomura Bank International plc
U.K.100
Nomura Financial Products Europe GmbH
Germany100
Banque Nomura France
France100
Nomura Bank (Luxembourg) S.A.
Luxemburg100
Nomura Bank (Switzerland) Ltd.
Switzerland100
Nomura Europe Finance N.V.
The Netherlands100
Nomura European Investment Limited
U.K.100
Nomura Asia Investment (India Powai) Pte. Ltd.
Singapore100
Nomura Services India Private Limited
India100
Nomura International Funding Pte. Ltd.
Singapore100
Nomura Orient International Securities Co., Ltd.
China51
(1)
Following an internal reorganization effective April 1, 2022, Instinet Incorporated and its group entities are now subsidiaries of Nomura Holding America Inc.
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D. Property, Plants and Equipment.
Our Properties
As of March 31, 2022, our principal head office is located in Tokyo, Japan and occupies 861,463 square feet of office space. Our other major offices in Japan are our Osaka branch office, which occupies 131,470 square feet, our Nagoya branch office, which occupies 89,567 square feet, and the head office of NAM in Tokyo, which occupies 128,715 square feet.
As of March 31, 2022, our major offices outside Japan are the head offices of NIP located in London, which occupies 250,616 square feet, the New York head office of Nomura Securities International, Inc., which occupies 188,957 square feet, and the offices of Nomura International (Hong Kong) Limited located in Hong Kong which occupies 111,837 square feet. We lease most of our overseas office space.
As of March 31, 2022, the major office of Nomura Services India Private Limited, our specialized service company in Mumbai, India, occupies 217,668 square feet.
As of March 31, 2022, the aggregate book value of the land and buildings we owned was ¥99 billion, and the aggregate book value of equipment we owned, including communications and data processing facilities, was ¥32 billion.
As of March 31, 2022, we plan to construct a new facility as follows:
Name
 Location Segment 
Nature of the plan
 Estimate of the
amount of
expenditures
(million yen)		  Amount of
expenditures
already paid
(million yen)		  Method of
financing		 Date of start of the
activity		 Estimated
date of
completion of
the activity
NHI Tokyo Other Nihonbashi
1-Chome
Naka Area Type 1 Urban Area Redevelopment Project		  120,000   8,267  Own funds December 2021 March 2026
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule
12b-2
under the Securities Exchange Act of 1934. There are no written comments which have been provided by the staff of the Securities and Exchange Commission regarding our periodic reports under that Act not less than 180 days before the end of the fiscal year ended March 31, 2022 and which remain unresolved as of the date of the filing of this annual report with the Commission.
Item 5. Operating and Financial Review and Prospects
A. Operating Results.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of factors, including, but not limited to, those under Item 3.D “Risk Factors” and elsewhere in this annual report.
Business Environment
The global economy experienced repeated slowdowns in the fiscal year ended March 31, 2022 in response to
flare-ups
in the
COVID-19
pandemic. Even so, economic activity resumed to a great extent, particularly in the countries of the West that were at the forefront in administering
COVID-19
vaccination programs. The pandemic
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had a lingering impact on emerging market economies in particular, causing sluggishness in production and distribution that, when combined with the
pent-up
demand unleashed by the economic recovery, led to increasingly severe supply constraints and, in turn, rising inflation. Despite initial expectations that it would not last, this rise in inflation became protracted, and as a result the central banks of major countries and regions around the world became more inclined to execute monetary policy tightening sooner than they had previously expected to, or to raise their policy interest rates in larger increments. This led to greater concern over rising interest rates in financial markets. Global equity markets stayed in an overall uptrend, albeit punctuated by numerous downward adjustments prompted by worries over sustained inflation and rising market interest rates. China’s economic growth slowed, in part due to curbs on production executed in the interest of stepping up the pace of decarbonization and tightening controls and regulations under China’s “common prosperity” drive.
Japan’s economy performed sluggishly. The country suffered repeated
flare-ups
in the pandemic—in part because it was slower than the countries of the West to roll out vaccinations—and supply constraints ended up causing a slump in exports. However, in spite of lackluster performance in the real economy and rising costs (including in the form of higher prices for imported raw materials due to accelerating global inflation and high market prices for raw materials and fuel), earnings at major Japanese companies kept up solid growth. The Japanese equity market set a fresh post-bubble high in September, buoyed by rising global equity markets and improvement in corporate earnings at home, but performance thereafter softened under the influence of downward adjustments in equity markets around the world triggered in part by worries over rising interest rates.
Executive SummaryCorporate Goals and Principles
—① Fundamental Management Policy
U.S. Prime Brokerage EventIn Fundamental Management Policy formulated by the Board of Directors, our company has set the following Management Vision and Basic Vision of Group Management.
” for further information on the nature
Fundamental Management Policy of this event. Although we establish and maintain allowances for credit losses, such allowances reflect management judgments and assumptions based on information available to us, which may provide incorrect or incomplete, and these judgments and assumptions may prove to be incorrect, potentially significantly so.Nomura Holdings, Inc.
 
13
(Management Vision)
Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in the firm and increasing satisfaction of stakeholders, including that of shareholders and clients.
As a global investment bank, the Company will provide high value-added solutions to clients globally, and recognizing its wider social responsibility, the Company will continue to contribute to the economic growth and development of society.
To enhance its corporate value, the Company utilizes return on equity (“ROE”) as a management indicator and will strive for sustainable business transformation.
(Basic Vision of Group Management)
(1) Nomura Group will establish its modernized growth model by itself through realizing expansion of its business in new domains. Nomura Group will also establish earning structure not subject to market condition with proper cost control and risk management.
(2) Nomura Group will aim to serve its customers at the highest level in every investment, by paying thorough attention to the needs of its customers and the market and by providing its customers with highly value-added solutions in financial and capital markets.
(3) Nomura Group will emphasize compliance with applicable laws and regulations and proper corporate behavior to carry out compliance and conduct risk management in daily business operations. Each company of Nomura Group shall respect customers’ interests and comply with applicable laws and regulations relating to the business.
(4) Nomura Group seeks to ensure effective management oversight and increase management transparency.
(5) Nomura Group will contribute to expanding securities markets through daily business and continuously engage in educational activities regarding investment in order to broaden participation in the securities market.
We have established the following management vision based on the management goals.
② Management Vision
Our diverse businesses rely on the trust of our clients and all stakeholders. We recognize that raising our corporate value and ensuring sustainable growth of society as a whole are closely linked together. This is why our management vision is to achieve sustainable growth by helping resolve social issues.
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Credit risk may also arise from:
Our Business Divisions
holding securities issued by third parties, or
the execution of securities, futures, currency or derivative transactions that fail to settle at the required time due to non-delivery by the counterparty, such as financial institutions and hedge funds which are counterparties to credit default swaps or systems failure by clearing agents, exchanges, clearing houses or other financial infrastructure.
Issues related to third party credit risk may include the following:
(1) DefaultsRetail
In our Retail Division, we conduct business activities by delivering a largewide range of financial institution could adversely affectproducts and high quality investment services mainly for individuals and corporations in Japan primarily through a network of nationwide branches of NSC. The total number of local branches, including our head office, was 119 as of the financial markets generallyend of March 2022. We offer investment consultation services to meet the medium and long-term needs of our clients. We discuss retail client assets in “
Retail Client Assets
” under Item 5.A of this annual report.
We will strengthen our operating model to provide solutions and services that enable us specificallyfurther flexible approaches to the entire balance sheet of our clients.
Investment Management
The commercial soundnessOur Investment Management Division is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of many financial institutions is closely interrelated as a result of credit, trading, clearing or other relationships amongour clients in the institutions. As a result, concern about the creditworthiness of or a default by, a certain financial institution could lead to significant liquidity problems or lossesbroad asset management business. By combining our expertise in or defaults by, other financial institutions. This may adversely affect financial intermediaries,traditional assets such as clearing agencies, clearing houses, banks, securities firmsstocks and exchanges, with whichbonds to alternative assets such as private equity, we interact on a daily basis. Actual defaults, increases in perceived default riskprovide added value and offer advanced services and solutions to meet the diverse needs of our clients. Within the Investment Management Division, Nomura Asset Management Co., Ltd. (NAM) and many of our other similar events could ariseinvestment and asset management companies maintain their independence while driving progress within the asset management industry, increasing collaboration within the division, and leveraging our comprehensive capabilities elsewhere in the future and could have an adverse effect on the financial markets and on us. Our funding operations may be adversely affected if major financial institutions, Japanese or otherwise, fail or experience severe liquidity or solvency problems.Nomura Group.
(2) There can be no assurance as to the accuracy of the information about, or the sufficiency of the collateral we use in managing, our credit risk
We regularly review our credit exposure to specific clients or counterparties and to specific countries and regions that we believe may present credit concerns. Default risk, however, may arise from events or circumstances that we do not detect, such as account-rigging and fraud. We may also fail to receive full information with respect to the risks of a counterparty, or to accurately manage and assess such information internally. For example, our credit risk assessments with respect to the client whose default led to the U.S. Prime Brokerage Event did not reflect the full extent of the client’s relevant trading activity. In addition, in cases where we have extended credit against collateral, we may fall into a deficiency in value in the collateral if sudden declines in market values reduce the value of our collateral, as was the case with loans extended to the prime brokerage client leading in part to the U.S. Prime Brokerage Event. See Item 5. “
Operating and Financial Review—Executive Summary—U.S. Prime Brokerage Event”
for further information on the nature of this event.
(3) Our clients and counterparties may be unable to perform their obligations to us as a result of political or economic conditions
Country, regional and political risks are components of credit risk, as well as market risk. Political or economic pressures in a country or region, including those arising from local market disruptions or currency crises, may adversely affect the ability of clients or counterparties located in that country or region to obtain credit or foreign exchange, and therefore to perform their obligations owed to us.
7.
We are a holding company and depend on payments from our subsidiaries
We are committed to providing high-quality investment strategies, products and services to a holding companywide range of investors. Along with delivering investment trusts for individual investors through financial institutions in Japan, we provide various investment solutions, both in public and heavily depend on dividends, distributionsprivate market asset classes, to pension funds, institutional investors, and other paymentsfinancial intermediaries globally.
Our revenues are mainly from asset management fees we receive from our subsidiariesclients or funds we manage. Typically, our asset management fees are based on fixed annual rates calculated based on the amount of assets under our management. Also, we occasionally receive success or performance-linked fees depending on the investment performance we deliver to make payments on our obligations. Regulatoryclients. We also seek to generate investment gains through our own investments. We often
co-invest
in private market funds we manage alongside external investors to demonstrate our commitment in the underlying investment strategies of those funds.
In 2016, we acquired a
non-controlling
economic interest in American Century Investments (“ACI”), an independent investment management firm based in the U.S. and other legal restrictions, suchannounced a strategic partnership with ACI. We seek to deepen our strategic alliance from a “complementary” relationship to an “integrated” one as those under the Companies Act, may limitwe continue to work together to further serve our ability to transfer funds freely, either to orclients. We include investment gains and losses from our subsidiaries. In particular, manyinvestment in ACI as part of our subsidiaries, including our broker-dealer subsidiaries, are subject to lawsInvestment Management Division’s revenue.
Wholesale
Our Wholesale Division consists of two businesses, Global Markets, which is engaged in the trading, sales and regulations, includingstructuring of financial products, and Investment Banking which is engaged in financing and advisory businesses.
Global Markets
Global Markets provides sales, trading, agency execution, and market-making of fixed income and equity-related products.
 
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Our global fixed income offerings include, among other products, government securities, interest rate derivatives, investment-grade and high-yield corporate debt securities, credit derivatives,
G-10
and emerging markets foreign exchange, asset-backed securities and mortgage-related products, in
over-the-counter
(“OTC”) and listed markets. We are primary dealers in the Japanese government securities market as well as in the Asian, European and U.S. markets.
Our global equity-related products include equity securities, Exchange Traded Funds (“ETFs”), convertible securities, listed and OTC equity derivatives, and prime services. In addition, we offer execution services based on cutting-edge electronic trading technology to help clients navigate through the complex market structure and achieve best execution. In order to provide extensive market access to our clients, we are also a member of various exchanges around the world, with leading positions on the Tokyo Stock Exchange.
These product offerings are supported by electronic/digital technology, and our global structuring and quants function which provide tailored ideas and trading strategies for our institutional and corporate clients as well as our retail franchise.
Investment Banking
We offer a broad range of investment banking services to a diverse range of corporations, financial institutions, sovereigns, financial sponsors and others. We aim to establish and cultivate strong, long-term relationships with our clients by providing them with our extensive resources for each bespoke solution.
Underwriting.
We underwrite offerings of a wide range of securities and other financial instruments, including various classes of shares, convertible and exchangeable securities, investment grade and high yield debt, sovereign and emerging market debt, structured securities and other securities in the Asian, European, U.S. and other financial markets. We also arrange private placements and engage in other capital raising activities.
Financial Advisory
 & Solutions Services.
We provide financial advisory services on business transactions including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts and risk solutions. Our involvement in reorganizations and other corporate restructurings related to industry consolidation enhances our opportunities to offer clients other advisory and investment banking services.
On April 1, 2020, we completed the acquisition of Greentech Capital, LLC, an M&A boutique that is strong in sustainable technology and infrastructure. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
Our Research Activities
We have an extensive network of intellectual capital with key research offices in Tokyo, Hong Kong and other major markets in the Asia-Pacific region, as well as in London and New York. We are recognized as a leading content provider with an integrated global approach to providing capital markets research. Our analysts collaborate closely across regions and disciplines to track changes and spot future trends in politics, economics, foreign exchange, interest rates, equities, and credit, and also provide quantitative analysis.
Our Information Technology
We believe that information technology is one of the key success factors for our overall business and intend to maintain and enhance our solid technology platform to ensure that we are able to fulfill and exceed the various needs of our clients. Accordingly, we will continue to invest, enhance and adapt our technology platform to ensure it remains suitable for each division and proactively seek and implement innovative financial technology to improve the operations of our business.
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regulatory capital requirements, that authorize regulatory bodiesIn our Retail Division, we continually invest and enhance our core system and related systems to block or reduce the flow of funds to the parent holding company, or that prohibit such transfers altogetherimprove efficiency in certain circumstances. For example, NSC, Nomura Securities International, Inc., Nomura International plcour business operations. We are also continuously working on improving our internet-based and Nomura International (Hong Kong) Limited, our main broker-dealer subsidiaries, are subject to regulatory capital requirements and changes in such regulatory capital requirements and the required level could limit the transfer of funds to us. While we monitor and manage the transfer of funds among Nomura Group on the basis of the relevant laws and regulations on a daily basis, these laws and regulations may hinder our ability to access funds needed to make payments on our obligations.smartphone platforms.
8.
We may not be able to realize gains we expect, and may even suffer losses, on our investments in equity securities and
non-trading
debt securities
We hold substantial investments in equity securities including private equity investmentsIn our Investment Management Division, we continue to invest and
non-trading
debt securities. Under U.S. GAAP, depending on market conditions, we may recognize significant unrealized gains or losses on enhance our investments in equity securities and debt securities, which could have an adverse impact on our financial condition and results of operations. For example, in the fiscal year ended March 31, 2020, we recognized a loss of ¥16.4 billiontechnology platforms related to our core businesses leveraging third-party services to improve our capabilities and efficiency. We are also continuously working on digital marketing to expand business opportunities, and utilizing advanced technology to automate and sophisticate operations for investment in American Century Investments and ¥16.6 billion on our investments in equity securities resulting from market declines arising from the
COVID-19
pandemic. Depending on the market conditions, we may also not be able to dispose of these equity securities and debt securities when we would like to do so, as quickly as we may wish or at the desired price.
9.
We may face an outflow of clients’ assets due to losses of cash reserve funds or debt securities we offer
Cash reserve funds, such as money market funds and money reserve funds are categorized as low risk financial products. As a result of a sudden rise in interest rates, such cash reserve funds may fall below par value due to losses resulting from price decreases of debt securities in the portfolio, defaults of debt securities in the portfolio or charges of negative interest. If we determine that a stable return cannot be achieved from the investment performance of cash reserve funds, we may accelerate the redemption of, or impose a deposit limit on, such cash reserve funds. For example, Nomura Asset Management Co., Ltd., the Company’s subsidiary, ended its operation of money market funds in late August 2016 and executed an accelerated redemption of such funds in September 2016.management.
In addition, debt securities thatour Wholesale Division, we offer may default or experience delays in the payment of interest and/or principal.
These events above may result in the loss of client confidencecontinually invest and leadenhance our technology platforms to an outflow of client assets from our custody or preclude us from increasing such client assets.
·
Risks Relating to Our Financial Position
10.
We may have to recognize impairment losses with regard to the amount of goodwill, tangible and intangible assets recognized on our consolidated balance sheets
We have purchased all or a part of the equity interests in, or operations from, certain other companies inprovide better risk management, improved data governance and also to increase trading capabilities through platforms allowing direct market access and algorithmic trading. In order to pursue our business expansion, and expect to continue to do so when and as we deem appropriate. We account for certain of those and similar purchases and acquisitions as a business combination under U.S. GAAP by allocating our acquisition costs toensure the assets acquired and liabilities assumed and recognizing the remaining amount as goodwill. On April 1, 2020, Nomura acquired 100% of Greentech Capital, LLC (“Greentech”) and goodwill of ¥12,480 million is reported on our consolidated balance sheet. We also possess tangible and intangible assets other than those stated above.
We may have to recognize impairment losses, as well as other losses associated with subsequent transactions, with regard to the amount of goodwill, tangible and intangible assets and, recognized on our consolidated group balance sheet which may adversely affect our financial condition and results of operations. For example, during the year ended March 31, 2019, we recognized an impairment loss on goodwill in our Wholesale segment attributable to previous overseas acquisitions of ¥81,372 million.
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11.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
Liquidity, or having ready access to cash, is essential to our business. We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of our creditworthiness or deterioration in market conditions. In addition to maintaining a readily available cash position, we seek to secure ample liquidity through repurchase agreements and securities lending transactions, long-term borrowings and the issuance of long-term debt securities, diversification of our short-term funding sources such as commercial paper, and by holding a portfolio of highly liquid assets. We bear the risk that we may lose liquidity under certain circumstances, including the following:
(1) We may be unable to access unsecured or secured funding
We continuously access unsecured funding from issuance of securities in the short-term credit markets and debt capital markets as well as bank borrowings to finance our
day-to-day
operations, including refinancing. We also enter into repurchase agreements and securities lending transactions to raise secured funding for our trading businesses. An inability to access unsecured or secured funding or funding at significantly higher cost than normal levels could have a substantial negative effect on our liquidity. For example, lenders could refuse to extend the credit necessary for us to conduct our business based on their assessment of our long-term or short-term financial prospects if:
We incur large trading losses,
Thesupport level of our business activity decreases dueWholesale operations, we will continue to a market downturn,
maintain utilization of our offshore service entities in India and enhance our regional support based capabilities.
Regulatory authorities take significant action against us, or
Our credit rating is downgraded.
In additionFurthermore, our digital transformation efforts are directly linked to the above, our ability to borrow in the debt capital markets could also be adversely impacted by factors that are not specific to us, such as reductions in banks’ lending capacity, a severe disruption of the financial and credit markets, negative views about the general prospects for the investment banking, brokerage or financial services industries, or negative market perceptions of Japan’s financial soundness.
(2) We may be unable to sell assets
If we are unable to raise funds or if our liquidity declines significantly, we will need to liquidate assets or take other actions in order to meet our maturing liabilities. In volatile or uncertain market environments, overall market liquidity may decline. In a time of reduced market liquidity, we may be unable to sell some of our assets, or we may have to sell at depressed prices, which could adversely affect our results of operations and financial condition. Our ability to sell assets may also be adversely impacted by other market participants seeking to sell similar assets into the market at the same time.
(3) Lowering of our credit ratings could impact our funding
Our funding depends significantly on our credit ratings. Rating agencies may reduce or withdraw their ratings or place us on “credit watch” with negative implications. For example, following the U.S. Prime Brokerage Event, in March 2021, Fitch Ratings, Inc. placed our credit ratings on negative watch and Moody’s Investors Service, Inc. changed the outlook on our credit ratings to negative, which may lead either agency to downgrade our credit ratings in the future. See Item 5. “Operating and Financial Review—Executive Summary—U.S. Prime Brokerage Event” for further information on the nature of this event. Future downgrades could increase our funding costs and limit our funding. This, in turn, could adversely affect our result of operations and our financial condition. In addition, other factors which are not specific to us may impact our funding, such as negative market perceptions of Japan’s financial soundness.
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12.
Equity investments in affiliates and other investees accounted for under the equity method in our consolidated financial statements may decline significantly over a period of time and result in us incurring impairment losses
We have affiliates and investees accounted for under the equity method in our consolidated financial statements and whose shares are publicly traded. If there is a decline in the market price, of the shares we hold in such affiliates over a period of time, and we determine that the decline is other-than-temporary, then we recognize an impairment loss for the applicable fiscal period which may have an adverse effect on our financial condition and results of operations. For example, we recognized an impairment loss of ¥47,661 million against its investment in Nomura Real Estate Holdings, Inc. during the year ended March 31, 2021.
·
Risks Relating to Legal, Compliance and Other Operational Issues
13.
Misconduct or fraud by an employee, director or officer, or any third party, could occur, and our reputation in the market and our relationships with clients could be harmed
We always face the risk that our employees, directors or officers, or any third party, could engage in misconduct that may adversely affect our business. Misconduct by an employee, director or officer includes conduct such as entering into transactions in excess of authorized limits, acceptance of risks that exceed our limits, or concealment of unauthorized or unsuccessful activities. The misconduct could also involve the improper use or disclosure of
non-public
information relating to us or our clients, such as insider trading and the recommendation of trades based on such information, as well as other crimes, which could result in regulatory sanctions, legal liability and serious reputational or financial damage to us.
For example, on March 5, 2019, a researcher at Nomura Research Institute, Ltd. (“NRI”), our equity-method affiliate, revealed information that there was a high possibility that the standard for designating the top market of the Tokyo Stock Exchange (the “TSE”) would fall to ¥25 billion, which had been under review at the TSE, to a chief strategist (the “NSC Strategist”) in the research division of Nomura Securities Co., Ltd. (“NSC”). The researcher at NRI was a member of the Advisory Group to Review the TSE Equity Market Structure and received this information in such capacity. On the same day and the next day, the NSC Strategist communicated the information to certain people including members of Japanese stock sales team of NSC and Nomura International (Hong Kong) Limited, some of whom provided the information to their institutional investor clients. Although the provision of the information did not represent a violation of law, they were inappropriate conducts and impaired the implicit trust placed in us and our employees by other market participants. Following a special internal investigation conducted by external experts, on May 24, 2019, we announced a remediation plan and the reduction of compensation of certain of our executives and those of NSC. On May 28, 2019, the FSA issued a business improvement order to us and to NSC, requiring us to clarify responsibility for this incident, develop and submit a detailed improvement plan, and report periodically on the implementation and effectiveness of measures for improvement, and on August 28, 2019, a fine of ¥10 million was imposed by Tokyo Stock Exchange, Inc. as a penalty.
Third parties may also engage in fraudulent activities, including devising a fraudulent scheme to induce our investment, loans, guarantee or any other formcompetitiveness of financial commitment, both direct and indirect. Because of the broad range of businesses that we engage in and the large number of third parties with whom we deal in our
day-to-day
business operations, such fraud or any other misconduct may be difficult to prevent or detect, and our future reputation and financial condition could adversely affected, which could result in serious reputational or financial damage to us in the future.
Measures we have implemented or additional measures that may be implementedinstitutions in the future, may not be effective in preventing or managing the risk of misconduct or fraud in all cases, and we may not always be ablewill continue to detect or deter misconduct or fraud by an employee, director, officers, or third parties. If any administrative or judicial sanction is issued against us as a result of such fraudulent or misconduct, we may lose business opportunities, and our future revenue and results of operations may be materially and adversely affected, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions.
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14.
A failure to identify and appropriately address conflicts of interest could adversely affect our business
We are a global financial institution that providespromote a wide range of products andinitiatives based on our strategy in order to provide highly convenient services to a diverse groupour clients and respond to diversifying needs. We also believe that our people are the source of clients, including individuals, corporations, other financial institutions and governmental institutions. As such, we face potential conflicts of interest in the ordinary course of our business. Conflicts of interests can arise when our services to a particular client conflict or compete, or are perceived to conflict or compete, with our own interests. In addition, where
non-public
information is not appropriately restricted or shared within the firm, conflicts of interest can also arise where a transaction withinadded value created by the Nomura Group even in a world where digitization and or a transactiondigitalization are advanced. We will continue to strengthen the development of our human resources with another client conflict or compete, or is perceived to conflict or compete, with a transaction with a particular client. While we have extensive internal procedures the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and controls designed to identify and address conflicts of interest on the basis of the Nomura Group Conflicts of Interest Management Policy, a failure, or a perceived failure, to identify, disclose and appropriately address such conflicts could adversely affect our reputation, the willingness of current or potential clients to do business with us and our revenues and results of operations. In addition, conflicts of interest could give rise to regulatory actions or litigation.
15.
Our business is subject to substantial legal, regulatory and reputational risks
Substantial legal liability or a significant regulatory action against us could have a material adverse effect on our business, financial condition or results of operations, or cause reputational harm to us. Also, material changes in regulations applicable to us or to the markets in which we operate could adversely affect our business. See Note 21
“Commitments, contingencies and guarantees”
in our consolidated financial statements included in this annual report for further information regarding the significant investigations, lawsuits and other legal proceedings that we are currently facing.
We face significant legal risks in our businesses. These risks include liability under securities or other laws in connection with securities underwriting and offering transactions, liability arising from the purchase or sale of any securities or other financial products, disputes over the terms and conditions of complex trading arrangements or the validity of contracts for our transactions, disputes with our business alliance partners and legal claims concerning our other businesses.
virtual communications.
(1) Legal liability may occur due to market downturn and could adversely affect our business, financial condition and results of operations
During a prolonged market downturn or upon the occurrence of an event that adversely affects the market, we would expect claims against us to increase. We may also face significant litigation. The cost of defending such litigation may be substantial and our involvement in litigation may damage our reputation. In addition, even legal transactions might be subject to adverse public reaction according to the particular details of such transactions. These risks may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time.
(2) Extensive regulation of our businesses limits our activities and may subject us to significant penalties and lossesCompetition
The financial services industry is subjectintensely competitive and we expect it to extensive regulation.continue remain so. We are subject to increasing regulation by governmentalcompete globally with other brokers and self-regulatory organizations in Japan and in virtually all other jurisdictions in which we operate, and such governmental and regulatory scrutiny may increase as our operations expand or as laws change. In addition, while regulatory complexities increase, possibilities of extra-territorial application of a regulation in one jurisdiction to business activities outside of such jurisdiction may also increase. These regulations are broadly designed to ensure the stability of financial systems and the integrity of the financial markets and financial institutions, and to protect clientsdealers, investment banking firms, commercial banks, investment advisors and other third parties who deal with us,financial services firms. We also face competition on regional, product and often limitniche bases from local and specialist firms. A number of factors determine our activities and/or affect our profitability, through net capital, client protection and market conduct requirements. In addition, on top of traditional finance-related legislation, the scope of laws and regulationscompetitive position against other firms, including:
 
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the quality, range and prices of our products and services,
our ability to originate and develop innovative client solutions,
our ability to maintain and develop client relationships,
our ability to access and commit capital resources,
our ability to retain and attract qualified employees, and
our general reputation.
Our competitive position is also affected by the overall condition of the global financial markets, which are influenced by factors such as:
the monetary and fiscal policies of national governments and international economic organizations,
economic, political and social developments both within and between Japan, the U.S., Europe and other major industrialized and developing countries and regions, such as the
COVID-19
pandemic since 2020, and
increasing digitalization beyond the traditional financial sector
In Japan, we compete with other Japanese and
non-Japanese
securities companies and other financial institutions. Competition has become more intense due to deregulation in the Japanese financial industry since the late 1990s and the increased presence of global securities companies and other financial institutions. In particular, major global firms have increased their presence in securities underwriting, corporate advisory services (particularly, mergers and acquisitions advisory) and secondary securities sales and trading.
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applyingThere has also been substantial consolidation and convergence among financial institutions, both within Japan and globally and this trend continued as the credit crisis caused mergers and acquisitions and asset acquisitions in the industry. The growing presence and scale of financial groups which encompass commercial banking, securities brokerage, investment banking and other financial services has led to and/increased competition. Through their broadened offerings, these firms are able to create good client relationships and leverage their existing client base in the brokerage and investment banking business as well.
In addition to the breadth of their products and services, these firms have the ability to pursue greater market share in investment banking and securities products by reducing margins and relying on their commercial banking, asset management, insurance and other financial services activities. This has resulted in pricing pressure in our investment banking and trading businesses and could result in pricing pressure in other areas of our businesses. We have also competed, and expect to compete, with other financial institutions which commit capital to businesses or impactingtransactions for market share in investment banking activities. In particular, corporate clients may seek loans or commitments in connection with investment banking mandates and other assignments.
Moreover, the trend toward consolidation and convergence has significantly increased the capital base and geographic reach of some of our competitors, hastening the globalization of the securities and financial services markets. To accommodate this trend, we will have to compete successfully with financial institutions that are large and well-capitalized, and that may have a stronger local presence and longer operating history outside Japan.
Regulation
Japan
Regulation of the Securities Industry and Securities Companies
. Pursuant to the Financial Instruments and Exchange Act (“FIEA”), the Prime Minister of Japan has the authority to supervise and regulate the securities industry and securities companies, and delegates its authority to the Commissioner of the FSA. The Company, as a holding company of a securities company, as well as subsidiaries such as NSC and Nomura Financial Products & Services, Inc. (“NFPS”), are subject to such supervision and regulation by the FSA. The Commissioner of the FSA delegates certain authority to the Director General of Local Finance Bureaus to inspect local securities companies and branches. Furthermore, the Securities and Exchange Surveillance Commission, an external agency of the FSA which is independent from the Agency’s other bureaus, is vested with authority to conduct
day-to-day
monitoring of the securities markets and to investigate irregular activities that hinder the fair trading of securities, including inspection of securities companies. Securities companies are also subject to the rules and regulations of the Japanese stock exchanges and the Japan Securities Dealers Association, a self-regulatory organization of the securities industry.
To enhance investor protection, each Japanese securities company is required to segregate client assets and to hold membership in an Investor Protection Fund approved by the government under the FIEA. The Investor Protection Fund is funded through assessments on our operations may become wider dependingits securities company members. In the event of failure of a securities company that is a member of the fund, the Investor Protection Fund provides protection of up to ¥10 million per client. The Investor Protection Fund covers claims related to securities deposited by clients with the failed securities company and certain other client claims.
Regulation of Other Financial Services
. Securities companies are not permitted to conduct banking or other financial services directly, except for those which are registered as money lenders and engaged in money lending business under the Money Lending Business Act or which hold permission to act as bank agents and conduct banking agency activities under the Banking Law. Among the subsidiaries of the Company in Japan, NSC is a securities company that is also registered as a money lender and holds permission to act as a bank agent. Another subsidiary of the Company, The Nomura Trust & Banking holds a banking license and trust business license.
Financial Instruments and Exchange Act
. The FIEA widely regulates financial products and services in Japan under the defined terms “financial instruments” and “financial instruments trading business”. It regulates
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most aspects of securities transactions and the securities industry, including public offerings, private placements and secondary trading of securities,
on-going
disclosure by securities issuers, tender offers for securities, organization and operation of securities exchanges and self-regulatory associations, and registration of securities companies. In addition, to enhance fairness and transparency in the financial markets and to protect investors, the FIEA provides for, among other things, penalties for misrepresentations in disclosure documents and unfair trading, strict reporting obligations for large shareholders and corporate information disclosure systems, including annual and quarterly report systems, submission of confirmation certificates concerning the descriptions in securities reports, and internal controls over financial reporting.
The FIEA also provides for corporate group regulations on securities companies the size of which exceeds specified parameters (Tokubetsu Kinyu Shouhin Torihiki Gyosha, “Special Financial Instruments Firm”) and on certain parent companies designated by the Prime Minister (Shitei Oyagaisha, “Designated Parent Companies”) and their subsidiaries (together, the “Designated Parent Company Group”). The FIEA aims to regulate and strengthen business management systems, compliance systems and risk management systems to ensure the protection of investors. The FIEA and its related guidelines also provide reporting requirements to the FSA on the situationDesignated Parent Company Group’s business and capital adequacy ratios, enhanced public disclosures as well as restrictions on compensation all of which are designed to reduce excessive risk-taking by executives and employees of a Designated Parent Company Group. We were designated as the wider international politicalDesignated Parent Company of NSC in April 2011 and economic environment or policy approaches taken by governmental authoritieswere designated as the Designated Parent Company of NFPS in respect of regulatory application or law enforcement. In particular,December 2013. As the number of investigations and proceedings against the financial services industry by governmental and self-regulatory organizations has increased substantiallyDesignated Parent Company and the consequences of such investigations and proceedings have become more severe in recent years, andfinal parent company within a corporate group (Saishu Shitei Oyagaisha, “a Final Designated Parent Company”), we are subject to facethese requirements. A violation of the riskFIEA may result in various administrative sanctions, including the revocation of such investigations and proceedings. For example,registration or license, the U.S. Departmentsuspension of Justice (the “DOJ”) conductedbusiness or an investigation regarding residential mortgage-backed securities securitized by some of our U.S. subsidiaries priororder to 2009. On October 15, 2018, the U.S. subsidiaries settled the investigationdischarge any director or executive officer who has failed to comply with the DOJFIEA.
Orderly Resolution Regime. On March 6, 2014, amendments to the FIEA and agreedthe Deposit Insurance Act, which included the establishment of an “Orderly Resolution Regime for Financial Institutions” to pay $480 million. Although weprevent a financial crisis that may spread across financial markets and may seriously impact the real economy, took effect. Under the Orderly Resolution Regime, the Financial Crisis Response Council, chaired by the Prime Minister, will take measures such as timely monitoring and establishing internal governance procedures in orderproviding liquidity to ensure the performance of obligations for critical market transactions where it is considered necessary to prevent violations of law and regulation, we may not alwayssevere market disruption. Such measures will be able to prevent such violations, and we could be fined, prohibited from engaging in some of our business activities, ordered to improve our internal governance procedures or be subject to revocation of our license to conduct business. Our reputation could also suffer from the adverse publicity that any administrative or judicial sanction against us may create, which may negatively affect our business opportunities and ability to secure human resources. As a result of any such sanction, we may lose business opportunities for a period of time, even after the sanction is lifted, if and to the extent that our clients, especially public institutions, decide not to engage us for their financial transactions. In addition, certain market participants may refrain from investing in or entering into transactions with us if we engage in business activities in regions subject to international sanctions, even if our activities do not constitute violations of sanctions laws and regulations.
(3) Tightening of regulations applicable tofunded by the financial system andindustry, except in special cases where the government will provide financial industry could adversely affect our business, financial condition and results of operations
support.
If regulations that apply to our businesses are introduced, modified or removed, we could be adversely affected directly or through resulting changes in market conditions. The impact of such developments could make it economically unreasonable for us to continue to conduct all or certain of our businesses, or could cause us to incur significant costs to adjust to such changes.
Furthermore, the exact details of the implementation of proposals for regulatory change and its impact on us will depend on the final regulations as they become ultimately adopted by various governmental agencies and oversight boards. See Item 4.B “
Business Overview
—Regulation
” in this annual report for more information about such regulations.
New regulations or revisions to existing regulations relating to accounting standards, regulatory capital adequacy ratios, liquidity ratios and leverage ratios applicable to us could also have a material adverse effect on our business, financial condition and results of operations. Such new regulations or revisions to existing regulations include the
so-called
Basel III package formulated by the Basel Committee on Banking Supervision (“Basel Committee”) and the finalized Basel III reforms published in December 2017. Furthermore, in October 2012, the Basel Committee developed and published a set of principles on the assessment methodology and higher loss absorbency requirements for domestic systemically important banks
(“D-SIBs”),
and, in December 2015,TLAC. In April 2016, the FSA identified us as a
D-SIB
published its policy describing its approach and imposed a surchargeframework for the introduction of 0.5% on our required capital ratio after March 2016 with
3-year
transitional arrangement. In addition, FSB published the final standard requiring global systemically important banks
(“G-SIBs”)
to maintain a certain level of total loss-absorbing capacity (“TLAC”) upon their failure in November 2015. Under the FSA’s policy implementing the TLAC framework in Japan as updated in April 2018, the TLAC requirements in Japan applyapplicable to Japanese
G-SIBs
and, in April 2018, released revisions to such policy that extended the coverage of the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. Based on the revised policy, in March 2019, the FSA finally published the notices and guidelines of TLAC regulations in Japan. According to these notices and guidelines, Nomura is subject to theJapan (including TLAC requirements in Japan from March 31, 2021 althoughholding regulations). Although Nomura is not identified as a
G-SIB
as of the date of this annual report. These changesreport, Nomura is subject to the TLAC regulations in regulations may increase our funding costs or require usJapan, and is required to liquidate financial instruments and other assets, raise additional capital or otherwise restrict our business activitiesmeet a minimum External TLAC requirement of holding TLAC in a manner that could adversely affect our operating or financing activities or the interestsan amount at least 16% of our shareholders.consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Regulatory Changes. On May 31, 2019, a bill to amend the FIEA and the Payment Services Act, etc. was passed by the Diet of Japan. The amendment to the FIEA includes establishing the concept of “electronically recorded transferable rights” (
denshi kiroku iten kenri
, “ERTRs”) and treating ERTRs as Securities defined in Paragraph 1 of the FIEA. As a result, ERTRs are subject to requirements of the Disclosure of Corporate Affairs and Other Related Matters, and regulations for Financial Instruments Business Operators Engaged in Type I Financial Instruments Business apply to institutions dealing in ERTRs. Additionally, “crypto assets” (
“angou shisan”
) are now included in the definition of “Financial Instruments”, and derivatives transactions related to crypto assets are subject to the provisions of the FIEA. As a result of the amendment, certain special provisions
 
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concerning the crypto asset-related business have been introduced, whereby Financial Instruments Business Operators, etc. must explain the nature of crypto assets and must not make any representation that may mislead their customers about the nature of crypto assets. Moreover, regulations governing unfair acts in respect of crypto asset and crypto asset derivative transactions are introduced. The amendment became effective on May 1, 2020.
Overseas
Our overseas offices and subsidiaries are also subject to various laws, rules and regulations applicable in the countries where they conduct their operations, including, but not limited to those promulgated and enforced by the Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), the U.S. Treasury, the New York Stock Exchange, the Chicago Mercantile Exchange and other exchanges and/or clearinghouses, the Financial Industry Regulatory Authority (“FINRA”) (a self-regulatory organization (“SRO”) for the U.S. securities industry), the National Futures Association (“NFA”) (an SRO for the U.S. derivatives industry) in the U.S.; by the Prudential Regulation Authority (“U.K. PRA”) and the Financial Conduct Authority (“U.K. FCA”) in the U.K; and by a number of EU regulators including Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marches Financiers (AMF). We are also subject to international money laundering and related regulations in various countries. For example, the USA PATRIOT Act of 2001 contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations and creating crimes and penalties. Failure to comply with such laws, rules or regulations could result in fines, suspension or expulsion, which could materially and adversely affect us.
Regulation in the United States
In the U.S., the SEC is the federal agency responsible for the administration of the federal securities laws, and the CFTC is the federal agency responsible for the administration of laws relating to commodity futures, commodity options and swaps industry. In addition, FINRA and the NFA are SROs that are actively involved in the regulation of financial services businesses (securities businesses in the case of FINRA and commodities/futures businesses in the case of the NFA). In addition to federal regulation, we are subject to state securities regulations in each state and U.S. territory in which we conduct securities or investment advisory activities. The SEC, FINRA, CFTC, NFA and state securities regulators conduct periodic examinations of broker-dealers, investment advisors, futures commission merchants (“FCMs”), swap dealers and security-based swap (“SBS”) dealers (“SBS dealers”). Financial services businesses are also subject to regulation and examination by state securities regulators and, in some cases, investigations and reviews by attorneys general in those states in which they do business. In addition, broker-dealers, investment advisors, FCMs, swap dealers and SBS dealers must also comply with the rules and regulation of clearing houses, exchanges, swap execution facilities and trading platforms of which they are a member.
Broker-dealers are subject to SEC, FINRA and state securities regulations that cover all aspects of the securities business, including sales and trading methods, publication of research reports, trade practices, among broker-dealers, risk management, use and safekeeping of customers’ funds and securities, capital structure and requirements, anti-money laundering efforts, recordkeeping and the conduct of broker-dealer personnel including officers and employees.
Our U.S. subsidiaries Nomura Securities International, Inc. (“NSI”) and Instinet, LLC (“ILLC”) are registered as broker-dealers with the SEC. U.S. subsidiary Nomura Global Financial Products Inc. (“NGFP”) is an “OTC derivatives dealer,” which is a class of broker-dealer exempt from certain broker-dealer requirements, including membership in an SRO, regular broker-dealer margin rules and application of the Securities Investor Protection Act of 1970, but are subject to special requirements, including limitations on the scope of their securities activities, specified internal risk management control systems, recordkeeping obligations and reporting responsibilities. OTC derivatives dealers are also subject to alternative net capital treatment.
Registered investment advisors are subject to, among other requirements, SEC regulations concerning marketing, transactions with affiliates, custody of client assets, disclosures to clients, conflict of interest, insider
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trading and recordkeeping. Investment advisors that are also registered as commodity trading advisors or commodity pool operators are also subject to regulation by the CFTC and the NFA. Certain of our subsidiaries, including NSI as well as Nomura Asset Management Co., Ltd., Nomura Asset Management U.S.A. Inc. and other asset management subsidiaries, are registered as investment advisors with the SEC.
FCMs, introducing brokers and swap dealers that engage in commodity options, futures or swap transactions are subject to regulation by the CFTC and the NFA. CFTC rules require registration of swap dealers, mandatory clearing and execution of certain default swaps through regulated clearing houses and execution facilities, real-time public reporting and adherence to business conduct standards for all
in-scope
swaps. A number of these requirements, particularly those regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. CFTC rules establishing capital requirements for swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB, became effective in October 2021. The CFTC has also adopted financial reporting requirements for covered swap entities and amended existing capital rules for CFTC-registered FCMs to provide explicit capital requirements for proprietary positions in swaps and security-based swaps that are not cleared by a clearing organization. Swap dealers that are not subject to the jurisdiction of a Prudential Regulator are subject to the margin rules issued by the CFTC (which covers
non-bank
swap dealers, such as our subsidiaries). The rules for variation margin have become effective, and those for initial margin are in the process of being phased in through September 2022, depending on certain activity levels of the swap dealer and the relevant counterparty. Inter-affiliate transactions under the CFTC margin rules are generally exempt from initial margin requirements under certain conditions. NSI is registered as an FCM with the CFTC. NGFP and Nomura International plc, a U.K. subsidiary, are registered as swap dealers with the CFTC. ILLC is registered as an introducing broker with the CFTC.
SEC rules constituting its SBS regulatory regime, which set registration and other compliance dates for SBS dealers and major SBS participants, generally came into effect by November 1, 2021. Under these rules, SBS dealers are subject to regulation by the SEC, including (i) capital, margin and segregation requirements; (ii) recordkeeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the application of risk mitigation techniques to uncleared portfolios of SBSs. In the fourth quarter of 2021, certain of our subsidiaries registered with the SEC as SBS dealers and became subject to the SEC’s regulations regarding SBSs. NGFP is registered as an SBS dealer with the SEC, and Nomura International plc is registered as an SBS dealer with the SEC.
The CFTC and the SEC have adopted rules relating to cross-border regulation of swaps, SBSs, business conduct and registration requirements. The CFTC and the SEC have entered into agreements with certain
non-U.S.
regulators regarding the cross-border regulation of derivatives and the mutual recognition of certain cross-border execution facilities and certain clearing houses, and have approved substituted compliance with certain
non-U.S.
regulations related to certain business conduct requirements and margin rules.
Additional legislation or rules promulgated by the SEC, FINRA, CFTC, NFA, other SROs and state securities regulators, or changes in such legislation or rules or in the interpretation or enforcement of existing legislation or rules may directly affect our operations and profitability. The SEC, CFTC, FINRA, NFA, state securities regulators and state attorneys general may conduct administrative proceedings or initiate civil litigation that can result in adverse consequences for us, our subsidiaries and our and their respective officers and employees (including, without limitation, injunctions, censures, fines, suspensions, directives that impact business operations (including proposed expansions), membership expulsions, or revocations of licenses and registrations).
Further, The Foreign Account Tax Compliance Act (“FATCA”), which was enacted in 2010, requires foreign financial institutions (“FFIs”) to report to the U.S. Internal Revenue Service information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As a result, Nomura is subject to certain reporting requirements consistent with a mutual agreement between Japanese governmental authorities and the U.S. Treasury Department.
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Proposed Changes to U.S. Regulation 
In 2016, the SEC adopted Rule 613 to create a consolidated audit trail (“CAT”) intended to allow regulators to track all activity throughout the U.S. markets in National Markets Systems securities. Following system development and implementation, the CAT is now live, and the final phased on compliance periods will end in
mid-2022.
In June 2016, the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. The effectiveness of the Rule 4210 margin requirements has been delayed a number of times. Most recently, FINRA published a notice of filing of proposed changes to the margin rule on February 25, 2022, delaying the date of effectiveness to October 26, 2022.
In January 2021, CFTC adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control, or trading in coordination with each other. Swap dealers may currently claim an exemption from the position limits for the bona fide hedging of swap-related risks, but this exemption will be eliminated in 2023. The CFTC position limits apply to futures on specified physical commodities and options on such futures, and these limits apply to both physically and cash settled positions. In addition, in 2023, the position limit rules will become applicable to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and
non-
spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that
non-spot
month limits will at some point be adopted for futures and swaps on other physical commodities.
In November 2021, the SEC published proposed Exchange Act Rule
10c-1,
which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, such as the Financial Industry Regulatory Authority. The registered national securities association would then make the material terms of the securities lending transaction available to the public.
In December 2021, the SEC proposed rules to prevent fraud, manipulation and deception in connection with security-based swaps, to prevent undue influence over the chief compliance officer (CCO) of SBS dealers and major SBS swap participants, and to require any person with a large security-based swap position to publicly report certain information related to the position.
Regulation in the U.K. and Europe
As part of global efforts to establish a framework to improve authorities’ capacity to resolve failing SIFIs, the U.K. implemented the EU Bank Recovery and Resolution Directive (“BRRD”), which was published on June 12, 2014. The BRRD also aims to implement FSB recommendations on recovery and resolution regimes for financial institutions. The BRRD applies to banks and investment firms operating in EU member states, including EU branches and subsidiaries of third country firms. It includes requirements for the preparation of recovery and resolution plans (“RRPs”) by institutions and regulators. It also creates various powers for EU regulators to intervene to resolve institutions at risk of failure, including the ability to sell or transfer all or part of an institution and the introduction of a debt write down or
bail-in
tool.
As part of the
bail-in
rules, firms will be required to maintain capital resources sufficient to meet the stipulated minimum requirement for eligible liabilities (“MREL”). The MREL overlaps with the global capital standards on total loss absorbing capacity (“TLAC”) for
G-SIBs
issued by the FSB on November 9, 2015. As
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Nomura Group has adopted a single point of entry resolution strategy, European subsidiaries are subject to internal MREL. The internal MREL became applicable in the U.K. for all U.K. incorporated institutions from January 1, 2019 for firms whose failure would have a significant impact on the U.K. financial system and for certain overseas firms where the Bank of England (“BOE”) would support a home resolution authority in carrying out a cross-border resolution. From January 1, 2020, Nomura is required to hold internal MREL resources above the regulatory capital requirements for the material subsidiaries in the U.K., identified as Nomura Europe Holdings plc (“NEHS”) on a
sub-consolidated
basis and NIP.
In July 2019, the BOE and U.K. PRA published a policy statement on the Resolvability Assessment Framework (“RAF”). The proposals for the RAF bring together existing policies such as MREL and Operational Continuity in Resolution (“OCIR”) as well as other new resolution policies in order to follow the resolution principles set out by the FSB. Under the policy, it is expected firms perform an assessment of their preparations for resolution and the BOE provide a public statement concerning resolvability of each firm. The BOE and U.K. PRA may consider, in consultation with Financial Services Agency (“FSA”), apply some or all of the requirements set out in the policy statement to NEHS.
EU banks and investment firms including those located in the U.K. have been subject to the current prudential regulatory capital regime since the introduction of the Capital Requirements Regulation and Capital Requirements Directive (collectively, “CRD IV”) in January 2014. The aim of CRD IV was to strengthen the resilience of the EU banking sector so it would be better placed to absorb economic shocks while also ensuring that banks continued to finance economic activity and growth. CRD IV sets out regulations for minimum capital requirements for banks and investment firms and also introduced new capital and liquidity buffers.
In November 2016 the European Commission proposed amendments to this regulation in a “CRRII” package of reforms. Together with the updates to the Bank Recovery and Resolution Directive (“BRRD II”) and Single Resolution Mechanism Regulation (“SRMR”) this package is an important step towards the completion of the European post-crisis regulatory reforms and implements some of the outstanding global reforms agreed by the Basel Committee and the FSB. The EU views the amendments as essential to making its financial system more stable and resilient, and the financial institutions more resolvable. These updates entered into force in June 2019 with the majority of changes being introduced two years later in June 2021.
Among other things these proposed changes include the introduction of binding minimum leverage and net stable funding ratios, changes to the calculations for counterparty credit risk of derivatives, a tightening of large exposure limits, introduction of new reporting requirements for market risk and the introduction of a new EU intermediate parent undertaking requirement. These reforms are generally expected to lead to an increase in local capital and liquidity requirements and increased costs of compliance.
Subsequent to the finalization of work on the CRRII package in October 2021 the EU introduced a first draft of proposals to introduce a “CRRIII/CRDVI” package of reforms to implement all outstanding elements of the Basel III framework including changes to the calculations for Operational Risk, CVA, Credit Risk, FRTB capital requirements and the introduction of an output floor to modelled calculations. The draft rules also include proposals to strengthen the resilience of the banking sector to environmental, social and governance (“ESG”) risks and to enhance the strength of supervision within the EU to better protect financial stability. The proposals are proposed for implementation in Jan 2025.
Since Brexit, the CRR and subsequent amendments are no longer applicable in the U.K. HMT and the PRA have published updated rules for implementation of similar reforms to the CRRII in the U.K. which were implemented from Jan 2022. Subsequent to this, HMT and the PRA will also consult towards the end of 2022 on implementing the final elements of the Basel III framework equivalent to those in the EU CRRIII package with a proposed implementation date of Jan 2025.
The revised MiFID II, which is split into the Markets in Financial Instruments Directive (“MiFID”) and the Markets in Financial Instruments Regulation (“MiFIR”) was published in the EU Official Journal on June 12,
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2014 and entered into force on July 2, 2014. The majority of the new rules under MiFID II and MiFIR took effect from January 3, 2018, with Member States required to implement MiFID II through national legislation by July 3, 2017. The legislation sought to introduce wide-reaching changes to markets, including the extension of market transparency rules into
non-equities
and potentially reducing the size of the OTC derivative market by mandating the clearing of standardized OTC transactions through central clearing counterparties and their trading through regulated trading venues. The new framework introduced a market structure which was intended to close certain loopholes and ensure that trading, wherever appropriate, takes place on regulated platforms. It has introduced rules on high frequency trading with a view to improving the transparency and oversight of financial markets. The revised MiFID also aimed to strengthen the protection of investors by introducing more robust organizational and conduct requirements and by strengthening the role of management bodies. The new framework also increased the role and supervisory powers of regulators and established powers to prohibit or restrict the marketing and distribution of certain products in well-defined circumstances. A harmonized regime for granting firms from third countries access to EU professional markets, based on an equivalence assessment of third-country jurisdictions by the Commission, was also introduced.
Following a range of consultations and technical advice published by the European Securities and Markets Authority (“ESMA”), in April 2016 the European Commission adopted a MiFID Delegated Directive (“Directive”). The Directive contains provisions on investor protection, notably on safeguarding of clients. The Commission also adopted a delegated regulation supplementing MiFID II. This regulation was aimed at specifying, in particular, the rules relating to exemptions, the organizational requirements for investment firms, and conduct of business obligations in the provision of investment services. In May 2016, the Commission adopted a further delegated regulation supplementing MiFIR. This regulation aims at specifying, in particular, the rules relating to determining liquidity for equity instruments, the rules on the provision of market data on a reasonable commercial basis, the rules on publication, order execution and transparency obligations for systematic internalisers, and the rules on supervisory measures on product intervention by the ESMA, the European Banking Authority (‘EBA’) and national authorities, as well as on position management powers by the ESMA.
After two years, the EU Commission is required to evaluate the overall functioning of the MiFID II/ MiFIR regime, in particular, addressing those areas where challenges still exist, and present a report to the European Parliament and Council together with a legislative proposal to reform the regime if required (the so called ‘MiFID Refit’). As part of this process, ESMA has already launched a number of consultations on specific areas, which will feed into the Commission’s reports.
Certain amendments to support economic recovery from the
COVID-19
pandemic, including via relief from administrative requirements on firms, has been published in the EU Official Journal on February 26, 2021 (MiFID
‘Quick-Fix’).
EU Member States were required to transpose the quick fix amendments into their national frameworks by November 28, 2021 and apply them by February 28, 2022. Alongside this on November 25, 2021, the EU Commission published its legislative proposal for a review of MiFID II/MiFIR. Key proposals include refinements to the scope of the Securities Trading and Derivatives Trading Obligations, adjustments to the transparency regime and reporting requirements and considerations around establishment of a Consolidated Tape. Since Brexit, these amendments will not be applicable in the U.K. and the FCA has consulted on proposed changes to the conduct and organizational rules under in the U.K. MiFID, specifically relating to research and best execution reporting. On November 30, 2021 the FCA published the Policy Statement (“PS”) on changes to U.K. MiFID’s conduct and organizational requirements. The PS sets out changes to best execution reporting requirements and research inducement rules. Effective from December 1 2021, U.K. firms are no longer required to produce best execution reports. In addition, from March 1, 2022, asset managers and research firms will be able to exercise the options on exempting inducement rules on research. This means U.K. firms will be able to provide research on FICC instruments to clients without it being subject to
un-bundling.
On July 1, 2021 the U.K. HMT launched a Wholesale Market Review Consultation. The consultation is part of the Government’s commitment to improving the competitiveness of the U.K. as a hub for capital markets, and
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is a central part of the Government’s post-Brexit strategy for financial services. It has a wide ranging focus, including the regulatory framework for trading venues, systematic internalizers, market data, and fixed income, equity, derivative and commodity markets. It proposes a number of amendments to the U.K.’s onshored MiFID regime and asks for industry input on a range of other topics.
The European Market Infrastructure Regulation (“EMIR”) became effective on August 16, 2012, and applies to any entity established in the EU that is a legal counterparty to a derivative contract, even when trading with
non-EU
firms. EMIR was created with the intention of stabilizing OTC markets found within EU member states. Although the majority of EMIR regulations have already been implemented, on May 28, 2019, Regulation (EU) 2019/834 (EMIR REFIT) was published in the EU’s Official Journal, with the aim of amending EMIR to make some of its requirements simpler and more proportionate, particularly for
non-financial
counterparties (“NFCs”). With a few exceptions, the majority of the provisions in the Regulation entered into force on June 17, 2019.
Following the announcement made by BCBS and the International Organization of Securities Commissions (‘IOSCO’) on April 3, 2020 to defer by one year, the deadline for completing the final two implementation phases of the bilateral margin requirements, the European Supervisory Authorities (ESMA, EBA and the European Insurance and Occupational Pensions Authority) have published joint draft Regulatory Technical Standards to amend the Delegated Regulation on the risk mitigation techniques for
non-centrally
cleared OTC derivatives (bilateral margining), under EMIR to incorporate in the EU, the one year deferral. Phase 6 represents the final stage of the
phase-in
of the rules and applies from September 1, 2022.
On January 12, 2016, the Securities Financing Transactions Regulation (“SFTR”), which forms part of the EU’s package of legislation targeted at reforming shadow banking and aims to improve transparency in the securities financing transactions (“SFTs”) market, came into force subject to a range of transitional provisions over a number of years. On April 11, 2019, the final regulatory technical standards entered into force and MiFID firms were due to commence their reporting one year later on April 11, 2020. However, due to the
COVID-19
pandemic, the reporting under the SFTR was extended until July 13, 2020. Other reporting counterparties were phased in over the following months, ending with NFCs on January 11, 2021.
On November 25, 2020, the FCA issued a statement explaining what trade repositories, and the U.K. counterparties that use them, should do to ensure they are compliant with the U.K. SFTR reporting obligations from the end of the Brexit transition period. All U.K. SFTR counterparties that enter into securities financing transactions that are in scope of the U.K. SFTR are required to report details of those transactions to an
FCA-registered,
or recognised, trade repositories.
On September 17, 2014, the Central Securities Depositories Regulation (“CSDR”) came into force, in the EU. It aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. CSDR plays a pivotal role for post-trade harmonisation efforts in Europe, as it will enhance the legal and operational conditions for cross-border settlement in the EU. On February 5, 2020, ESMA has published a Final Report on draft regulatory technical standards (“RTS”) on postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) to February 1, 2021. It has been endorsed by the European Commission on May 8, 2020 and is now subject to the
non-objection
of the European Parliament and of the Council. Furthermore, on August 28, 2020, ESMA published another Final Report on draft RTS definitively postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until February 1, 2022. On January 27, 2021, the EU Commission published a delegated act confirming the entry into force of CSDR Settlement Discipline to February 1, 2022. On September 24, 2021 ESMA wrote to European Commission regarding the implementation of the Central Securities Depositories Regulation, urging it to consider a delay of the mandatory
buy-in
regime. ESMA is in favor of delaying the entry into force of the
buy-in
requirements—scheduled on February 1, 2022—while applying the other settlement discipline requirements, such as settlement fails reporting and cash penalties regime, as planned. On
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November 24, 2021, the EU Commissioner announced that the mandatory
buy-in
regime would not enter into force on February 1, 2022. On December 17, 2021, ESMA issued a public statement informing national competent authorities (NCAs) not to prioritize supervisory actions in relation to the application of the
buy-in
regime until the provision for postponing the application of the
buy-in
regime is formally in place. The remaining requirements of CSDR settlement discipline, in particular the settlement fails reporting and the cash penalties regimes, will go ahead as planned.
In the U.K., on June 23, 2020, the Government confirmed that it will not implement the CSDR Settlement Discipline. U.K. firms will continue to apply the existing
industry-led
framework.
On February 8, 2022, the EU Commission announced a decision to extend equivalence for U.K. central counterparties (“CCPs”) until June 30, 2025. The equivalence will apply from July 1, 2022. At the same time, the EU Commission launched a targeted public consultation and a call for evidence on ways to expand central clearing activities in the EU and improve the attractiveness of EU CCPs in order to reduce the EU’s overreliance on systemic third-country CCPs.
The Fifth Money Laundering Directive (“5MLD”), came into force in the EU on April 26, 2018 and for implementation by EU Member States by January 10, 2020. However, the U.K. government has enacted the regulations bringing into force the 5MLD and the provisions are contained in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The changes impose additional obligations within the financial services sector. 5MLD amends 4MLD, and includes provisions that enhance the required level of transparency around beneficial ownership of corporates and trusts, tightens some controls relating to Politically-Exposed Persons and high risk third countries and also addresses risks associated with certain technological innovation, particularly virtual currencies.
On October 2018 the 6th Money Laundering Directive (“6MLD”) was approved by the European Parliament and Council. EU member states had until December 3, 2020 to implement this upcoming Directive into national law, whilst regulated entities had a deadline of June 3, 2021.The U.K. has decided to opt out of complying with this further AML Directive as the Government assesses that the domestic legislation is already largely compliant with the Directive’s measures. The 6MLD complements the criminal aspects of the 5MLD and has been introduced to focus on the definition of these crimes and their sanctions. It also gives financial institutions more responsibility in the fight against financial crime and aims to promote the collaboration of member states when tackling money laundering.
The Senior Managers and Certification Regime (“SM&CR”) came into force on March 7, 2016 with the aim of reducing the risk of harm to consumers and strengthening market integrity by making firms, and individuals within those firms, more accountable for their conduct and competence. In July 2018, the U.K. FCA and U.K. PRA published near-final rules extending SM&CR to cover all financial services firms in the U.K. to apply from December 9, 2019. On March 8, 2019, the U.K. FCA announced its final rules on its proposed Directory—a new public register that will enable consumers, firms and other stakeholders to find information on key individuals working in financial services who are not otherwise appointed and publicly registered under the SM&CR. Firms were to submit data on Directory individuals in December 2019, and the Directory was expected to go live in March 2020. However, due to the
COVID-19
pandemic, the implementation date of the directory of certified and assessed persons had been delayed and the Directory is now live since March 31, 2021.
Since 2012, the European Commission sought to establish a modern and harmonized data protection framework across the EU to replace the existing Directive. On May 4, 2016, the official texts of the new EU General Data Protection Regulation (“GDPR”) were published in the EU Official Journal in all the official languages and it came into force on May 25, 2016. GDPR took effect across the EU member states on May 25, 2018. GDPR included a number of important changes to existing data protection legislation including new obligations on data processors, restrictions on the transfer of personal data outside the EEA and the introduction of new concepts such as “accountability” (and related record-keeping), the “right to be forgotten” and a
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requirement for data breach notifications to the relevant Regulators. Enforcement of GDPR is carried out by both national regulators (for the U.K., the Information Commissioner) and the European Commission, and the regulators also have the power to impose greater fines for any breaches of the data protection requirements of up to 4% of a firm’s global turnover.
The EU Benchmark Regulation (“BMR”) entered into force on June 30, 2016 and has applied in the U.K. since January 1, 2018. Global regulators have imposed fines on firms following attempted manipulation of the London Inter-bank Offered Rate (“LIBOR”), gold and foreign exchange benchmarks, and have taken action against individuals for misconduct related to benchmarks. The objectives of the EU BMR include, but are not limited to: (i)improving governance and controls over the benchmarking process to ensure that administrators avoid/manage conflicts of interest, (ii)improving the quality of input data and methodologies used by benchmark administrators, (iii)ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, and (iv)protecting consumers and investors through greater transparency and adequate rights of redress.
Furthermore, in November 2019, the EU BMR was amended to include two new types of “climate benchmarks”—‘Paris-Aligned’ Benchmarks (“PABs”) and Climate Transition Benchmarks (“CTBs”). The
Low-Carbon
Benchmarks Regulation introduced the requirement (under Article 13 of the BMR) that administrators of benchmarks (save interest rate and foreign exchange benchmarks) must provide an explanation of how the key elements of their benchmark methodologies reflect ESG factors. The requirements are to be complied with by April 30, 2020. However, since the draft regulatory technical standards were still subject to a public consultation and a number of important details are subject to these delegated acts, ESMA issued a ‘No Action Letter’ encouraging EU national regulators not to force these ‘Level 1’ requirements until these delegated acts are finalized. The Delegated Acts were finalized and published on December 3, 2021.
In addition, interest rate benchmarks including, among others, the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”), the Euro Overnight Index Average (“EONIA”) and certain other Interbank Offered Rates (“IBORs”) are being reformed. The U.K. is due to make the transition from LIBOR to Sterling Overnight Index Average (“SONIA”) by the end of 2021 although certain interim milestones have been extended due to the
COVID-19
pandemic. To avoid disruption to legacy contracts that reference the
1-,
3-
and
6-month
sterling and Japanese yen LIBOR settings, on September 30, 2021 the U.K. FCA announced that it will require the LIBOR benchmark administrator to publish these settings under a ‘synthetic’ methodology, based on term risk-free rates, for the duration of 2022. These six LIBOR settings will be available only for use in some legacy contracts, and are not for use in new business.
On January 1, 2022, the U.K. FCA issued notices under Article 23C and Article 23D of the UK BMR on the calculation and permitted the legacy use of the six sterling and Japanese yen LIBOR settings.
In the Eurozone, €STR (Euro Short Term Rate) is set to gradually replace the Euro Overnight Index Average (EONIA) and serve as a fallback for the Euro Interbank Offered Rate (“EURIBOR”). EONIA will effectively be pegged against €STR until January 3, 2022, when EONIA ceases to apply.
On July 22, 2020, the U.K. Government published a policy statement extending the transitional period for third-country benchmarks under the U.K. BMR from December 31, 2022 to December 31, 2025, thus allowing U.K. firms to continue using benchmarks provided by administrators located outside the U.K. in new financial contracts and instruments without these benchmarks being registered with the FCA until
end-2025.
On October 21, 2020, the U.K. Government published a policy statement making amendments to BMR to allow for the orderly winding down of LIBOR, including providing new powers for the U.K. Financial Conduct Authority (“FCA”). The proposed framework in the policy document allows the FCA to take an appropriate course of action to direct a change in the methodology of a critical benchmark and extend its publication, for a limited time period, for those contracts that face insurmountable barriers to transition from LIBOR (Tough Legacy Contracts). The FCA consulted on its proposal to use two new powers relating to the use of critical
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benchmarks that are being wound down. The powers are part of a wider package of amendments to the BMR in the Financial Services Act 2021, intended to ensure that the FCA has the appropriate regulatory powers to help reduce risk in the wind-down period before LIBOR ceases permanently. The final Statements of Policy were published in September 29, 2021 (Statement of Policy on the FCA’s power under Article 23C BMR and Statement of Policy on the FCA’s power under Article 21A BMR).
In the U.K. as a follow up to the Fair and Effective Markets Review (established by the Chancellor of the Exchequer), the Fixed Income, Currencies and Commodities (“FICC”) Markets Standards Board (“FMSB”) was established in 2015 as a private sector response to the conduct problems revealed in global wholesale FICC markets after the financial crisis. The function of the FMSB is to help raise standards of conduct in global wholesale markets by producing voluntary Standards and other guidance in areas of uncertainty that are developed by the membership and designed to illustrate best practices to all market participants. These Standards are intended to reduce the continuing uncertainty about acceptable practices in opaque and unregulated areas, which is a hazard for FMSB members, as well as other market participants. The Standards published to date cover topics including the new issue process, binary options for the commodities markets, reference price transactions for the fixed income markets and secondary market trading error compensation. The published Standards do not have legal or regulatory force and do not replace existing legislation; rather, they are intended to supplement the rules already in place. The Standards are implemented by way of FMSB member firms, including Nomura International plc, making an adherence statement on an annual basis.
Following Brexit, on March 26, 2021, the U.K. Government announced that technical negotiations on the text of the
U.K.-EU
memorandum of understanding (“MoU”) establishing a framework for regulatory cooperation in financial services have concluded. Among other things, the MoU will establish a Joint
U.K.-EU
Financial Regulatory Forum to serve as a platform to facilitate dialogue on financial services issues. The MoU makes limited reference to access, saying that both sides will “jointly endeavor to pursue a robust and ambitious bilateral regulatory cooperation”.
In response to heightened global focus on the issues of climate change, and a growing demand for standards associated with ESG factors and reporting, a number of global regulatory initiatives are being developed. These regulations cover both prudential frameworks including assessment and management of climate risks associated with Nomura businesses, such as the PRA SS3/19 regulations; and also labelling, disclosure and reporting regulations which includes but is not limited to the EU Taxonomy Regulation, the EU Sustainable Finance Disclosure Regulation and the EU Corporate Sustainability Reporting Directive.
Regulatory Capital Rules
Japan
In March 2022, the FSA announced one year delay of the implementation date of the finalised Basel III standards for internationally active banks, to March 31, 2024. Also the FSA announced the exclusion of deposits with the Bank of Japan from the total exposure used to calculate the leverage ratio until March 31, 2024.
The FIEA requires that all Financial Instruments Firms (Category I) (“Financial Instruments Firms I”), a category that includes NSC and NFPS, ensure that their capital adequacy ratios do not fall below 120% on a
non-consolidated
basis. The FIEA also requires Financial Instruments Firms I to file monthly reports regarding their capital adequacy ratios with the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, and also to disclose their capital adequacy ratios to the public on a quarterly basis. In addition, if the capital adequacy ratio of a Financial Instruments Firm I falls below 140%, it must file a daily report with the authorities. The FIEA provides for actions which the Prime Minister, through the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, may take if any Financial Instruments Firm I fails to meet the capital adequacy requirement. More specifically, if the capital adequacy ratio of any Financial Instruments Firms I falls below 120%, the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau may order the Financial Instruments Firm I to change its business conduct, to deposit its
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property in trust, or may issue any other supervisory order that such authorities deem necessary and appropriate to protect the interests of the general public or investors. If the capital adequacy ratio of a Financial Instruments Firm I falls below 100%, the authorities may take further action, including the issuance of orders to temporarily suspend its business and the revocation of its registration as a Financial Instruments Firm I under the FIEA.
Under the FIEA and regulations thereunder, the “capital adequacy ratio” means the ratio of adjusted capital to a quantified total of business risks. Adjusted capital is defined as net worth less illiquid assets. Net worth mainly consists of stated capital, additional
paid-in
capital, retained earnings, reserves for securities transactions, certain allowances for doubtful current accounts, net unrealized gains/losses in the market value of investment securities, and subordinated debt. Illiquid assets generally include
non-current
assets, certain deposits and advances and prepaid expenses. Business risks are divided into three categories: (i) market risks (i.e., risks of asset value changes due to decline in market values and other reasons), (ii) counterparty risks (i.e., risks of delinquency of counterparties and other reasons) and (iii) basic risks (i.e., risks in carrying out daily business activities, such as administrative problems with securities transactions and clerical mistakes), each quantified in the manner specified in a rule promulgated under the FIEA.
The FSA reviewed the FIEA and regulations thereunder in line with Basel 2.5 framework and the revised regulations for Basel 2.5 were implemented at the end of December 2011. Market risks increased significantly as a result of the Basel 2.5 rule implementation.
We closely monitor the capital adequacy ratio of NSC and NFPS on a continuous basis. Since the introduction of the capital adequacy requirement in Japan in 1989, we have at all times been in compliance with all appropriate requirements. We believe that we will continue to be in compliance with all applicable capital adequacy requirements for the foreseeable future.
As discussed above, the FSA amended the FIEA and introduced new rules on consolidated regulation and supervision of securities companies on a consolidated basis on April 1, 2011 to improve the stability and transparency of Japan’s financial system and ensure the protection of investors. Following introduction of these rules, NSC was designated as a Special Financial Instruments Firm, following which we have been designated as a Final Designated Parent Company. As such, we are required to calculate consolidated regulatory capital adequacy ratio according to the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby”(2010 FSA Regulatory Notice No. 130;“Capital Adequacy Notice on Final Designated Parent Company”). Accordingly, since our designation as a Final Designated Parent Company in April 2011, we now calculate our Basel rule-based consolidated regulatory capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company.
The FSA also amended the FIEA to include reporting on consolidated regulatory capital for the Final Designated Parent Companies, effective April 1, 2011. We are subject to this reporting requirements as well as the capital adequacy requirements described above.
The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III, and we have calculated a Basel
III-based
consolidated capital adequacy ratio since the end of March 2013. Basel 2.5 includes significant changes in the method of calculating market risk and Basel III includes redefinition of capital items for the purpose of requiring higher levels of capital and expansion of the scope of credit risk-weighted assets calculation.
If our capital ratios fall to the minimum level required by the FSA, our business activities may be impacted. However, these ratios are currently at well capitalized levels. We have met all capital adequacy requirements to which we are subject and have consistently operated in excess of the FSA’s capital adequacy requirements. Subject to future developments in regulatory capital regulations and standards, there has been no significant change in our capital ratios which management believes would have material impact on our operations.
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The Basel Committee has issued a series of announcements regarding a broader program to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises, as described in “
Consolidated Regulatory Capital Requirements
” under Item 5.B of this annual report. The Capital Adequacy Notice on Final Designated Parent Company is expected to incorporate the series of rules and standards in line with the schedule proposed by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The FSB also announced the group of
G-SIBs
will be updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIB.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important banks
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
Overseas
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a futures commission merchant with the Commodity Futures Trading Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s Uniform Net Capital Rule (“Rule
15c3-1”)
and other related rules, which require net capital, as defined under the alternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from client transactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or $1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, or other various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934. NGFP registered with the Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer on October 6, 2021 and registered with the Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule
18a-1
and CFTC rule 23.101 and requires the greater of $20,000,000, 2% of the SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
15c3-1
which requires the maintenance of minimum net capital, as defined under the alternative method, equal to the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount of adjusted net capital required by a futures association of which it is a member; and the amount of net capital required by Rule
15c3-1(a).
As of March 31, 2021 and 2022, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”) as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Financial Services and Markets Act 2000, U.K. Capital Requirements Regulations and the PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. As a
non-U.S.
swap dealer and securities based swap dealer NIP is also subject to the regulations of the CFTC and SEC under the Dodd Frank Act. In addition, Nomura Bank International plc (“NBI”), another
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subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”) and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 2021 and 2022, NEHS, NIP, NBI, NFPE and BNF were in compliance with relevant regulatory capital related requirements.
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) are regulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank regulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its regulated activities including, among others, securities brokerage and dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on a standalone basis by the MAS in Singapore. NIHK and NSL have always been compliant with relevant regulatory capital related requirements.
In addition, certain of our other subsidiaries are subject to various securities and banking regulations, and the capital adequacy requirements established by the regulatory and exchange authorities of the countries in which those subsidiaries operate. We believe that each such subsidiary is, and will in the foreseeable future be, in compliance with these requirements in all material respects.
Management Challenges and Strategies
Management vision
Our business environment is undergoing significant changes. We will continue to respond to it flexibly while maintaining an appropriate financial standing and effectively utilizing management resources through improved capital efficiency. In addition, we are never satisfied with ourselves and will constantly implement new initiatives with the aim of expanding existing businesses and providing value-added services to clients.
(1) Urgent Priority Issues
As a global financial services group, we continue to seek to deliver value-added products and services to our clients globally. Given the diversification of its products and services, as well as the multifaceted nature and expansion of global business, enhancing risk management is essential for us.
In response to the U.S. Prime Brokerage Event in 2021, we immediately launched a thorough review of our business management processes as well as our procedures and organizational structure. Based on this review, we analyzed a number of areas, such as how we manages our business in the current environment, communication and coordination across departments, and allocation of management resources. In light of this, we have taken steps to further enhance our risk management including revamping our organizational structure and realigning headcount in related departments.
We see enhanced risk management as an urgent key management project and one of the top priorities for us over the medium to long-term. Our senior management is committed to leveraging the full capabilities of the group to strengthen risk management, including building a stronger risk culture and raising the risk awareness our employees and executive officers. See Item 11.
“Quantitative and Qualitative Disclosures about Market, Credit and Other Risk—Risk Management”
for further information about this review.
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(2)
Medium-to
Long-term Priority Issues to respond to changed environment
① The Group’s growth strategy for the sustainable improvement of our corporate value
Our vision is to take Nomura to the next stage. To realize this, we launched a new strategy of expanding into private markets to complement our businesses in the public markets. We are committed to strengthening the provision of bespoke services and solutions made for each specific client, through a three-pronged approach, namely the expansion of our client base, expansion of products and services, and delivery utilizing digital technology. Based on this strategy, for instance, we are starting to see results from the following efforts.
For more information on the strategies in each division, please refer to the challenges and strategies in each division.
Strengthening Investment Management Division
We newly established our Investment Management Division, in April 2021, aiming to meet our clients’ diverse needs, as part of our management strategy: Expanding our scope of business from public to private. This division aims not only to expand and strengthen traditional investment products but also to provide investment opportunities into private section such as alternative assets. Nomura Babcock & Brown Co., Ltd, which conducts aircraft leasing and was not under any business division before the establishment of Investment Management Division, was consolidated into Investment Management as a key company under the new division. By bringing together diverse expertise under the same structure, we aim to deliver even greater added value.
Shifting to asset consulting business
We are shifting to an asset consulting business for domestic individual customers. We provide asset consulting services that we believe provide preferable
medium-to
long-term solutions for our clients. We support clients in increasing their assets, and we aim to increase the fee income we receive as a result by increasing assets under custody. The steady increase in income from stock assets such as investment trusts, for which fees such as management and administration expenses are charged for assets under management, contributes to more stable revenue stream for us. We also established our Chief Investment Office (“CIO”) Group in July 2020 to provide consulting services similar to those already offered towards institutional investors, to individual investors. In November 2020, we introduced the CIO services for discretionary investment services to improve operational performance. We are also promoting the introduction of “Nomura Navigation”, a tool that helps clients manage their portfolios and enhance their consulting services. Besides, in addition to the existing commission system which requires payment every time a transaction is made, we are introducing a new fee system that allows customers to select a level fee based on level of client assets. In April 2022, all of our branches began offering this product. In addition to ensuring quality through CIO services, we are building a structure that provides advice that aligns the interests of customers and our company more closely than ever before.
Diversifying Wholesale revenues
In our Wholesale Division, we are diversifying our revenue sources while maintaining a high market share in core products. Capital-light origination business, including M&A advisory, grow global business centered on Americas. Especially, in the U.S., we acquired Greentech Capital, LLC, a firm with a solid presence in sustainable technology and infrastructure, and launched Nomura Greentech in April 2020. We will seamlessly provide financial and other solutions to our global customer base. In addition, regarding solutions business that is less suspectable to changes in market environment, we build up experience in structured finance including infrastructure finance.
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② Digitalization to provide new value-added services and convenience to our clients
Our digital transformation efforts are directly linked to our competitiveness with other financial institutions in the future, and we will continue to promote a wide range of initiatives based on our strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of the added value created by the Nomura Group even in a world of increasing where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications. In addition, we established “Digital Company” in April 2022, aiming to strengthen collaboration in the digital domain across group entities, including in our international operations, while also bolstering initiatives in focus areas. Our efforts to promote digitalization are as follows.
Streamline and enhance internal operations
We are working to focus on high value-added analysis and advisory services by promoting the automation and efficiency of internal operations. We also aim to provide services through highly satisfactory communication methods by improving existing services. For instance, our Retail Division utilizes “Remote Consulting” which is original system supporting sales representatives. In addition, we have launched an internal Digital IQ program to support digital
e-learning
with the aim of lifting the base-level knowledge of digital initiatives across the Group.
Attracting a new client base
We have developed a platform to deliver services for young people and the working generations, who we have not provided with many products and services, by utilizing digital technology. We expand to utilize LINE Securities Corporation established together with LINE Financial Corporation, OneStock which is an asset management smartphone application, FINTOS! which is an investment information application.
Participation in Digital Asset Business
Nomura and BOOSTRY Co., Ltd., which is a joint venture between Nomura and Nomura Research Institute, Ltd. have provided technical infrastructure and other support on digital asset bond and digital bond offerings. This is the first bond offering using blockchain technology by a Japanese issuer. Through our approach to the digital asset business, we aim to provide new added value that goes beyond the boundaries of conventional finance by utilizing advanced technologies and our network. Going forward, we will continue to build a system that can respond to diversifying client needs through products and services in the digital asset value chain, from origination to custody. In addition, in order to systematically accelerate such efforts, we established “Digital Company Strategy Department” and “Digital Asset Strategy Office”, effective April 1, 2022.
③ Initiatives for Sustainability
Our management vision for 2025 is to achieve sustainable growth by helping resolve social issues, and we have integrated sustainability into our management strategy. We now make decisions on sustainability issues at through our Sustainability Committee, which comprises Executive Management Board members, and therefore, we are responding to our own sustainable development issues and other broad social issues in a timely manner. Sustainability promotion in Nomura has value in two ways. One is to support the sustainability efforts of our clients and various stakeholders. The second is to promote the sustainability efforts in our own operations.
Supporting the sustainability efforts of our clients and stakeholders
Our core role as a financial services group is to support clients through the flow of funds and capital. We believe it is important to strengthen our functions to promote the sustainable circulation of
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capital by underwriting green bonds and social bonds issued by companies and financial institutions, providing strategic advisory services such as M&A advisory, and by developing
ESG-related
funds as investments and providing them to individual investors. In addition, we will take advantage of our comprehensive strengths in providing solutions to social issues by leveraging the functions we have cultivated over many years, including support for business succession, promoting innovation in the fields of regional revitalization, agriculture and medical care, and our expertise and knowledge in the field of research and analysis. Since the 1990s, we have been providing financial and economics education programs in Japan for elementary and junior high school students as well as adults. Starting from April 2022, Japanese high schools have classes on financial education, based on the new guidelines of education. In response to this policy, we have appointed Executive in charge of Financial Education, and will continue to strengthen initiatives to improve the financial literacy of society as a whole.
Our company’s own efforts
We have committed to achieve net zero greenhouse gas (“GHG”) emissions for our own operations by 2030, and to transition attributable GHG emissions from our lending and investment portfolios to align with pathways achieving net zero by 2050. To materialize these initiatives, we joined the
Net-Zero
Banking Alliance (“NZBA”) in 2021. We participate in and endorse numerous initiatives besides NZBA to further promote the realization of a sustainable environment and society in cooperation with stakeholders regarding how we will address social issues.
The challenges and strategies in each division are as follows:
Retail Division
Based on the basic concept of “Enriching clients by responding to their concerns about assets”, our Retail Division aims to become a financial institution fulfilling the needs of many people. We will continue working on improving the skills of our clients, and enhance our wide range of products and services in order to accurately respond to diversifying clients’ asset issues such as inheritance or anxiety about lack of funds after retirement. In addition, we will enhance online services and remote consulting service through contact centers.
Investment Management Division
Our Investment Management Division is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of our clients in the broad asset management business. By combining our expertise in traditional assets such as stocks and bonds to alternative assets such as private equity, we provide added value and offer advanced services and solutions to meet the diverse needs of our clients. In the public market business, we aim to strengthen existing businesses and improve through digital transformation. In the private market business, we will strive to expand our product offerings as investors’ demand for alternative investments increases. We will also seek to execute inorganic strategies (such as alliances and equity investments) to expand our product offerings and client base.
Wholesale Division
Our Wholesale Division faces challenges presented by increasingly sophisticated client needs and technological advancement, coupled with uncertainty in the market environment and the possibility of an economic downturn. To ensure continuity of service as well as added value to clients, we will continue to enhance collaboration across regions and divisions while ensuring tight risk control. We will continue efforts to diversify our business portfolio through targeted growth in areas including private markets as well as deploy financial resources to selective, high growth opportunities.
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Global Markets aims to provide uninterrupted liquidity to our clients while reinforcing risk control and governance. Additionally, we aim to further diversify our business portfolio, reinforce global connectivity and cross-sell to leverage our global platform and client franchise, pursue growth opportunities such as structured financing and solution business as well as international wealth management business, and continue to build on the strength of our Flow businesses.
Investment banking aims to provide advisory services and financing to domestic as well as crossborder restructurings and industry-wide consolidations, as well as interest rate and FX solutions related to these transactions as volatile business environments impact our clients’ businesses. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
Risk Management and Compliance, etc.
We have defined our risk appetite in our Risk Appetite Statement which includes the types and level of risk that the Nomura Group is willing to assume in pursuit of our strategic objectives and business plans. Further, we continue to develop our risk management framework in a way that is strategically aligned to our business plans and incorporates decision-making by senior management, thereby securing capital soundness and enhancing our corporate value.
We recognized substantial losses during the years ended March 31, 2021 and 2022 as a result of the U.S. Prime Brokerage Event (as described in Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
”).
To address this issue, we have launched an extensive internal remediation and enhancement program (The “Risk Management Enhancement Program” or “RMEP”) in order to identify specific issues which may have contributed to the loss and areas of improvement in order to strengthen our risk management.
As a part of RMEP, we have clearly defined in our Risk Appetite Statement that all executives and employees must actively engage in risk management through our Three Lines of Defense framework and have provided extensive training to all executives and employees affected by RMEP.
With regard to compliance, we continue to focus on improving the management structure to comply with local laws and regulations in the countries where we operate. We also continue to review our internal systems and rules so that all executive management and employees can work autonomously with high ethical standards.
In order to ensure not only compliance with laws and regulations, but also that all directors, officers and employees are able to act in accordance with social norms, we have established the “Nomura Group Code of Conduct” as guidelines for actions to be taken, and through associated trainings and other measures, we are working to promote appropriate actions (“Conduct”) based on the Code of Conduct. At the ‘Nomura Founding Principles and Corporate Ethics Day’ held in every August, all directors, officers and employees reaffirm the lessons learned from past incidents and renew our determination to prevent similar incidents then to maintain and gain the trust society places in us; discussions are held regarding the proper way to conduct after looking back on past incidents, and a pledge is made to comply with the Code of Conduct.
In order for us to be able to respond to the changing demands of society, the Code of Conduct is regularly reviewed to constantly examine ourselves and to ensure that our thinking aligns with society’s norms. In March 2022, we added a new item “Managing Risks Appropriately” to instill a robust risk culture within Nomura Group, and articulated in writing that each executive and employee will deepen one’s knowledge and understanding on risks, properly recognize and evaluate them, and actively engage in risk management to prepare for all possible contingencies.
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By addressing and resolving the above issues, we will strive for the stability and further development of financial markets as well as the sustainable growth of the Nomura Group.
(3) Human Capital Initiatives
① Nomura’s Approach to Human Resources
Philosophy of “Human resources is the greatest asset”
With the belief that our people are our most valuable asset, we consistently aim to create a workplace where our employees can build long-term careers and play an active role in our business and are implementing various initiatives to enhance the physical and mental health of our employees.
Talent Management Based on Corporate Philosophy
We regard “We help to enrich society through our expertise in capital markets” as our social mission in our corporate philosophy. To realize this mission, we have set “Entrepreneurial Leadership,” “Teamwork” and “Integrity” as being core values that must be maintained at all times, and established the Nomura Code of Conduct to provide clear guidelines for connecting our corporate philosophy with these values. As talent management embodies these needs, we are working on the following various initiatives to foster and embed these values in our employees.
② Talent Management Initiatives
We are working on the following Initiatives to foster values of “Entrepreneurial Leadership,” “Teamwork,” and “Integrity” that must be maintained at all times.
Main ObjectiveExamples of Initiatives
Securing diverse human resources
•  
Internship and Nomura passport
We offer internship programs in Nomura Securities which offer students the opportunity to experience working in various areas of our business, and to deepen their knowledge of the financial services industry. In addition to this, students also learn about the roles and purpose of the securities industry. This helps students broaden their knowledge and experience and gives them the opportunity to think about their future careers.
We have also introduced an employment program called “Nomura Passport” for students pursuing doctoral degrees in the fields of science and technology in order to identify talent with expertise in such areas as AI development, data science and digitalization which will be increasingly critical to our business going forward.
Providing and supporting growth opportunities and developing professional human resources
•  
Training
In addition to training programs for new hires, training programs in Japan mainly consist of group training and
on-the-job
training to develop and train our employees. Global training is conducted separately by year of entry and position. Additionally, we conduct a leadership program aimed at developing our next generation of leaders and a program to support the development of women as executives with participants selected based on their performance and potential. We also offer a global program that is held annually
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Main ObjectiveExamples of Initiatives
in our Tokyo headquarters for managers of our overseas entities. In addition, we have established a self-improvement support system, consisting of a large number of external training and correspondence courses as well as voluntary group training on weekends at our company training facilities, in order to support the development of our employees on a voluntary basis.
•  
Study-abroad program
Over the past 60 years, more than 600 Nomura Securities employees have studied at business and law schools in more than 20 countries and regions, mainly in the United Kingdom and the United States.
•  
Global Mobility (International Transfer)
In addition to transferring from Japan to overseas, we actively provide opportunities for employees of our overseas entities to transfer to Japan to develop employees with experience of working in different countries and cultures.
•  
Digital IQ program
As we enter an era in which digital-related knowledge determines the competitiveness of global financial institutions, we have introduced the “Digital IQ” Program. This program is an online program for all of our global employees to improve their knowledge and skills.
Proper evaluation and treatment
•  
Compensation system based on the
pay-for-performance
principle
Based on our principle that employees are paid based on their performance, we ensure our compensation policies and practices are sound and competitive from a market perspective. This helps us realize our business strategy and generate long-term profits, with the aim of achieving sustainable growth and improving enterprise value over the medium to long term.
•  
360-degree
evaluation
We conduct a “360 degree evaluation” in which relevant managers are evaluated by colleagues other than their immediate superiors. This leads to further skill development and behavioral change for managers.
•  
ERCC goal
We have introduced a standard ERCC goal, which set goal from the perspectives of ethics, risk management, compliance, and conduct. We aim to raise the awareness of the Code for each employee and to instill the concept of the Code throughout our business, thereby creating an environment in which employees can speak out.
Employee engagement
•  
Employee engagement survey
We conduct the “Nomura Group Employee Survey” to monitor, maintain and improve the status of communication across our
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Main ObjectiveExamples of Initiatives
business and to understand the level of our employee satisfaction. As part of the most recent survey conducted during the year ended March 31, 2022, many employees responded positively to the question, “I am proud to work for the firm.”
Fostering a risk culture
•  
Fostering a risk culture
We have made it an objective for all of our global employees to foster a risk culture within our business by encouraging respectful relationships (Respect), reporting to their manager (Escalate), and performing constructive checks (Challenge).
DE & I, Health &Productivity Management, and provision of equal opportunities and prohibition of discrimination
•  
DE&I
As we have employees from about 90 different nationalities across our business, the development of human resources that respect diversity is one of our most important issues. These diverse human resources are our greatest asset. We believe that through mutual recognition and cooperation with others who have different backgrounds and values, we can meet the diverse needs of our clients and provide higher value-added services.
Based on this philosophy, our Sustainability Committee, chaired by the Group CEO, discuss and promote global strategies about DE&I. In addition, voluntary employee networks are promoting diversity issues in our offices globally. We are working on these issues from both a
top-down
and
bottom-up
approach. In accordance with the enactment of the “The Act on Promotion of Women’s Participation and Advancement in the Workplace” in Japan, we have formulated an action plan focused on the promotion of women’s participation and advancement and we are implementing various programs to achieve this.
•  
Health & Productivity Management
In July 2016, we adopted the Nomura Health & Productivity Declaration Statement as part of our efforts led by the Group Chief Health Officer (CHO) to maintain and improve the health of our employees. Starting in the year ended March 31, 2021, in order to work toward our management vision of “Achieve sustainable growth by helping resolve social issues,” we are communicating to all employees our goal that “All people who work at Nomura will not simply be healthy, but also physically, mentally and socially sound (overall well-being).”
•  
Provision of equal opportunities and prohibition of discrimination
For each and every employee to be active and successful in utilizing their capabilities and personal strengths, we provide equal opportunities in recruitment, development, evaluation, promotion and assignment. As part of the “Respect diversity and human rights” Section of the Nomura Group Code of Conduct, we state that “We promote equal opportunity and do not discriminate on grounds
such as nationality, race, sex, gender identity, sexual orientation, creed, social status, or existence of or nonexistence of disability.”
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(4) Deferred tax assets may be impacted due to a change in business condition or in laws and regulations, resulting in an adverse effect on our operating results and financial conditionC. Organizational Structure.
We recognize deferred tax assets in our consolidated balance sheets
The following table lists the Company and its significant subsidiaries and their respective countries of incorporation as a possible benefit of tax relief inMarch 31, 2022. Indentation indicates the future. If we experience or forecast future operating losses, if tax laws or enacted tax rates in the relevant tax jurisdictions in which we operate change, or if there is a change in accounting standards in the future, we may reduce the deferred tax assets recognized in our consolidated balance sheets. As a result, it could adversely affect our financial condition and resultsprincipal parent of operations. See Note 16
“Income taxes”
in our consolidated financial statements included in this annual report for further information regarding the deferred tax assets that we currently recognize.
16.
Unauthorized disclosure or misuse of personal information held by us may adversely affect our business
We keep and manage personal information obtained from clients in connection with our business. In recent years, there have been many reported caseseach subsidiary. Proportions of personal information and records in the possession of corporations and institutions being improperly accessed disclosed or misused.
Although we exercise care to protect the confidentiality of personal information and have in place policies and procedures designed to safeguard such information and ensure that it is used in compliance with applicable laws, rules and regulations, were any unauthorized disclosure or misuse of personal information to occur, our business could be adversely affected. For example, we could be subject to government actions such as administrative actions or penalties in case there is any violation of applicable personal data protection laws, rules and regulations or be subject to complaints and lawsuits for damages from clients if they are adversely affected due to the unauthorized disclosure or misuse of their personal information (including leakage of such information by an external service provider). In addition, we could incur additional expenses associated with changing our security systems, either voluntarily or in response to administrative guidance or other regulatory initiatives. Moreover, restrictions on our ability to use personal information collected from clients may adversely affect our existing businesses or to develop new ones. Furthermore, any damage to our reputation caused by such unauthorized disclosure or misuse could lead to a decline in new clients and/or a loss of existing clients, as well as to increased costs and expenses incurred for public relations campaigns designed to prevent or mitigate damage to our corporate or brand image or reputation.ownership interest include indirect ownership.
 
17.
System failure, the information leakage and the cost of maintaining sufficient cybersecurity could adversely affect our businessName
Our businesses rely on secure processing, storage, transmission and reception of personal, confidential and proprietary information on our systems. We have been in the past and may again become the target of attempted unauthorized access, computer viruses or malware, and other cyber-attacks designed to access and obtain information on our systems or to disrupt and cause other damage to our services. For example, in June 2018, one of our foreign subsidiaries experienced a spear phishing incident that resulted in the unauthorized access to the firm’s desktop network, requiring us to immediately launch an internal investigation to assess and remediate the incident, notify the appropriate authorities of its occurrence and communicate with clients and other individuals whose data may have been impacted. In response to the
COVID-19
pandemic, many of our employees now work remotely using networking or other technologies, and these technologies have become even more critical to our business. The implementation of remote work arrangements may also increase the possibility that we will be subject to cyber-attacks and other information security breaches. Although these threats may originate from human error or technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or third parties, including foreign
non-state
actors and extremist parties. Additionally, we could also be adversely impacted if any of the third-party vendors, exchanges, clearing houses or other financial institutions to whom we are interconnected are subject to cyber-attacks or other informational security breaches. Such events could cause interruptions to our systems, reputational damage, client dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect our financial condition and operations.
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While we continue to devote significant resources to monitor and update our systems and implement information security measures to protect our systems, there can be no assurance that any controls and procedures we have in place will be sufficient to protect us from future security breaches. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modify or enhance our systems in the future.
·  
Country/Region
Risks Related to
Ownership

Interest
(%)
Nomura Holdings, Inc.
Japan—  
Nomura Securities Co., Ltd.
Japan100
Nomura Asset Management Co., Ltd.
Japan100
The Nomura Trust & Banking Co., Ltd.
Japan100
Nomura Babcock & Brown Co., Ltd.
Japan100
Nomura Capital Investment Co., Ltd.
Japan100
Nomura Investor Relations Co., Ltd.
Japan100
Nomura Fiduciary Research & Consulting Co., Ltd.
Japan100
Nomura Research & Advisory Co., Ltd.
Japan100
Nomura Business Services Co., Ltd.
Japan100
Nomura Properties, Inc.
Japan100
Nomura Institute of Capital Markets Research
Japan100
Nomura Healthcare Co., Ltd.
Japan100
Nomura Agri Planning & Advisory Co., Ltd.
Japan100
Nomura Financial Products & Services, Inc.
Japan100
Nomura Institute of Estate Planning
Japan100
N-Village
Co., Ltd.
Japan100
Nomura Capital Partners Co., Ltd.
Japan100
Nomura Mezzanine Partners Co., Ltd.
Japan100
Corporate Design Partners Co., Ltd.
Japan100
Nomura Kagayaki Co., Ltd.
Japan100
Nomura Asia Pacific Holdings Co., Ltd.
Japan100
Nomura International (Hong Kong) Limited
Hong Kong100
Nomura Singapore Limited
Singapore100
Nomura Securities Singapore Pte. Ltd.
Singapore100
Nomura Australia Limited
Australia100
PT Nomura Sekuritas Indonesia
Indonesia96
Nomura Asia Investment (Fixed Income) Pte. Ltd.
Singapore100
Nomura Asia Investment (Singapore) Pte. Ltd.
Singapore100
Capital Nomura Securities Public Co., Ltd.
Thailand99
Nomura Financial Advisory and Securities (India) Private Limited
India100
Nomura Holding or Trading of our SharesAmerica Inc.
(1)
U.S.100
Nomura Securities International, Inc.
U.S.100
Nomura Corporate Research and ADRsAsset Management Inc.
U.S.100
Nomura Derivative Products Inc.
U.S.100
Nomura America Mortgage Finance, LLC
U.S.100
Nomura Global Financial Products, Inc.
U.S.100
NHI Acquisition Holding, Inc.
U.S.100
Instinet Incorporated
(1)
U.S.100
Nomura Europe Holdings plc
U.K.100
Nomura International plc
U.K.100
Nomura Bank International plc
U.K.100
Nomura Financial Products Europe GmbH
Germany100
Banque Nomura France
France100
Nomura Bank (Luxembourg) S.A.
Luxemburg100
Nomura Bank (Switzerland) Ltd.
Switzerland100
Nomura Europe Finance N.V.
The Netherlands100
Nomura European Investment Limited
U.K.100
Nomura Asia Investment (India Powai) Pte. Ltd.
Singapore100
Nomura Services India Private Limited
India100
Nomura International Funding Pte. Ltd.
Singapore100
Nomura Orient International Securities Co., Ltd.
China51
 
18.
(1)
BecauseFollowing an internal reorganization effective April 1, 2022, Instinet Incorporated and its group entities are now subsidiaries of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of the Company’s common stock at a particular price on any particular trading day, or at all
Nomura Holding America Inc.
Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. For the purpose of protecting investors from excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.
19.
Under Japan’s unit share system, holders of the Company’s shares constituting less than one unit are subject to transfer, voting and other restrictions
The Company’s Articles of Incorporation, as permitted under the Companies Act, provide that 100 shares of the Company’s stock constitute one “unit.” The Companies Act imposes significant restrictions and limitations on holdings of shares that constitute less than a whole unit. Holders of shares constituting less than one unit do not have the right to vote or any other rights relating to voting. Under the unit share system, any holders of shares constituting less than a unit may at any time request the Company to purchase their shares. Also, holders of shares constituting less than a unit may request the Company to sell them such number of shares that the Company may have as may be necessary to raise such holder’s share ownership to a whole unit. Shares constituting less than a unit are transferable under the Companies Act, but may not be traded on any Japanese stock exchange.
20.
As a holder of ADSs, you will have fewer rights than a shareholder has and you will have to act through the depositary to exercise these rights
The rights of shareholders under Japanese law to take actions including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the company’s accounting books and records and exercising appraisal rights are available only to holders of record. Because the depositary, through its custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying your ADSs as instructed by you and will pay you the dividends and distributions collected from the Company. However, in your capacity as an ADS holder, you will not be able to bring a derivative action, examine the Company’s accounting books or records or exercise appraisal rights except through the depositary.
21.
Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions
The Companies Act and the Company’s Articles of Incorporation and Regulations of the Board of Directors govern the Company’s corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties and shareholders’ rights may be different from
 
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those that would apply to a
non-Japanese
company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of other jurisdictions, including jurisdictions within the U.S. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.
22.
The Company’s shareholders of record on a record date may not receive the dividend they anticipate
The customary dividend payout practice of publicly listed companies in Japan may significantly differ from that widely followed or otherwise deemed necessary or fair in foreign markets. The Company’s dividend payout practice is no exception. The Company ultimately determines whether the Company will make any dividend payment to shareholders of record as of a record date and such determination is made only after such record date. For the foregoing reasons, the Company’s shareholders of record as of a record date may not receive the dividends they anticipate. Furthermore, the Company does not announce any dividend forecasts.
23.
It may not be possible for investors to secure personal jurisdiction within the U.S. over the Company or the Company’s directors or executive officers, or to enforce against the Company or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S.
The Company is a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of the Company’s directors and executive officers reside in Japan. Many of the Company’s assets and the assets of these persons are located in Japan and elsewhere outside the U.S. It may not be possible, therefore, for U.S. investors to obtain personal jurisdiction over the Company or these persons within the U.S. or to enforce against the Company or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the U.S. The Company believes that there is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of U.S. court judgments, of liabilities predicated solely upon the federal securities laws of the U.S.
·
Special Note Regarding Forward-looking Statements
This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business, our industry and capital markets around the world. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “plan” or similar words. These statements discuss future expectations, identify strategies, contain projections of our results of operations or financial condition, or state other forward-looking information.
Known and unknown risks including the
COVID-19
pandemic, uncertainties and other factors may cause our actual results, performance, achievements or financial position to differ materially from any future results, performance, achievements or financial position expressed or implied by any forward-looking statement contained in this annual report. Such risks, uncertainties and other factors are set forth in this Item 3.D and elsewhere in this annual report.
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Item 4. Information on the CompanyD. Property, Plants and Equipment.
A. History and Development of the Company.Our Properties
The Company (previously known as TheAs of March 31, 2022, our principal head office is located in Tokyo, Japan and occupies 861,463 square feet of office space. Our other major offices in Japan are our Osaka branch office, which occupies 131,470 square feet, our Nagoya branch office, which occupies 89,567 square feet, and the head office of NAM in Tokyo, which occupies 128,715 square feet.
As of March 31, 2022, our major offices outside Japan are the head offices of NIP located in London, which occupies 250,616 square feet, the New York head office of Nomura Securities Co.International, Inc., Ltd.) was incorporated in Japan on December 25, 1925 under the Commercial Code of Japan when the securities division of The Osaka Nomura Bank, Ltd. became a separate entity specializing in the trading and distribution of debt securities in Japan. The Company was the first Japanese securities company to develop its business internationally with the opening in 1927 of a representative office in New York. In Japan, we broadened the scope of our business when we began trading in equity securities in 1938 and when we organized the first investment trust in Japan in 1941.
Since the end of World War II, we have played a leading role in most major developments in the Japanese securities market. These developments include the resumption of the investment trust business in the 1950s, the introduction of public stock offerings by Japanese companies in the 1960s, the development of the
over-the-counter
bond market in the 1970s, the introduction of new types of investment trusts such as the medium-term Japanese government bond investment trust in the 1980s,which occupies 188,957 square feet, and the growthoffices of the corporate bond and initial public offering markets in the 1990s.
Our expansion overseas accelerated in 1967, when the Company acquired a controlling interest in Nomura International (Hong Kong) Limited for the purpose of conducting broker-dealer activitieslocated in the Hong Kong capital markets. Subsequently, we established a numberwhich occupies 111,837 square feet. We lease most of otherour overseas subsidiaries, including Nomura Securities International, Inc. in the U.S. in 1969 as a broker-dealer and Nomura International Limited, now Nomura International plc, in the U.K. in 1981, which acts as an underwriter and a broker, as well as other overseas affiliates, branches and representative offices.office space.
On October 1, 2001, we adopted a holdingAs of March 31, 2022, the major office of Nomura Services India Private Limited, our specialized service company structure. In connection with this reorganization,in Mumbai, India, occupies 217,668 square feet.
As of March 31, 2022, the Company changed its name from “The Nomura Securities Co., Ltd.” to “Nomura Holdings, Inc.” The Company continues to be listed on the Tokyo Stock Exchange and other stock exchanges. A wholly-owned subsidiaryaggregate book value of the Company assumedland and buildings we owned was ¥99 billion, and the Company’s securities businessesaggregate book value of equipment we owned, including communications and data processing facilities, was named “Nomura Securities Co., Ltd.”¥32 billion.
The Company has proactively engagedAs of March 31, 2022, we plan to construct a new facility as follows:
Name
 Location Segment 
Nature of the plan
 Estimate of the
amount of
expenditures
(million yen)		  Amount of
expenditures
already paid
(million yen)		  Method of
financing		 Date of start of the
activity		 Estimated
date of
completion of
the activity
NHI Tokyo Other Nihonbashi
1-Chome
Naka Area Type 1 Urban Area Redevelopment Project		  120,000   8,267  Own funds December 2021 March 2026
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in establishing a governance framework to ensure transparency inRule
12b-2
under the Company’s management. Among other endeavors, whenSecurities Exchange Act of 1934. There are no written comments which have been provided by the Company adopted a holding company structure and was listed on the New York Stock Exchange (“NYSE”) in 2001, the Company installed Outside Directors. In addition, in June 2003, the Company further strengthened and increased the transparencystaff of the Company’s oversight functions by adoptingSecurities and Exchange Commission regarding our periodic reports under that Act not less than 180 days before the Company with Three Board Committees (previously known as the Committee System), a system in which management oversight and business execution functions are clearly separated.
In 2008, to pave the way for future growth, the Company acquired and integrated the operations of Lehman Brothers in Asia Pacific, Europe and the Middle East.
The addressend of the Company’s registered office is
13-1,
Nihonbashi
1-chome,
Chuo-ku,
Tokyo
103-8645,
Japan, telephone number:
+81-3-5255-1000.
The SEC maintains an internet site that contains reports, proxyfiscal year ended March 31, 2022 and information statements, and other information regarding issuers that file electronicallywhich remain unresolved as of the date of the filing of this annual report with the SEC at https://www.sec.gov. Our corporate website is https://www.nomuraholdings.com.
Commission.
B. Business Overview.Item 5. Operating and Financial Review and Prospects
OverviewA. Operating Results.
We are one
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of factors, including, but not limited to, those under Item 3.D “Risk Factors” and elsewhere in this annual report.
Business Environment
The global economy experienced repeated slowdowns in the fiscal year ended March 31, 2022 in response to
flare-ups
in the
COVID-19
pandemic. Even so, economic activity resumed to a great extent, particularly in the countries of the leading financial services groupsWest that were at the forefront in Japan and we operate offices in countries and regions worldwide including Japan, the U.S., the U.K., Singapore and Hong Kong Special Administrative Region (“Hong Kong”) through our subsidiaries.administering
COVID-19
vaccination programs. The pandemic
 
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had a lingering impact on emerging market economies in particular, causing sluggishness in production and distribution that, when combined with the
Our clients include individuals, corporations,pent-up
demand unleashed by the economic recovery, led to increasingly severe supply constraints and, in turn, rising inflation. Despite initial expectations that it would not last, this rise in inflation became protracted, and as a result the central banks of major countries and regions around the world became more inclined to execute monetary policy tightening sooner than they had previously expected to, or to raise their policy interest rates in larger increments. This led to greater concern over rising interest rates in financial institutions, governmentsmarkets. Global equity markets stayed in an overall uptrend, albeit punctuated by numerous downward adjustments prompted by worries over sustained inflation and governmental agencies.
rising market interest rates. China’s economic growth slowed, in part due to curbs on production executed in the interest of stepping up the pace of decarbonization and tightening controls and regulations under China’s “common prosperity” drive.
Our business consistsJapan’s economy performed sluggishly. The country suffered repeated
flare-ups
in the pandemic—in part because it was slower than the countries of Retail, Asset Management, Wholesale the West to roll out vaccinations—and Merchant Banking, which are describedsupply constraints ended up causing a slump in further detail below. On April 1, 2021,exports. However, in spite of lackluster performance in the Asset Management Divisionreal economy and Merchant Banking Division were abolishedrising costs (including in the form of higher prices for imported raw materials due to accelerating global inflation and high market prices for raw materials and fuel), earnings at major Japanese companies kept up solid growth. The Japanese equity market set a fresh post-bubble high in September, buoyed by rising global equity markets and improvement in corporate earnings at home, but performance thereafter softened under the Investment Management Division was newly established. See also Note 22 “
Segment and geographic information
”influence of downward adjustments in our consolidated financial statements includedequity markets around the world triggered in this annual report.part by worries over rising interest rates.
Corporate Goals and Principles
The ① Fundamental Management Policy
In Fundamental Management Policy formulated by the Board of Directors, our company has set the following Management Vision and Basic Vision of Group Management.
Fundamental Management Policy of Nomura Holdings, Inc.
(Management Vision)
Nomura Group’s management vision is to enhance its corporate value by deepening society’s trust in the firm and increasing satisfaction of stakeholders, including that of shareholders and clients.
As a global investment bank, the Company will provide high value-added solutions to clients globally, and recognizing its wider social responsibility, the Company will continue to contribute to the economic growth and development of society.
To enhance its corporate value, the Company utilizes return on equity (“ROE”) as a management indicator and will strive for sustainable business transformation.
(Basic Vision of Group Management)
(1) Nomura Group will establish its modernized growth model by itself through realizing expansion of its business in new domains. Nomura Group will also establish earning structure not subject to market condition with proper cost control and risk management.
(2) Nomura Group will aim to serve its customers at the highest level in every investment, by paying thorough attention to the needs of its customers and the market and by providing its customers with highly value-added solutions in financial and capital markets.
(3) Nomura Group will emphasize compliance with applicable laws and regulations and proper corporate behavior to carry out compliance and conduct risk management in daily business operations. Each company of Nomura Group shall respect customers’ interests and comply with applicable laws and regulations relating to the business.
(4) Nomura Group seeks to ensure effective management oversight and increase management transparency.
(5) Nomura Group will contribute to expanding securities markets through daily business and continuously engage in educational activities regarding investment in order to broaden participation in the securities market.
We have established the following management vision based on the management goals.
② Management Vision
Our diverse businesses rely on the trust of our clients and all stakeholders. We recognize that raising our corporate value and ensuring sustainable growth of society as a whole are closely linked together. This is why our management vision is to achieve sustainable growth by helping resolve social issues.
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Our Business Divisions
Retail
In our Retail Division, we conduct business activities by delivering a wide range of financial products and high quality investment services mainly for individuals and corporations in Japan primarily through a network of nationwide branches of Nomura Securities Co., Ltd. (“NSC”).NSC. The total number of local branches, including our head office, was 123119 as of the end of March 2021.2022. We offer investment consultation services to meet the medium and long-term needs of our clients. We discuss retail client assets in “
Retail Client Assets
” under Item 5.A of this annual report.
We will strengthen our operating model to provide solutions and services that enable us further flexible approaches to the entire balance sheet of our clients.
Investment Management
We established a newOur Investment Management Division by replacing the Asset Management Division and the Merchant Banking Division, effective April 1, 2021.
Investment Management Division, which is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of our clients in the broad asset management businessbusiness. By combining our expertise in a broad sense, aims to increase added value by combining various types of expertise that have been accumulated within the group, from traditional assets such as stocks and bonds to alternative assets such as
non-listed
equities. Recognizing private equity, we provide added value and offer advanced services and solutions to meet the diversifying investmentdiverse needs of clientsour clients. Within the Investment Management Division, Nomura Asset Management Co., Ltd. (NAM) and many of our other investment and asset management companies maintain their independence while driving progress within the downward pressure onasset management fees as challenges, we aimindustry, increasing collaboration within the division, and leveraging our comprehensive capabilities elsewhere in the Nomura Group.
We are committed to expand our business through providing high-quality investment strategies, products and services to a wide range of investors. Along with delivering investment opportunitiestrusts for individual investors through financial institutions in Japan, we provide various investment solutions, both in public and providing performancesprivate market asset classes, to pension funds, institutional investors, and solutions that exceed expectations. In addition, we will advance the sophistication of thefinancial intermediaries globally.
Our revenues are mainly from asset management business and governance while ensuringfees we receive from our clients or funds we manage. Typically, our asset management fees are based on fixed annual rates calculated based on the independence, diversity and swiftnessamount of assets under our management. Also, we occasionally receive success or performance-linked fees depending on the investment performance we deliver to our clients. We also seek to generate investment gains through our own investments. We often
co-invest
in private market funds we manage alongside external investors to demonstrate our commitment in the underlying investment strategies of those funds.
In 2016, we acquired a
non-controlling
economic interest in American Century Investments (“ACI”), an independent investment management firm based in the U.S. and management companiesannounced a strategic partnership with ACI. We seek to deepen our strategic alliance from a “complementary” relationship to an “integrated” one as we continue to work together to further serve our clients. We include investment gains and losses from our investment in ACI as part of our Investment Management Division.Division’s revenue.
Wholesale
TheOur Wholesale Division consists of two businesses, Global Markets, which is engaged in the trading, sales and structuring of financial products, and Investment Banking which is engaged in financing and advisory businesses.
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Global Markets
Global Markets provides research, sales, trading, agency execution, and market-making of fixed income and equity-related products.
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Our global fixed income offerings include, among other products, government securities, interest rate derivatives, investment-grade and high-yield corporate debt securities, credit derivatives,
G-10
and emerging markets foreign exchange, asset-backed securities and mortgage-related products, in
over-the-counter
(“OTC”) and listed markets. We are primary dealers in the Japanese government securities market as well as in the Asian, European and U.S. markets.
Our global equity-related products include equity securities, Exchange Traded Funds (“ETFs”), convertible securities, listed and OTC equity derivatives, and prime services. In addition, we offer execution services based on cutting-edge electronic trading technology to help clients navigate through the complex market structure and achieve best execution. In order to provide extensive market access to our clients, we are also a member of various exchanges around the world, with leading positions on the Tokyo Stock Exchange.
These product offerings are underpinnedsupported by electronic/digital technology, and our global structuring and quants function which provide tailored ideas and trading strategies for our institutional and corporate clients as well as our retail franchise.
Investment Banking
We offer a broad range of investment banking services to a diverse range of corporations, financial institutions, sovereigns, financial sponsors and others. We aim to establish and cultivate strong, long-term relationships with our clients by providing them with our extensive resources for each bespoke solution.
Underwriting.
We underwrite offerings of a wide range of securities and other financial instruments, including various classes of shares, convertible and exchangeable securities, investment grade and high yield debt, sovereign and emerging market debt, structured securities and other securities in the Asian, European, U.S. and other financial markets. We also arrange private placements and engage in other capital raising activities.
Financial Advisory
 & Solutions Services.
We provide financial advisory services on business transactions including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts and risk solutions. Our involvement in reorganizations and other corporate restructurings related to industry consolidation enhances our opportunities to offer clients other advisory and investment banking services.
On April 1, 2020, we completed the acquisition of Greentech Capital, LLC, an M&A boutique that is strong in sustainable technology and infrastructure. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
Our Research Activities
We have an extensive network of intellectual capital with key research offices in Tokyo, Hong Kong and other major markets in the Asia-Pacific region, as well as in London and New York. Nomura isWe are recognized as a leading content provider with an integrated global approach to providing capital markets research. Our analysts collaborate closely across regions and disciplines to track changes and spot future trends in politics, economics, foreign exchange, interest rates, equities, and credit, and also provide quantitative analysis.
Our Information Technology
We believe that information technology is one of the key success factors for our overall business and intend to maintain and enhance our solid technology platform to ensure that the Nomura Group iswe are able to fulfill and
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exceed the various needs of our clients. Accordingly, we will continue to invest, enhance and adapt our technology platform to ensure it remains suitable for each division and proactively seek and implement innovative financial technology to improve the operations of our business.
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In our Retail Division, we continually invest and enhance our core system and related systems to improve efficiency onin our business operation.operations. We are also continuously working on improving our internet-based and smartphone platforms.
In our Investment Management Division, we continue to invest and enhance our technology platforms related to our core businesses leveraging third-party services to improve our capabilities and efficiency. We are also continuously working on digital marketing to expand business opportunities, and utilizing advanced technology to automate and sophisticate operations for investment management.
In our Wholesale Division, we continually invest and enhance our technology platforms to provide better risk management, improved data governance and also to increase trading capabilities through platforms allowing direct market access and algorithmic trading. In order to ensure the support level of our Wholesale operations, we will continue to maintain utilization of our offshore service entities in India and enhance our regional support based capabilities.
Furthermore, our digital transformation efforts are directly linked to the competitiveness of financial institutions in the future, and we will continue to promote a wide range of initiatives based on the Group’sour strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of added value created by the Nomura Group even in a world where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications.
Competition
The financial services industry is intensely competitive and we expect it to continue remain so. We compete globally with other brokers and dealers, investment banking firms, commercial banks, investment advisors and other financial services firms. We also face competition on regional, product and niche bases from local and specialist firms. A number of factors determine our competitive position against other firms, including:
 
the quality, range and prices of our products and services,
 
our ability to originate and develop innovative client solutions,
 
our ability to maintain and develop client relationships,
 
our ability to access and commit capital resources,
 
our ability to retain and attract qualified employees, and
 
our general reputation.
Our competitive position is also affected by the overall condition of the global financial markets, which are influenced by factors such as:
 
the monetary and fiscal policies of national governments and international economic organizations,
 
economic, political and social developments both within and between Japan, the U.S., Europe and other major industrialized and developing countries and regions, such as the
COVID-19
pandemic since 2020, and
 
increasing digitalization beyond the traditional financial sector
In Japan, we compete with other Japanese and
non-Japanese
securities companies and other financial institutions. Competition has become more intense due to deregulation in the Japanese financial industry since the late 1990s and the increased presence of global securities companies and other financial institutions. In particular, major global firms have increased their presence in securities underwriting, corporate advisory services (particularly, mergers and acquisitions advisory) and secondary securities sales and trading.
 
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There has also been substantial consolidation and convergence among financial institutions, both within Japan and globally and this trend continued as the credit crisis caused mergers and acquisitions and asset acquisitions in the industry. The growing presence and scale of financial groups which encompass commercial banking, securities brokerage, investment banking and other financial services has led to increased competition. Through their broadened offerings, these firms are able to create good client relationships and leverage their existing client base in the brokerage and investment banking business as well.
In addition to the breadth of their products and services, these firms have the ability to pursue greater market share in investment banking and securities products by reducing margins and relying on their commercial banking, asset management, insurance and other financial services activities. This has resulted in pricing pressure in our investment banking and trading businesses and could result in pricing pressure in other areas of our businesses. We have also competed, and expect to compete, with other financial institutions which commit capital to businesses or transactions for market share in investment banking activities. In particular, corporate clients may seek loans or commitments in connection with investment banking mandates and other assignments.
Moreover, the trend toward consolidation and convergence has significantly increased the capital base and geographic reach of some of our competitors, hastening the globalization of the securities and financial services markets. To accommodate this trend, we will have to compete successfully with financial institutions that are large and well-capitalized, and that may have a stronger local presence and longer operating history outside Japan.
Regulation
Japan
Regulation of the Securities Industry and Securities Companies
. Pursuant to the FIEA,Financial Instruments and Exchange Act (“FIEA”), the Prime Minister of Japan has the authority to supervise and regulate the securities industry and securities companies, and delegates its authority to the Commissioner of the FSA. The Company, as a holding company of a securities company, as well as subsidiaries such as NSC and Nomura Financial Products & Services, Inc. (“NFPS”), are subject to such supervision and regulation by the FSA. The Commissioner of the FSA delegates certain authority to the Director General of Local Finance Bureaus to inspect local securities companies and branches. Furthermore, the Securities and Exchange Surveillance Commission, an external agency of the FSA which is independent from the Agency’s other bureaus, is vested with authority to conduct
day-to-day
monitoring of the securities markets and to investigate irregular activities that hinder the fair trading of securities, including inspection of securities companies. Securities companies are also subject to the rules and regulations of the Japanese stock exchanges and the Japan Securities Dealers Association, a self-regulatory organization of the securities industry.
To enhance investor protection, each Japanese securities company is required to segregate client assets and to hold membership in an Investor Protection Fund approved by the government under the FIEA. The Investor Protection Fund is funded through assessments on its securities company members. In the event of failure of a securities company that is a member of the fund, the Investor Protection Fund provides protection of up to ¥10 million per client. The Investor Protection Fund covers claims related to securities deposited by clients with the failed securities company and certain other client claims.
Regulation of Other Financial Services
. Securities companies are not permitted to conduct banking or other financial services directly, except for those which are registered as money lenders and engaged in money lending business under the Money Lending Business Act or which hold permission to act as bank agents and conduct banking agency activities under the Banking Law. Among the subsidiaries of the Company in Japan, NSC is a securities company that is also registered as a money lender and holds permission to act as a bank agent. Another subsidiary of the Company, The Nomura Trust & Banking holds a banking license and trust business license.
Financial Instruments and Exchange Act
. The FIEA widely regulates financial products and services in Japan under the defined terms “financial instruments” and “financial instruments trading business”. It regulates
 
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most aspects of securities transactions and the securities industry, including public offerings, private placements and secondary trading of securities,
on-going
disclosure by securities issuers, tender offers for securities, organization and operation of securities exchanges and self-regulatory associations, and registration of securities companies. In addition, to enhance fairness and transparency in the financial markets and to protect investors, the FIEA provides for, among other things, penalties for misrepresentations in disclosure documents and unfair trading, strict reporting obligations for large shareholders and corporate information disclosure systems, including annual and quarterly report systems, submission of confirmation certificates concerning the descriptions in securities reports, and internal controls over financial reporting.
The FIEA also provides for corporate group regulations on securities companies the size of which exceeds specified parameters (Tokubetsu Kinyu Shouhin Torihiki Gyosha, “Special Financial Instruments Firm”) and on certain parent companies designated by the Prime Minister (Shitei Oyagaisha, “Designated Parent Companies”) and their subsidiaries (together, the “Designated Parent Company Group”). The FIEA aims to regulate and strengthen business management systems, compliance systems and risk management systems to ensure the protection of investors. The FIEA and its related guidelines also provide reporting requirements to the FSA on the Designated Parent Company Group’s business and capital adequacy ratios, enhanced public disclosures as well as restrictions on compensation all of which are designed to reduce excessive risk-taking by executives and employees of a Designated Parent Company Group. We were designated as the Designated Parent Company of NSC in April 2011 and were designated as the Designated Parent Company of NFPS in December 2013. As the Designated Parent Company and the final parent company within a corporate group (Saishu Shitei Oyagaisha, “a Final Designated Parent Company”), we are subject to these requirements. A violation of the FIEA may result in various administrative sanctions, including the revocation of registration or license, the suspension of business or an order to discharge any director or executive officer who has failed to comply with the FIEA.
Orderly Resolution Regime. On March 6, 2014, amendments to the FIEA and the Deposit Insurance Act, which included the establishment of an “Orderly Resolution Regime for Financial Institutions” to prevent a financial crisis that may spread across financial markets and may seriously impact the real economy, took effect. Under the Orderly Resolution Regime, the Financial Crisis Response Council, chaired by the Prime Minister, will take measures such as providing liquidity to ensure the performance of obligations for critical market transactions where it is considered necessary to prevent severe market disruption. Such measures will be funded by the financial industry, except in special cases where the government will provide financial support.
TLAC. In April 2016, the FSA published its policy describing its approach and framework for the introduction of the TLAC requirements in Japan applicable to Japanese
G-SIBs
and, in April 2018, released revisions to such policy that extended the coverage of the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. Based on the revised policy, in March 2019, the FSA finally published the notices and guidelines of TLAC regulations in Japan (including TLAC holding regulations). Although Nomura is not identified as a
G-SIB
as of the date of this annual report, Nomura is subject to the TLAC regulations in Japan, and is required to meet a minimum External TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Regulatory Changes. On May 31, 2019, a bill to amend the FIEA and the Payment Services Act, etc. was passed by the Diet of Japan. The amendment to the FIEA includes establishing the concept of “electronically recorded transferable rights” (
denshi kiroku iten kenri
, “ERTRs”) and treating ERTRs as Securities defined in Paragraph 1 of the FIEA. As a result, ERTRs are subject to requirements of the Disclosure of Corporate Affairs and Other Related Matters, and regulations for Financial Instruments Business Operators Engaged in Type I Financial Instruments Business apply to institutions dealing in ERTRs. Additionally, “crypto assets” (
“angou shisan”
) are now included in the definition of “Financial Instruments”, and derivatives transactions related to crypto assets are subject to the provisions of the FIEA. As a result of the amendment, certain special provisions
 
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concerning the crypto asset-related business have been introduced, whereby Financial Instruments Business Operators, etc. must explain the nature of crypto assets and must not make any representation that may mislead their customers about the nature of crypto assets. Moreover, regulations governing unfair acts in respect of crypto asset and crypto asset derivative transactions are introduced. The amendment became effective on May 1, 2020.
Overseas
Our overseas offices and subsidiaries are also subject to various laws, rules and regulations applicable in the countries where they conduct their operations, including, but not limited to those promulgated and enforced by the U.S. Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), the U.S. Treasury, the Financial Stability Oversight Council (“FSOC”), the New York Stock Exchange, the Chicago Mercantile Exchange and other exchanges and/or clearinghouses, the Financial Industry Regulatory Authority (“FINRA”) (a privateself-regulatory organization with quasi-governmental authority and a regulator(“SRO”) for allthe U.S. securities companies doing business in the U.S.)industry), the National Futures Association (“NFA”) (a self-regulatory organization(an SRO for the U.S. derivatives industry) in the U.S.; by the Prudential Regulation Authority (“U.K. PRA”) and the Financial Conduct Authority (“U.K. FCA”) in the U.K; and by a number of EU regulators including Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marches Financiers (AMF). We are also subject to international money laundering and related regulations in various countries. For example, the USA PATRIOT Act of 2001 contains measures to prevent, detect and prosecute terrorism and international money laundering by imposing significant compliance and due diligence obligations and creating crimes and penalties. Failure to comply with such laws, rules or regulations could result in fines, suspension or expulsion, which could materially and adversely affect us.
Regulatory Changes.
Regulation in the United States
In responsethe U.S., the SEC is the federal agency responsible for the administration of the federal securities laws, and the CFTC is the federal agency responsible for the administration of laws relating to commodity futures, commodity options and swaps industry. In addition, FINRA and the financial markets crisis, governments and regulatory authoritiesNFA are SROs that are actively involved in various jurisdictions have made and continue to make numerous proposals to reform the regulatory framework for, or impose a tax or levy upon, theregulation of financial services industrybusinesses (securities businesses in the case of FINRA and commodities/futures businesses in the case of the NFA). In addition to enhance its resilience against future crises, contribute to the relevant economy generally or for other purposes. In July 2010, the U.S. enacted the Dodd-Frank Act and a multi-agency rulemaking process. The rulemakings include the following: (i) create a tighter regulatory framework for
over-the-counter
(“OTC”) derivatives to promote transparency and impose conduct rules in that marketplace; (ii) establish a process for designating nonbank financial firms as Systemically Important Financial Institutions (“SIFIs”),federal regulation, we are subject to increased (and sometimes new) prudential oversight including early remediation, capital standards, resolution authoritystate securities regulations in each state and new regulatory fees; (iii) prohibit material conflictsU.S. territory in which we conduct securities or investment advisory activities. The SEC, FINRA, CFTC, NFA and state securities regulators conduct periodic examinations of interest between firmsbroker-dealers, investment advisors, futures commission merchants (“FCMs”), swap dealers and security-based swap (“SBS”) dealers (“SBS dealers”). Financial services businesses are also subject to regulation and examination by state securities regulators and, in some cases, investigations and reviews by attorneys general in those states in which they do business. In addition, broker-dealers, investment advisors, FCMs, swap dealers and SBS dealers must also comply with the rules and regulation of clearing houses, exchanges, swap execution facilities and trading platforms of which they are a member.
Broker-dealers are subject to SEC, FINRA and state securities regulations that package and sell asset-backed securities (“ABS”) and firms that invest in ABS; (iv) establish risk retention requirements for ABS; (v) establish rules related to the orderly liquidation of certain broker dealers; (vi) create annual stress tests; and (vii) set forth a number of executive compensation mandates, including rules to curtail incentive compensation that promotes excessive risk taking and listing standards for recovery of erroneously awarded compensation. The new regulatory framework for OTC derivatives includes mandates for clearing transactions with designated clearing organizations, exchange trading, new capital requirements, bilateral and variation margin for
non-cleared
derivatives, reporting and recordkeeping, and internal and external business conduct rules. Some U.S. derivatives and executive compensation rules may be applied extraterritorially and therefore impact some
non-U.S.
Nomura entities.
Othercover all aspects of the Dodd-Frank Actsecurities business, including sales and related rulemakings include provisions that (i) prohibit deposit-taking bankstrading methods, publication of research reports, trade practices, among broker-dealers, risk management, use and their affiliates from engaging in proprietary trading and limit their ability to make investments in hedgesafekeeping of customers’ funds and private equity funds (thesecurities, capital structure and requirements, anti-money laundering efforts, recordkeeping and the conduct of broker-dealer personnel including officers and employees.
so-called
“Volcker Rule”
Our U.S. subsidiaries Nomura Securities International, Inc. (“NSI”); (ii) empower regulators and Instinet, LLC (“ILLC”) are registered as broker-dealers with the SEC. U.S. subsidiary Nomura Global Financial Products Inc. (“NGFP”) is an “OTC derivatives dealer,” which is a class of broker-dealer exempt from certain broker-dealer requirements, including membership in an SRO, regular broker-dealer margin rules and application of the Securities Investor Protection Act of 1970, but are subject to liquidate failing nonbank financial companies thatspecial requirements, including limitations on the scope of their securities activities, specified internal risk management control systems, recordkeeping obligations and reporting responsibilities. OTC derivatives dealers are systemically important; (iii) provide for new systemic risk oversight and increasedalso subject to alternative net capital requirements for both bank andtreatment.
non-bank
SIFIs; (iv) provide for a broader regulatory oversight of hedge funds; and (v) establish new regulations regarding the role of credit rating agencies,
Registered investment advisors and others. The Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted in May 2018, preserves the fundamental elementsare subject to, among other requirements, SEC regulations concerning marketing, transactions with affiliates, custody of the post-Dodd-Frank regulatory framework and, asclient assets, disclosures to bank regulatory requirements, primarily focuses on revising certain aspectsclients, conflict of the U.S. financial regulatory regime for small and
medium-sizedinterest, insider
banking organizations. In connection with the implementation of
 
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trading and recordkeeping. Investment advisors that are also registered as commodity trading advisors or commodity pool operators are also subject to regulation by the Dodd-Frank Act,CFTC and the U.S. Federal financial regulatory agencies have released proposalsNFA. Certain of our subsidiaries, including NSI as well as Nomura Asset Management Co., Ltd., Nomura Asset Management U.S.A. Inc. and other asset management subsidiaries, are registered as investment advisors with the SEC.
FCMs, introducing brokers and swap dealers that engage in commodity options, futures or swap transactions are subject to tailorregulation by the applicationCFTC and the NFA. CFTC rules require registration of prudentialswap dealers, mandatory clearing and execution of certain default swaps through regulated clearing houses and execution facilities, real-time public reporting and adherence to business conduct standards for all
in-scope
swaps. A number of these requirements, includingparticularly those regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. CFTC rules establishing capital and liquidity requirements for large U.S. banking organizations and foreign banking organizations with significant U.S. activities.
swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB, became effective in October 2021. The CFTC has largely finalized its rulemakingsalso adopted financial reporting requirements for covered swap entities and amended existing capital rules for CFTC-registered FCMs to provide explicit capital requirements for proprietary positions in swaps and security-based swaps that implementare not cleared by a clearing organization. Swap dealers that are not subject to the OTC derivatives market reform aspectsjurisdiction of a Prudential Regulator are subject to the margin rules issued by the CFTC (which covers
non-bank
swap dealers, such as our subsidiaries). The rules for variation margin have become effective, and those for initial margin are in the process of being phased in through September 2022, depending on certain activity levels of the Dodd-Frank Act. Among other items,swap dealer and the relevant counterparty. Inter-affiliate transactions under the CFTC Dodd-Frankmargin rules now impose reporting, clearing,are generally exempt from initial margin and trade execution requirements that will apply, to varying degrees, to commodity derivative transactions entered into by all U.S. and many
non-U.S.
Nomura entities. These rules also require swap dealers that exceed a de minimis threshold of swap dealing activity to beunder certain conditions. NSI is registered as an FCM with the CFTCCFTC. NGFP and subject thoseNomura International plc, a U.K. subsidiary, are registered swap dealers to internal and external conduct requirements. The U.S. derivatives rules are now being applied extraterritorially and are impacting some
non-U.S.
Nomura entities. The full extent of the extraterritorial application of the CFTC’s Dodd-Frank rules continues to evolve as the CFTC updates its own guidance, and these changes may result in more or fewer aspects of the rules impacting Nomura’s entities. In relevant part, on December 18, 2019, the CFTC approved proposed rules that address the cross-border application of registration thresholds and certain requirements relevant to swap dealers, as well as changes to existing terms and definitions and the CFTC’s treatment of transactions that have been arranged, negotiated or executed by Associated Persons (“APs”) in the U.S., and the availability of substituted compliance for the limited scope of the Title VII swap requirements addressed in the proposal. Separately, on March 5, 2019, the NFA issued rules that require certain APs of NFA member firms (e.g., swap dealers and Futures Commission Merchants) to satisfy certain swaps proficiency requirements to ensure that APs engaged in swaps activities meet a minimum proficiency standard that tests both their market knowledge and their knowledge of regulatory requirements relating to swaps activities. Swap dealer APs outside the U.S. that only transact swaps with
non-U.S.
persons or
non-U.S.
branches of U.S. swap dealers are exempt from the requirements. The compliance date for
in-scope
APs to complete the proficiency requirements is January 31, 2021. Furthermore, on July 22, 2020 the CFTC adopted final capital and financial reporting rules for swap dealers with athe CFTC. ILLC is registered as an introducing broker with the CFTC.
SEC rules constituting its SBS regulatory regime, which set registration and other compliance date of October 6,dates for SBS dealers and major SBS participants, generally came into effect by November 1, 2021.
In addition, Title VII of the Dodd-Frank Act gives Under these rules, SBS dealers are subject to regulation by the SEC, regulatory authority over “security-based swaps” which are defined under the act as swaps based on a single security or loan or a narrow-based group or index of securities. Security-based swaps are included within the definition of “security” under the U.S. Securities and Exchange Act of 1934 and the U.S. Securities Act of 1933. The SEC continues to issue final rules and interpretive guidance addressing cross-border security-based swap activities. On June 25, 2014, the SEC initially finalized a portion of its cross-border rules, namely key foundational definitions and registration calculations that will become operative once the SEC sets a timeframe for the security-based swap dealer registration process to begin. Since then, the SEC has issued a series of final rules that will apply certain Dodd-Frank Act requirements to security-based swaps between two
non-U.S.
person counterparties when the security-based swaps are arranged, negotiated or executed using personnel or personnel of agents located in the U.S. On February 10, 2016, the SEC issued final rules that require a
non-U.S.
person that uses personnel or personnel of agents located in the U.S. in connection with security-based swap dealing activity to include such security-based swaps in its security-based swap dealer registration de minimis calculation. On April 14, 2016, the SEC issued final rules that require a
non-U.S.
security-based swap dealer to comply with external business conduct standards rules when facing a
non-U.S.
person counterparty if the
non-U.S.
security-based swap dealer uses personnel or personnel of agents located in the U.S. to arrange, negotiate or execute the security-based swap. On July 14, 2016 the SEC issued final rules that subject a security-based swap between a
non-U.S.
security-based swap dealer and a
non-U.S.
person counterparty to public dissemination pursuant to SEC rules if the
non-U.S.
swap dealer uses personnel or personnel of agents located in the U.S. to arrange, negotiate or execute the security-based swap. On June 21, 2019, the SEC issued its final rules governingincluding (i) capital, margin and segregation requirements for security-based swap dealers, revisedrequirements; (ii) recordkeeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the capital and segregation requirements for broker-dealers that are not security-based swap dealers to the extent they engage in security-based swaps activities, and increased the minimum capital requirements for broker-dealers authorized to use internal models to compute net capital. On September 19, 2019, the SEC issued final rules governing recordkeeping and reporting for security-based swap dealers and amendments to existing recordkeeping and reporting requirements for broker-dealers. On December 18, 2019, the SEC adopted rules that would require security-based swap dealers to comply with
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certain risk mitigation techniques with respect to uncleared portfolios of uncleared security-based swaps. These risk mitigation techniques include, inter alia, requirements that a security-based swap dealer establish, maintain and follow written policies and procedures: (1) related to bilateral offsettingSBSs. In the fourth quarter of security-based swaps and periodic portfolio compression exercises; and (2) that are reasonably designed to ensure that it executes written security-based swap trading relationship documentation with each2021, certain of its counterparties prior to, and contemporaneously with, executing a security-based swap. Finally, on December 18, 2019, the SEC also adopted final supplemental guidance and rule amendments addressing the cross-border application of certain security-based swap requirements. Specifically, the rules provide guidance, subject to certain conditions, on the circumstances under which providing “market color” will not constitute “arranging” or “negotiating” a security-based swap for purposes of the of the SEC rules, guidance relating to the certification and opinion requirements for
non-U.S.
security-based swap dealer registration applicants, and
non-U.S.
AP requirements relevant toour subsidiaries registered security-based swap dealers. In addition, the SEC adopted a conditional exception from the security-based swap dealer
de minimis
registration calculation that would otherwise require a
non-U.S.
security-based swap entity to count a security-based swap transaction with a
non-U.S.
counterparty that was arranged, negotiated or executed by personnel or personnel of agents in the U.S. These cross-border rules and amendments may impact some
non-U.S.
Nomura entities. Significantly, the SEC’s cross-border final guidance and rule amendments trigger the eighteen (18) month countdown for security-based swap dealer registration and compliance with all final security-based swap dealer requirements. Consequently, for those dealers and other market participants who breach the
de minimis
counting threshold, security-based swap dealer registration and compliance with all final security-swap dealer rules will be no later than November 1, 2021.
The exact details of the Dodd-Frank Act implementation and ultimate impact on Nomura’s operations will depend on the form and substance of the final regulations adopted by various governmental agencies and oversight boards. In addition to the rulemakings required by the Dodd-Frank Act, the SEC is considering other rulemakings that will impact Nomura’s U.S. entities. While these rules have not been formally proposed, they have been publicly reported in the U.S. Office of Management and Budget’s (“OMB”) “Current Regulatory Plan and Unified Agenda of Regulatory and Deregulatory Actions.” The SEC’s Division of Trading and Markets has announced that it is considering recommending that the SEC propose an amendment to its net capital rule that would prohibit a broker-dealer that carries customer accounts from having a ratio of total assets to regulatory capital in excess of a certain level. The SEC and the CFTC are also considering a number of changes to market structure rules. The SEC adopted Rule 613 to create a consolidated audit trail (“CAT”) intended to allow regulators to track all activity throughout the U.S. markets in National Markets Systems (“NMS”) securities. Self-regulatory organizations must jointly submit a NMS plan to create and implement the CAT, which will replace existing reporting systems OATS, TRACE and EBS. On June 15, 2016 the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 15, 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 25, 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. On October 25, 2019, FINRA filed a rule change with the SEC again extending the effective date of the Rule 4210 margin requirements to March 25, 2021. The compliance date has since been extended to October 26, 2021. However, FINRA published a notice of filing of proposed changes to the margin rule on May 25, 2021 with comments due by June 15, 2021. On November 7, 2016, the CFTC approved a supplemental notice of proposed rulemaking modifying certain rules proposed in the CFTC’s December 17, 2015, notice of proposed rulemaking regarding Regulation AT. Proposed Regulation AT would have, among other things, required firms engaged in electronic algorithmic trading to (i) register with the CFTCas SBS dealers and (ii) submit their trading source code to the CFTC. On June 25, 2020 the CFTC voted to both rescind the proposed Regulation AT and replace it with a proposed set of rules based on risk principles. The new rule was adopted by the CFTC on December 8, 2020 and became effective date on January 11, 2021 and where all designated contract markets must be in full compliance with the requirements of this rule no later than July 12, 2021.
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On February 3, 2017, U.S. President Donald J. Trump signed Executive Order 13772 outlining core principles to regulate the U.S. financial system. The order directed the Secretary of the Treasury to consult with heads of member agencies of the FSOC and report within 120 days of the date of the order (and periodically thereafter) on the extent to which existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements and other government policies promote the core principles. U.S. regulatory agencies may change financial regulations through administrative procedures and rulemakings, supervisory guidance or
no-action
relief as the result of recommendations by the Treasury Secretary in accordance with the core principles of the executive order. These may have a material impact on Nomura’s business.
The core principles are as follows: (i) empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth; (ii) prevent taxpayer-funded bailouts; (iii) foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry; (iv) enable American companies to be competitive with foreign firms in domestic and foreign markets; (v) advance American interests in international financial regulatory negotiations and meetings; (vi) make regulation efficient, effective, and appropriately tailored; and (vii) restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework. The Treasury Department divided its review of the financial system into a series of reports. The reports, all of which have been issued, cover the following subjects: (1) the depository system, covering banks, savings associations, and credit unions of all sizes, types and regulatory charters: (2) capital markets: covering debt, equity, commodities and derivatives markets, central clearing and other operational functions; (3) the asset management and insurance industries, and retail and institutional investment products and vehicles; and
(4) non-bank
financial institutions, financial technology and financial innovation. In addition, President Trump issued two Presidential Memoranda to the Secretary of the Treasury. One calls for a review of the Orderly Liquidation Authority (“OLA”) established under Title II of the Dodd-Frank Act, which the Treasury Department released in February 2018, recommending reforms to the OLA and amendments to the U.S. Bankruptcy Code to make a bankruptcy proceeding a more effective solution method for large financial institutions. The other calls for Treasury to review the process by which the FSOC determines that a nonbank financial company could pose a threat to the financial stability of the U.S., subjecting such an entity to supervision by the Federal Reserve and enhanced prudential standards and capital requirements. In March 2019, the FSOC proposed to revise its interpretive guidance relating to such designations (the “March Proposal”). In December 2019, the FSOC issued finalized amendments to its interpretative guidance, which adopts the March Proposal with some modifications.
On October 26, 2017, the Division of Investment Management and the Division of Trading and Markets of the SEC issued three related
no-action
letters to address certain issues raised by cross-border implementation of the European Union’s (“EU”) Markets in Financial Instruments Directive (“MiFID II”), which took effect on January 3, 2018. MiFID II will require the unbundling of execution and research payments made by investment managers to broker-dealers. Under the relief, a broker-dealer may, without becoming subject to the Advisers Act, provide research servicesSEC’s regulations regarding SBSs. NGFP is registered as an SBS dealer with the SEC, and Nomura International plc is registered as an SBS dealer with the SEC.
The CFTC and the SEC have adopted rules relating to an investment managercross-border regulation of swaps, SBSs, business conduct and registration requirements. The CFTC and the SEC have entered into agreements with certain
non-U.S.
regulators regarding the cross-border regulation of derivatives and the mutual recognition of certain cross-border execution facilities and certain clearing houses, and have approved substituted compliance with certain
non-U.S.
regulations related to certain business conduct requirements and margin rules.
Additional legislation or rules promulgated by the SEC, FINRA, CFTC, NFA, other SROs and state securities regulators, or changes in such legislation or rules or in the interpretation or enforcement of existing legislation or rules may directly affect our operations and profitability. The SEC, CFTC, FINRA, NFA, state securities regulators and state attorneys general may conduct administrative proceedings or initiate civil litigation that is required, either directlycan result in adverse consequences for us, our subsidiaries and our and their respective officers and employees (including, without limitation, injunctions, censures, fines, suspensions, directives that impact business operations (including proposed expansions), membership expulsions, or by contractual obligation, to pay for such research services with MiFID
II-compliantrevocations of licenses and registrations).
research payments. This
no-action
letter, which was set to expire on July 3, 2020, has been extended until July 3, 2023.
Further, The Foreign Account Tax Compliance Act (“FATCA”), which was enacted in 2010, requires foreign financial institutions (“FFIs”) to report to the U.S. Internal Revenue Service information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. As a result, Nomura is subject to certain reporting requirements consistent with a mutual agreement between Japanese governmental authorities and the U.S. Treasury Department.
On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act into law. Among other things, the legislation includes the Base Erosion and Anti-Abuse Tax (“BEAT”), effectively a minimum tax on large corporations applied by adding back to taxable income certain deductible payments made to related foreign persons. These tax law changes are complex and raise significant interpretive issues and therefore we anticipate
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future guidance
Proposed Changes to U.S. Regulation 
In 2016, the SEC adopted Rule 613 to create a consolidated audit trail (“CAT”) intended to allow regulators to track all activity throughout the U.S. markets in National Markets Systems securities. Following system development and implementation, the CAT is now live, and the final phased on compliance periods will end in
mid-2022.
In June 2016, the SEC approved amendments to FINRA Rule 4210, which require FINRA member broker-dealers to set risk limits on each counterparty transacting in specified forward-settling agency mortgage-backed securities (“covered agency transactions”) as of December 2016, and to collect variation margin and/or maintenance margin from certain counterparties transacting in covered agency transactions as of June 2018. A failure to collect required margin in a timely manner (T+1) results in an obligation for the FINRA member broker-dealer to take a capital charge, and ultimately (T+5) to liquidate the customer’s position in order to satisfy the margin deficiency. The effectiveness of the Rule 4210 margin requirements has been delayed a number of times. Most recently, FINRA published a notice of filing of proposed changes to the margin rule on February 25, 2022, delaying the date of effectiveness to October 26, 2022.
In January 2021, CFTC adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control, or trading in coordination with each other. Swap dealers may currently claim an exemption from the position limits for the bona fide hedging of swap-related risks, but this exemption will be eliminated in 2023. The CFTC position limits apply to futures on specified physical commodities and options on such futures, and these limits apply to both physically and cash settled positions. In addition, in 2023, the position limit rules will become applicable to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and
non-
spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that
non-spot
month limits will at some point be adopted for futures and swaps on other physical commodities.
In November 2021, the SEC published proposed Exchange Act Rule
10c-1,
which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, such as the Financial Industry Regulatory Authority. The registered national securities association would then make the material terms of the securities lending transaction available to the public.
In December 2021, the SEC proposed rules to addressprevent fraud, manipulation and deception in connection with security-based swaps, to prevent undue influence over the areaschief compliance officer (CCO) of uncertainty which could also have an adverse impact onSBS dealers and major SBS swap participants, and to require any person with a large security-based swap position to publicly report certain information related to the tax liabilities of our U.S. entities.position.
Regulation in the U.K. and Europe
As part of global efforts to establish a framework to improve authorities’ capacity to resolve failing SIFIs, the U.K. implemented the EU Bank Recovery and Resolution Directive (“BRRD”), which was published on June 12, 2014. The BRRD also aims to implement FSB recommendations on recovery and resolution regimes for financial institutions. The BRRD applies to banks and investment firms operating in EU member states, including EU branches and subsidiaries of third country firms. It includes requirements for the preparation of recovery and resolution plans (“RRPs”) by institutions and regulators. It also creates various powers for EU regulators to intervene to resolve institutions at risk of failure, including the ability to sell or transfer all or part of an institution and the introduction of a debt write down or
bail-in
tool.
As part of the
bail-in
rules, firms will be required to maintain capital resources sufficient to meet the stipulated minimum requirement for eligible liabilities (“MREL”). The MREL overlaps with the global capital standards on total loss absorbing capacity (“TLAC”) for
G-SIBs
issued by the FSB on November 9, 2015. As
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Nomura Group has adopted a single point of entry resolution strategy, European subsidiaries are subject to internal MREL. The internal MREL became applicable in the U.K. for all U.K. incorporated institutions from January 1, 2019 for firms whose failure would have a significant impact on the U.K. financial system and for certain overseas firms where the Bank of England (“BOE”) would support a home resolution authority in carrying out a cross-border resolution. From January 1, 2020, Nomura is required to hold internal MREL resources above the regulatory capital requirements for the material subsidiaries in the U.K., identified as Nomura Europe Holdings plc (“NEHS”) on a
sub-consolidated
basis and NIP.
In July 2019, the BOE and U.K. PRA published a policy statement on the Resolvability Assessment Framework (“RAF”). The proposals for the RAF bring together existing policies such as MREL and Operational Continuity in Resolution (“OCIR”) as well as other new resolution policies in order to follow the resolution principles set out by the FSB. Under the policy, it is expected firms perform an assessment of their preparations for resolution and the BOE provide a public statement concerning resolvability of each firm. The BOE and U.K. PRA may consider, in consultation with Financial Services Agency (“FSA”), apply some or all of the requirements set out in the policy statement to NEHS.
EU banks and investment firms including those located in the U.K. have been subject to the current prudential regulatory capital regime since the introduction of the Capital Requirements Regulation and Capital Requirements Directive (collectively, “CRD IV”) in January 2014. The aim of CRD IV was to strengthen the resilience of the EU banking sector so it would be better placed to absorb economic shocks while also ensuring that banks continued to finance economic activity and growth. CRD IV sets out regulations for minimum capital requirements for banks and investment firms and also introduced new capital and liquidity buffers.
In November 2016 the European Commission proposed amendments to this regulation in a “CRRII” package of reforms. Together with the updates to the Bank Recovery and Resolution Directive (“BRRD II”) and Single Resolution Mechanism Regulation (“SRMR”) this package is an important step towards the completion of the European post-crisis regulatory reforms and implements some of the outstanding global reforms agreed by the Basel Committee and the FSB. The EU views the amendments as essential to making its financial system more stable and resilient, and the financial institutions more resolvable. These updates entered into force in June 2019 with the majority of changes being introduced two years later in June 2021.
Among other things these proposed changes include the introduction of binding minimum leverage and net stable funding ratios, changes to the calculations for counterparty credit risk of derivatives, a tightening of large exposure limits, introduction of new reporting requirements for market risk and the introduction of a new EU intermediate parent undertaking requirement. These reforms are generally expected to lead to an increase in local capital and liquidity requirements and increased costs of compliance.
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Subsequent to the finalization of work on the CRRII package in October 2021 the EU willintroduced a first draft of proposals to introduce a “CRRIII”“CRRIII/CRDVI” package of reforms to implement all outstanding elements of the Basel III framework including changes to the calculations for Operational Risk, CVA, Credit Risk, FRTB capital requirements and the introduction of an output floor to modelled calculations. The draft rules also include proposals to strengthen the resilience of the banking sector to environmental, social and governance (“ESG”) risks and to enhance the strength of supervision within the EU to better protect financial stability. The proposals are proposed for implementation in Jan 2025.
Since Brexit, thesethe CRR and subsequent amendments are notno longer applicable in the U.K. TheHMT and the PRA is currently consulting on proposed changes similar to those in the CRRII package in consultation paper 5/21—have published updated rules for implementation of Basel standards. This is expectedsimilar reforms to be implementedthe CRRII in the U.K. which were implemented from 1 Jan 2022. Subsequent to this, HMT and the PRA will also consult towards the end of 2022 on implementing the final elements of the Basel III framework equivalent to those in the EU CRRIII package.package with a proposed implementation date of Jan 2025.
The revised MiFID II, which is split into the Markets in Financial Instruments Directive (“MiFID”) and the Markets in Financial Instruments Regulation (“MiFIR”) was published in the EU Official Journal on June 12,
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2014 and entered into force on July 2, 2014. The majority of the new rules under MiFID II and MiFIR took effect from January 3, 2018, with Member States required to implement MiFID II through national legislation by July 3, 2017. The legislation sought to introduce wide-reaching changes to markets, including the extension of market transparency rules into
non-equities
and potentially reducing the size of the OTC derivative market by mandating the clearing of standardized OTC transactions through central clearing counterparties and their trading through regulated trading venues. The new framework introduced a market structure which was intended to close certain loopholes and ensure that trading, wherever appropriate, takes place on regulated platforms. It has introduced rules on high frequency trading with a view to improving the transparency and oversight of financial markets. The revised MiFID also aimed to strengthen the protection of investors by introducing more robust organizational and conduct requirements and by strengthening the role of management bodies. The new framework also increased the role and supervisory powers of regulators and established powers to prohibit or restrict the marketing and distribution of certain products in well-defined circumstances. A harmonized regime for granting firms from third countries access to EU professional markets, based on an equivalence assessment of third-country jurisdictions by the Commission, was also introduced.
Following a range of consultations and technical advice published by the European Securities and Markets Authority (“ESMA”), in April 2016 the European Commission adopted a MiFID Delegated Directive (“Directive”). The Directive contains provisions on investor protection, notably on safeguarding of clients. The Commission also adopted a delegated regulation supplementing MiFID II. This regulation was aimed at specifying, in particular, the rules relating to exemptions, the organizational requirements for investment firms, and conduct of business obligations in the provision of investment services. In May 2016, the Commission adopted a further delegated regulation supplementing MiFIR. This regulation aims at specifying, in particular, the rules relating to determining liquidity for equity instruments, the rules on the provision of market data on a reasonable commercial basis, the rules on publication, order execution and transparency obligations for systematic internalisers, and the rules on supervisory measures on product intervention by the ESMA, the European Banking Authority (‘EBA’) and national authorities, as well as on position management powers by the ESMA.
After two years, the EuropeanEU Commission is required to evaluate the overall functioning of the MiFID II/ MiFIR regime, in particular, addressing those areas where challenges still exist, and present a report to the European Parliament and Council together with a legislative proposal to reform the regime if required (the so called ‘MiFID Refit’). As part of this process, ESMA has already launched a number of consultations on specific areas, which will feed into the Commission’s reports.
Certain amendments to support economic recovery from the
COVID-19
pandemic, including via relief from administrative requirements on firms, has been published in the EU Official Journal on February 26, 2021 (MiFID
‘Quick-Fix’).
EU Member States arewere required to transpose the quick fix amendments into their national frameworks by November 28, 2021 and apply them by February 28, 2022. Alongside this on November 25, 2021, the scheduled MiFID2 review continues, with theEU Commission expected to publish a furtherpublished its legislative proposal towardsfor a review of MiFID II/MiFIR. Key proposals include refinements to the endscope of 2021.Sincethe Securities Trading and Derivatives Trading Obligations, adjustments to the transparency regime and reporting requirements and considerations around establishment of a Consolidated Tape. Since Brexit, these amendments arewill not be applicable in the U.K. Theand the FCA is currently consultinghas consulted on proposed
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changes to the conduct and organizational rules under in the U.K. MiFID, specifically relating to research and best execution reporting. On November 30, 2021 the FCA published the Policy Statement (“PS”) on changes to U.K. MiFID’s conduct and organizational requirements. The PS sets out changes to best execution reporting requirements and research inducement rules. Effective from December 1 2021, U.K. firms are no longer required to produce best execution reports. In addition, from March 1, 2022, asset managers and research firms will be able to exercise the options on exempting inducement rules on research. This means U.K. firms will be able to provide research on FICC instruments to clients without it being subject to
un-bundling.
On July 1, 2021 the U.K. HMT intendslaunched a Wholesale Market Review Consultation. The consultation is part of the Government’s commitment to consult in due courseimproving the competitiveness of the U.K. as a hub for capital markets, and
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is a central part of the Government’s post-Brexit strategy for financial services. It has a wide ranging focus, including the regulatory framework for trading venues, systematic internalizers, market data, and fixed income, equity, derivative and commodity markets. It proposes a number of amendments to the U.K.’s onshored MiFID regime and asks for industry input on proposed legislative changes ona range of other areas of MiFID II.topics.
The European Market Infrastructure Regulation (“EMIR”) became effective on August 16, 2012, and applies to any entity established in the EU that is a legal counterparty to a derivative contract, even when trading with
non-EU
firms. EMIR was created with the intention of stabilizing OTC markets found within EU member states. Although the majority of EMIR regulations have already been implemented, on May 28, 2019, Regulation (EU) 2019/834 (EMIR REFIT) was published in the EU’s Official Journal, with the aim of amending EMIR to make some of its requirements simpler and more proportionate, particularly for
non-financial
counterparties (“NFCs”). With a few exceptions, the majority of the provisions in the Regulation entered into force on June 17, 2019.
Following the announcement made by BCBS and the International Organization of Securities Commissions (‘IOSCO’) on April 3, 2020 to defer by one year, the deadline for completing the final two implementation phases of the bilateral margin requirements, the European Supervisory Authorities (ESMA, EBA and the European Insurance and Occupational Pensions Authority) have published joint draft Regulatory Technical Standards to amend the Delegated Regulation on the risk mitigation techniques for
non-centrally
cleared OTC derivatives (bilateral margining), under EMIR to incorporate in the EU, the one year deferral. Phase 6 represents the final stage of the
phase-in
of the rules and applies from September 1, 2022.
On January 12, 2016, the Securities Financing Transactions Regulation (“SFTR”), which forms part of the EU’s package of legislation targeted at reforming shadow banking and aims to improve transparency in the securities financing transactions (“SFTs”) market, came into force subject to a range of transitional provisions over a number of years. On April 11, 2019, the final regulatory technical standards entered into force and MiFID firms were due to commence their reporting one year later on April 11, 2020. However, due to the
COVID-19
pandemic, the reporting under the SFTR was extended until July 13, 2020. Other reporting counterparties were phased in over the following months, ending with NFCs on January 11, 2021.
On November 25, 2020, the FCA issued a statement explaining what trade repositories, and the U.K. counterparties that use them, should do to ensure they are compliant with the U.K. SFTR reporting obligations from the end of the Brexit transition period. All U.K. SFTR counterparties that enter into securities financing transactions that are in scope of the U.K. SFTR are required to report details of those transactions to an
FCA-registered,
or recognised, trade repositories.
On September 17, 2014, the Central Securities Depositories Regulation (“CSDR”) came into force, in the EU. It aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. CSDR plays a pivotal role for post-trade harmonisation efforts in Europe, as it will enhance the legal and operational conditions for cross-border settlement in the EU. On February 5, 2020, ESMA has published a Final Report on draft regulatory technical standards (“RTS”) on postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) to February 1, 2021. It has been endorsed by the European Commission on May 8, 2020 and is now subject to the
non-objection
of the European Parliament and of the Council. Furthermore, on August 28, 2020, ESMA published another Final Report on draft RTS definitively postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until February 1, 2022..2022. On January 27, 2021, the EuropeanEU Commission published a delegated act confirming the entry into force of CSDR Settlement Discipline to February 1, 2022. On September 24, 2021 ESMA wrote to European Commission regarding the implementation of the Central Securities Depositories Regulation, urging it to consider a delay of the mandatory
buy-in
regime. ESMA is in favor of delaying the entry into force of the
buy-in
requirements—scheduled on February 1, 2022—while applying the other settlement discipline requirements, such as settlement fails reporting and cash penalties regime, as planned. On
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November 24, 2021, the EU Commissioner announced that the mandatory
buy-in
regime would not enter into force on February 1, 2022. On December 17, 2021, ESMA issued a public statement informing national competent authorities (NCAs) not to prioritize supervisory actions in relation to the application of the
buy-in
regime until the provision for postponing the application of the
buy-in
regime is formally in place. The remaining requirements of CSDR settlement discipline, in particular the settlement fails reporting and the cash penalties regimes, will go ahead as planned.
In the U.K., on June 23, 2020, the Government confirmed that it will not implement the CSDR Settlement Discipline. U.K. firms will continue to apply the existing
industry-led
framework.
In June 2015, the European Parliament and Council toOn February 8, 2022, the EU members issued the final version of the Fourth Money Laundering DirectiveCommission announced a decision to extend equivalence for U.K. central counterparties (“4MLD”CCPs”). All EU member states, including the U.K., had until June 26, 2017 to transpose30, 2025. The equivalence will apply from July 1, 2022. At the requirements of the directive into national law. In February 2016, the European Commission, in an effort to bolster the fight against terrorist financing, proposed amendments to the 4MLD that
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would enable the tracing of terrorists through financial movements and disrupt the sources of revenue for terrorist organizations by targeting their capacity to raise funds. These proposed amendments were included in a final version of the 4MLD issued bysame time, the EU Parliament in July 2016. In September 2017, additional legislation was implementedCommission launched a targeted public consultation and a call for evidence on ways to expand central clearing activities in the U.K. designedEU and improve the attractiveness of EU CCPs in order to combat financial crime includingreduce the Criminal Finances Act. The Act functions as an enhancement and extension of the Proceeds of Crime Act 2002 and, in addition to increasing the powers of authorities in investigating tax evasion, is also designed to make failure by a commercial organization to prevent the facilitation of tax evasion a punishable offence.EU’s overreliance on systemic third-country CCPs.
The Fifth Money Laundering Directive (“5MLD”), came into force in the EU on April 26, 2018 and for implementation by EU Member States by January 10, 2020. Not all Member States have yet been able to implement the changes. However, the U.K. government has enacted the regulations bringing into force the 5MLD and the provisions are contained in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The changes impose additional obligations within the financial services sector. 5MLD amends 4MLD, and includes provisions that enhance the required level of transparency around beneficial ownership of corporates and trusts, tightens some controls relating to Politically-Exposed Persons and high risk third countries and also addresses risks associated with certain technological innovation, particularly virtual currencies.
On October 2018 the 6th Money Laundering Directive (“6MLD”) was approved by the European Parliament and Council. EU member states had until December 3, 2020 to implement this upcoming Directive into national law, whilst regulated entities havehad a deadline of June 3, 2021. The2021.The U.K. has decided to opt out of complying with this further AML Directive as the Government assesses that the domestic legislation is already largely compliant with the Directive’s measures. The 6MLD complements the criminal aspects of the 5MLD and has been introduced to focus on the definition of these crimes and their sanctions. It also gives financial institutions more responsibility in the fight against financial crime and aims to promote the collaboration of member states when tackling money laundering.
The Senior Managers and Certification Regime (“SM&CR”) came into force on March 7, 2016 with the aim of reducing the risk of harm to consumers and strengthening market integrity by making firms, and individuals within those firms, more accountable for their conduct and competence. In July 2018, the U.K. FCA and U.K. PRA published near-final rules extending SM&CR to cover all financial services firms in the U.K. to apply from December 9, 2019. On March 8, 2019, the U.K. FCA announced its final rules on its proposed Directory—a new public register that will enable consumers, firms and other stakeholders to find information on key individuals working in financial services who are not otherwise appointed and publicly registered under the SM&CR. Firms were to submit data on Directory individuals in December 2019, and the Directory was expected to go live in March 2020. However, due to the
COVID-19
pandemic, the implementation date of the directory of certified and assessed persons had been delayed. However, some firms, like banksdelayed and insurance companies, had already submitted their data to the FCA. The Directory is now live since March 31, 20212021.
Since 2012, the European Commission sought to establish a modern and harmonized data protection framework across the EU to replace the existing Directive. On May 4, 2016, the official texts of the new EU General Data Protection Regulation (“GDPR”) were published in the EU Official Journal in all the official languages and it came into force on May 25, 2016. GDPR took effect across the EU member states on May 25, 2018. GDPR included a number of important changes to existing data protection legislation including new obligations on data processors, restrictions on the transfer of personal data outside the EEA and the introduction of new concepts such as “accountability” (and related record-keeping), the “right to be forgotten” and a
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requirement for data breach notifications to the relevant Regulators. Enforcement of GDPR is carried out by both national regulators (for the U.K., the Information Commissioner) and the European Commission, and the regulators also have the power to impose greater fines for any breaches of the data protection requirements of up to 4% of a firm’s global turnover.
The EU Benchmark Regulation (“BMR”) entered into force on June 30, 2016 and has applied in the U.K. since January 1, 2018. Global regulators have imposed fines on firms following attempted manipulation of the
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London Inter-bank Offered Rate (“LIBOR”), gold and foreign exchange benchmarks, and have taken action against individuals for misconduct related to benchmarks. The objectives of the EU BMR include, but are not limited to: (i)improving governance and controls over the benchmarking process to ensure that administrators avoid/manage conflicts of interest, (ii)improving the quality of input data and methodologies used by benchmark administrators, (iii)ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, and (iv)protecting consumers and investors through greater transparency and adequate rights of redress.
Furthermore, in November 2019, the EU BMR was amended to include two new types of “climate benchmarks”—‘Paris-Aligned’ Benchmarks (“PABs”) and Climate Transition Benchmarks (“CTBs”). The
Low-Carbon
Benchmarks Regulation introduced the requirement (under Article 13 of the BMR) that administrators of benchmarks (save interest rate and foreign exchange benchmarks) must provide an explanation of how the key elements of their benchmark methodologies reflect ESG factors. The requirements are to be complied with by April 30, 2020. However, since the draft regulatory technical standards were still subject to a public consultation and a number of important details are subject to these delegated acts, ESMA issued a ‘No Action Letter’ encouraging EU national regulators not to force these ‘Level 1’ requirements until these delegated acts are finalized. The Delegated Acts were finalized and published on December 3, 2021 and entered into force in December 23, 2020.2021.
In addition, interest rate benchmarks including, among others, the London Interbank Offered Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”), the Euro Overnight Index Average (“EONIA”) and certain other Interbank Offered Rates (“IBORs”) are being reformed. The U.K. is due to make the transition from LIBOR to Sterling Overnight Index Average (“SONIA”) by the end of 2021 although certain interim milestones have been extended due to the
COVID-19
pandemic. To avoid disruption to legacy contracts that reference the
1-,
3-
and
6-month
sterling and Japanese yen LIBOR settings, on September 30, 2021 the U.K. FCA announced that it will require the LIBOR benchmark administrator to publish these settings under a ‘synthetic’ methodology, based on term risk-free rates, for the duration of 2022. These six LIBOR settings will be available only for use in some legacy contracts, and are not for use in new business.
On January 1, 2022, the U.K. FCA issued notices under Article 23C and Article 23D of the UK BMR on the calculation and permitted the legacy use of the six sterling and Japanese yen LIBOR settings.
In the Eurozone, €STR (Euro Short Term Rate) is set to gradually replace the Euro Overnight Index Average (“EONIA)(EONIA) and serve as a fallback for the Euro Interbank Offered Rate (“EURIBOR”). EONIA will effectively be pegged against €STR until January 3, 2022, when EONIA ceases to apply.
On July 22, 2020, the U.K. Government published a policy statement extending the transitional period for third-country benchmarks under the U.K. BMR from December 31, 2022 to December 31, 2025, thus allowing U.K. firms to continue using benchmarks provided by administrators located outside the U.K. in new financial contracts and instruments without these benchmarks being registered with the FCA until
end-2025.
On October 21, 2020, the U.K. Government published a policy statement making amendments to BMR to allow for the orderly winding down of LIBOR, including providing new powers for the U.K. Financial Conduct Authority (“FCA”). The proposed framework in the policy document allows the FCA to take an appropriate course of action to direct a change in the methodology of a critical benchmark and extend its publication, for a limited time period, for those contracts that face insurmountable barriers to transition from LIBOR (Tough Legacy Contracts). Currently theThe FCA is consultingconsulted on its proposal to use two new powers relating to the use of critical
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benchmarks that are being wound down. The powers are part of a wider package of amendments to the BMR in the Financial Services Act 2021, intended to ensure that the FCA has the appropriate regulatory powers to help reduce risk in the wind-down period before LIBOR ceases permanently. The final Statements of Policy were published in September 29, 2021 (Statement of Policy on the FCA’s power under Article 23C BMR and Statement of Policy on the FCA’s power under Article 21A BMR).
In the U.K. as a follow up to the Fair and Effective Markets Review (established by the Chancellor of the Exchequer), the Fixed Income, Currencies and Commodities (“FICC”) Markets Standards Board (“FMSB”) was established in 2015 as a private sector response to the conduct problems revealed in global wholesale FICC markets after the financial crisis. The function of the FMSB is to help raise standards of conduct in global wholesale markets by producing voluntary Standards and other guidance in areas of uncertainty that are developed by the membership and designed to illustrate best practices to all market participants. These Standards are intended to reduce the continuing uncertainty about acceptable practices in opaque and unregulated areas, which is a hazard for FMSB members, as well as other market participants. The Standards published to date cover topics including the new issue process, binary options for the commodities markets, reference price
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transactions for the fixed income markets and secondary market trading error compensation. The published Standards do not have legal or regulatory force and do not replace existing legislation; rather, they are intended to supplement the rules already in place. The Standards are implemented by way of FMSB member firms, including Nomura International plc, making an adherence statement on an annual basis.
The U.K.’s membership of the EU endedFollowing Brexit, on January 31, 2020, commonly referred to as “
Brexit
”, in accordance with the
Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community
(the “
Withdrawal Agreement
”). On December 31, 2020, a transition period during which the rules and regulations of the EU continued to apply to the U.K expired. The U.K. and EU entered a trade and cooperation agreement governing their relationship prior to the expiration of the transition period, such agreement does not comprehensively address the financial industry.
On March 26, 2021, the U.K. Government announced that technical negotiations on the text of the
U.K.-EU
memorandum of understanding (“MoU”) establishing a framework for regulatory cooperation in financial services have concluded. Among other things, the MoU will establish a Joint
U.K.-EU
Financial Regulatory Forum to serve as a platform to facilitate dialogue on financial services issues. The MoU makes limited reference to access, saying that both sides will “jointly endeavor to pursue a robust and ambitious bilateral regulatory cooperation”.
In response to heightened global focus on the issues of climate change, and a growing demand for standards associated with Environmental, Social and Governance (“ESG”)ESG factors and reporting, a number of global regulatory initiatives are being developed. These regulations cover both prudential frameworks including assessment and management of climate risks associated with Nomura businesses, such as the PRA SS3/19 regulations; and also labelling, disclosure and reporting regulations which includes but is not limited to the EU Taxonomy Regulation, the EU Sustainable Finance Disclosure Regulation and the EU Corporate Sustainability Reporting Directive.
Regulatory Capital Rules
Japan
The FSA and regulatory authorities have revised the current regulatory capital standards applicable to Nomura to alleviate some of the impact of the
COVID-19
pandemic. In March 2020, the Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (“GHOS”), approved a set of measures that provide additional operational capacity for banks and supervisors. These measures allow banks and supervisors to immediately focus on financial stability, and priorities that alleviate the impact of the
COVID-19
pandemic on the global banking system. GHOS also made changes to the implementation timeline of the outstanding Basel III standard by deferring the deadline by 1 year. After this announcement,2022, the FSA also announced a 1one year defermentdelay of the implementation schedule in Japan. In June 2020, in coordination with the monetary policydate of the Bank of Japan in responsefinalised Basel III standards for internationally active banks, to the impact of
COVID-19
pandemic,March 31, 2024. Also the FSA published amendments toannounced the Notice on Consolidated Leverage Ratio. Under these amendments,exclusion of deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 tountil March 31, 2021. In March 2021, the FSA announced this measure will be extended for one year due to the continuous uncertainty regarding the impact of
COVID-19.2024.
The FIEA requires that all Financial Instruments Firms (Category I) (“Financial Instruments Firms I”), a category that includes NSC and NFPS, ensure that their capital adequacy ratios do not fall below 120% on a
non-consolidated
basis. The FIEA also requires Financial Instruments Firms I to file monthly reports regarding their capital adequacy ratios with the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau, and also to disclose their capital adequacy ratios to the public on a quarterly basis. In addition, if the capital adequacy ratio of a Financial Instruments Firm I falls below 140%, it must file a daily report with the authorities. The FIEA provides for actions which the Prime Minister, through the Commissioner of the FSA or
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the Director-General of the appropriate Local Finance Bureau, may take if any Financial Instruments Firm I fails to meet the capital adequacy requirement. More specifically, if the capital adequacy ratio of any Financial Instruments Firms I falls below 120%, the Commissioner of the FSA or the Director-General of the appropriate Local Finance Bureau may order the Financial Instruments Firm I to change its business conduct, to deposit its
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property in trust, or may issue any other supervisory order that such authorities deem necessary and appropriate to protect the interests of the general public or investors. If the capital adequacy ratio of a Financial Instruments Firm I falls below 100%, the authorities may take further action, including the issuance of orders to temporarily suspend its business and the revocation of its registration as a Financial Instruments Firm I under the FIEA.
Under the FIEA and regulations thereunder, the “capital adequacy ratio” means the ratio of adjusted capital to a quantified total of business risks. Adjusted capital is defined as net worth less illiquid assets. Net worth mainly consists of stated capital, additional
paid-in
capital, retained earnings, reserves for securities transactions, certain allowances for doubtful current accounts, net unrealized gains/losses in the market value of investment securities, and subordinated debt. Illiquid assets generally include
non-current
assets, certain deposits and advances and prepaid expenses. Business risks are divided into three categories: (i) market risks (i.e., risks of asset value changes due to decline in market values and other reasons), (ii) counterparty risks (i.e., risks of delinquency of counterparties and other reasons) and (iii) basic risks (i.e., risks in carrying out daily business activities, such as administrative problems with securities transactions and clerical mistakes), each quantified in the manner specified in a rule promulgated under the FIEA.
The FSA reviewed the FIEA and regulations thereunder in line with Basel 2.5 framework and the revised regulations for Basel 2.5 were implemented at the end of December 2011. Market risks increased significantly as a result of the Basel 2.5 rule implementation.
We closely monitor the capital adequacy ratio of NSC and NFPS on a continuous basis. Since the introduction of the capital adequacy requirement in Japan in 1989, we have at all times been in compliance with all appropriate requirements. We believe that we will continue to be in compliance with all applicable capital adequacy requirements for the foreseeable future.
As discussed above, the FSA amended the FIEA and introduced new rules on consolidated regulation and supervision of securities companies on a consolidated basis on April 1, 2011 to improve the stability and transparency of Japan’s financial system and ensure the protection of investors. Following introduction of these rules, NSC was designated as a Special Financial Instruments Firm, following which we have been designated as a Final Designated Parent Company. As such, we are required to calculate consolidated regulatory capital adequacy ratio according to the FSA’s “Establishment of standards on sufficiency of capital stock of a final designated parent company and its subsidiary entities, etc. compared to the assets held thereby”(2010 FSA Regulatory Notice No. 130;“Capital Adequacy Notice on Final Designated Parent Company”). Accordingly, since our designation as a Final Designated Parent Company in April 2011, we now calculate our Basel rule-based consolidated regulatory capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company.
The FSA also amended the FIEA to include reporting on consolidated regulatory capital for the Final Designated Parent Companies, effective April 1, 2011. We are subject to this reporting requirements as well as the capital adequacy requirements described above.
The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III, and we have calculated a Basel
III-based
consolidated capital adequacy ratio since the end of March 2013. Basel 2.5 includes significant changes in the method of calculating market risk and Basel III includes redefinition of capital items for the purpose of requiring higher levels of capital and expansion of the scope of credit risk-weighted assets calculation.
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If our capital ratios fall to the minimum level required by the FSA, our business activities may be impacted. However, these ratios are currently at well capitalized levels. We have met all capital adequacy requirements to which we are subject and have consistently operated in excess of the FSA’s capital adequacy requirements. Subject to future developments in regulatory capital regulations and standards, there has been no significant change in our capital ratios which management believes would have material impact on our operations.
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The Basel Committee has issued a series of announcements regarding a broader program to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises, as described in “
Consolidated Regulatory Capital Requirements
” under Item 5.B of this annual report. The Capital Adequacy Notice on Final Designated Parent Company is expected to incorporate the series of rules and standards in line with the schedule proposed by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The FSB also announced the group of
G-SIBs
will be updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIB.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important banks
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
Overseas
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a futures commission merchant with the Commodity Futures Trading Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s Uniform Net Capital Rule (“Rule
15c3-1”)
and other related rules, which require net capital, as defined under the alternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from client transactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or $1,000,000, whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, or other various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934. NGFP is subject to Ruleregistered with the Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer on October 6, 2021 and registered with the Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule
15c3-118a-1
and applies Appendix F. NGFP is required to maintain net capitalCFTC rule 23.101 and requires the greater of $20,000,000, in accordance with2% of the SEC.SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
15c3-1
which requires the maintenance of minimum net capital, as defined under the alternative method, equal to the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount of adjusted net capital required by a futures association of which it is a member; and the amount of net capital required by Rule
15c3-1(a).
As of March 31, 20202021 and 2021,2022, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”). as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Financial Services and Markets Act 2000, U.K. Capital Requirements DirectiveRegulations and the Capital Requirements Regulation which came into effect on January 1, 2014.PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has
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minimum capital adequacy requirements imposed on it on a standalone basis. As a
non-U.S.
swap dealer and securities based swap dealer NIP is also subject to the regulations of the CFTC and SEC under the Dodd Frank Act. In addition, Nomura Bank International plc (“NBI”), another
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subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis andbasis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”). and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 20202021 and 2021,2022, NEHS, NIP, NBI, NFPE and NFPEBNF were in compliance with relevant regulatory capital related requirements.
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) are regulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank with an Asian Currency Unit (“ACU”) license governedregulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its ACU regulated activities including, among others, securities brokerage and dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on a standalone basis by the MAS in Singapore. NIHK and NSL have always been compliant with relevant regulatory capital related requirements.
In addition, certain of our other subsidiaries are subject to various securities and banking regulations, and the capital adequacy requirements established by the regulatory and exchange authorities of the countries in which those subsidiaries operate. We believe that each such subsidiary is, and will in the foreseeable future be, in compliance with these requirements in all material respects.
Management Challenges and Strategies
Management vision
The Nomura Group’sOur business environment is undergoing significant changes. We will continue to respond to it flexibly while maintaining an appropriate financial standing and effectively utilizing management resources through improved capital efficiency. In addition, we are never satisfied with ourselves and will constantly implement new initiatives with the aim of expanding existing businesses and providing value-added services to clients.
(1) Urgent Priority Issues
Issues Relating
As a global financial services group, we continue to seek to deliver value-added products and services to our clients globally. Given the diversification of its products and services, as well as the multifaceted nature and expansion of global business, enhancing risk management is essential for us.
In response to the U.S. Prime Brokerage Event
As described in more detail in Item 5. “
Operating2021, we immediately launched a thorough review of our business management processes as well as our procedures and Financial Review—A. Operating Results—Executive Summary—U.S.
Prime Brokerage Event
”,organizational structure. Based on this review, we recognized significant losses during the year ended March 31, 2021 as a result of the U.S. Prime Brokerage Event. We have takenanalyzed a number of steps to address the issues underlying the U.S. Prime Brokerage Event, and plan to take additional stepsareas, such as how we manages our business in the future aimed at strengtheningcurrent environment, communication and enhancing our riskcoordination across departments, and allocation of management procedures in future. Immediately following the incident, we conducted an internal investigationresources. In light of the underlying facts, and our Audit Committee hired an external law firm to conduct a comprehensive review. As a result of these investigations, we have already implemented a number of measures; and in addition, we are also reviewing our risk management framework, centered on the prime brokerage business, and conducting a comprehensive review by third-party risk management experts on our risk management framework for the Wholesale division and our Risk Management function. Finally,this, we have taken steps to further enhance our risk management including revamping our organizational structure and realigning headcount in related departments.
We see enhanced risk management as an urgent key management project and one of the top priorities for us over the medium to long-term. Our senior management is committed to leveraging the full capabilities of the group to strengthen global risk controls,management, including building a stronger risk culture and raising the risk awareness our employees and executive officers. See Item 11.
“Quantitative and Qualitative Disclosures about Market, Credit and Other Risk—Risk Management”
for further information about this review.
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(2)
Medium-to
Long-term Priority Issues to respond to changed environment
① The Group’s growth strategy for the sustainable improvement of our corporate value
Our vision is to take Nomura to the next stage. To realize this, we launched a new strategy of expanding into private markets to complement our businesses in the public markets. We are committed to strengthening the provision of bespoke services and solutions made for each specific client, through a three-pronged approach, namely the expansion of our client base, expansion of products and services, and delivery utilizing digital technology. Based on this strategy, for instance, we are starting to see results from the following efforts.
For more information on the strategies in each division, please refer to the challenges and strategies in each division.
Strengthening Investment Management Division
We newly established our Investment Management Division, in April 2021, aiming to meet our clients’ diverse needs, as part of our management strategy: Expanding our scope of business from public to private. This division aims not only to expand and strengthen traditional investment products but also to provide investment opportunities into private section such as enhancingalternative assets. Nomura Babcock & Brown Co., Ltd, which conducts aircraft leasing and was not under any business division before the establishment of Investment Management Division, was consolidated into Investment Management as a key company under the new division. By bringing together diverse expertise under the same structure, we aim to deliver even greater added value.
Shifting to asset consulting business
We are shifting to an asset consulting business for domestic individual customers. We provide asset consulting services that we believe provide preferable
medium-to
long-term solutions for our Risk Management organizationclients. We support clients in increasing their assets, and deepeningwe aim to increase the fee income we receive as a result by increasing assets under custody. The steady increase in income from stock assets such as investment trusts, for which fees such as management and expandingadministration expenses are charged for assets under management, contributes to more stable revenue stream for us. We also established our Chief Investment Office (“CIO”) Group in July 2020 to provide consulting services similar to those already offered towards institutional investors, to individual investors. In November 2020, we introduced the scopeCIO services for discretionary investment services to improve operational performance. We are also promoting the introduction of “Nomura Navigation”, a tool that helps clients manage their portfolios and enhance their consulting services. Besides, in addition to the existing commission system which requires payment every time a transaction is made, we are introducing a new fee system that allows customers to select a level fee based on level of client assets. In April 2022, all of our branches began offering this product. In addition to ensuring quality through CIO services, we are building a structure that provides advice that aligns the interests of customers and our company more closely than ever before.
Diversifying Wholesale division’s risk monitoring conducted byrevenues
In our Wholesale Division, we are diversifying our revenue sources while maintaining a committeehigh market share in core products. Capital-light origination business, including M&A advisory, grow global business centered on Americas. Especially, in the U.S., we acquired Greentech Capital, LLC, a firm with a solid presence in sustainable technology and infrastructure, and launched Nomura Greentech in April 2020. We will seamlessly provide financial and other solutions to our Chief Risk Officer, Chief Financial Officer and the Head of Wholesale.
global customer base. In addition, regarding solutions business that is less suspectable to changes in market environment, we build up experience in structured finance including infrastructure finance.
 
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Moreover, we have appointed Mr. Christopher Willcox, who has extensive experience with the U.S. financial services business, as the CEO & President of our U.S. subsidiaries Nomura Securities International, Inc. (our registered broker-dealer subsidiary in the U.S.) and Nomura Global Financial Products Inc. (our registered swap dealer subsidiary in the U.S.), as well as
Co-CEO
of Nomura Holding America, Inc. (the intermediate holding company for our U.S. subsidiaries), effective May 3, 2021. We have also enhanced our front office and risk management teams, and we nominated three additional outside directors from outside of Japan, each of whom were elected at our annual general meeting of shareholders on June 21, 2021.
We view our responses to the U.S. Prime Brokerage Event as falling into the following four “phases”. As of the date of this annual report, Phase 1 is complete, while Phases 2 through 4 are in progress and represent our ongoing efforts.
Phase 1: Initial Responses
(completed). As part of this phase, we reviewed all of the transactions with our existing prime brokerage clients, as well as large positions in our other financing-related businesses, and concentrated positions in
non-risk
origination businesses. As a result, we have concluded that there are no transactions similar to those triggering the U.S. Prime Brokerage Event, namely no other prime brokerage transactions which are excessively leveraged or any other transactions by our non-risk origination businesses with significant concentrated exposures.
Phase 2: Review of Prime Brokerage Risk Management Framework
(in progress). As part of this phase, we are taking actions to enhance the monitoring of concentrated positions, revise our margin rates applicable to clients and to enhance management of margin rates for individual transactions (including internal approvals and other processes).
��
Phase 3: Comprehensive Review of Wholesale Risk Framework
(in progress). We have already completed our comprehensive internal review of the risk management framework in the Wholesale division, and have initiated a further review by third-party risk management experts. We are also reviewing our organizational structure and staffing within risk management function in order to strengthen further our risk management framework.
Phase 4: Enhance Global Risk Governance
(in progress): We are considering actions to strengthen the functions of our risk management committees, including expanding the scope of our Wholesale division’s risk monitoring beyond our financing businesses to include other businesses in the Wholesale division. We are also working to promote a better understanding of further proactive risk management capabilities among front office teams.
Urgent Priority Issues
The
COVID-19
pandemic has continued to impact the global economy and the daily lives of individual clients since 2020. We believe that the improvement of Nomura’s enterprise value and the sustainable growth of entire society are linked, with the resolution of social issues as a point of connection. As a financial services group, Nomura’s mission and highest priority are to continue to address the following issues:
Continue to fulfill our responsibility as capital market intermediary and liquidity provider in order to maintain the financing required by companies and trading activities by market participants.
Support the recovery of the economy and corporate activities while ensuring the safety of our clients, communities and employees and their families.
Maintain a robust financial position and ensured sufficient liquidity in a highly volatile and stressful market environment.
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Medium-to
Long-term Priority Issues to respond to changed environment
Amid client behavior changes and new needs arising from the impact of the prolonged
COVID-19
pandemic, we are taking into consideration changes in the business environment surrounding the Nomura Group and implementing the Group’s growth strategy for the sustainable improvement of our corporate value based on the following three pillars:
Growth strategy for sustainable improvement of corporate value
As part of our business strategy to improve corporate value, we are expanding and strengthening our scope of business from public markets to private markets in the areas of ‘Products and services’, ‘Clients’ and ‘Delivery’.
② Digitalization to provide new value-added services and convenience to our clients
Our digital transformation efforts are directly linked to theour competitiveness ofwith other financial institutions in the future, and we will continue to promote a wide range of initiatives based on the Group’sour strategy in order to provide highly convenient services to our clients and respond to diversifying needs. We also believe that our people are the source of the added value created by the Nomura Group even in a world of increasing where digitization and digitalization are advanced. We will continue to strengthen the development of our human resources with the qualities required for the upcoming era, such as consulting capabilities that make full use of both
face-to-face
and virtual communications. In addition, we established “Digital Company” in April 2022, aiming to strengthen collaboration in the digital domain across group entities, including in our international operations, while also bolstering initiatives in focus areas. Our efforts to promote digitalization are as follows.
 
Initiatives for SustainabilityStreamline and enhance internal operations
The Nomura Group supports the Task Force on Climate-related Financial Disclosures (“TCFD”) and isWe are working to expand information disclosure basedfocus on it.high value-added analysis and advisory services by promoting the automation and efficiency of internal operations. We also aim to provide services through highly satisfactory communication methods by improving existing services. For instance, our Retail Division utilizes “Remote Consulting” which is original system supporting sales representatives. In addition, we have launched an internal Digital IQ program to support digital
e-learning
with the aim of lifting the base-level knowledge of digital initiatives across the Group.
Attracting a new client base
We have developed a platform to deliver services for young people and the working generations, who we have not provided with many products and services, by utilizing digital technology. We expand to utilize LINE Securities Corporation established together with LINE Financial Corporation, OneStock which is an organizational structureasset management smartphone application, FINTOS! which is an investment information application.
Participation in Digital Asset Business
Nomura and BOOSTRY Co., Ltd., which is a joint venture between Nomura and Nomura Research Institute, Ltd. have provided technical infrastructure and other support on digital asset bond and digital bond offerings. This is the first bond offering using blockchain technology by a Japanese issuer. Through our approach to the digital asset business, we aim to provide new added value that goes beyond the boundaries of conventional finance by utilizing advanced technologies and our network. Going forward, we will continue to build a system that can respond to diversifying client needs through products and services in the digital asset value chain, from origination to custody. In addition, in order to systematically accelerate such efforts, we established “Digital Company Strategy Department” and “Digital Asset Strategy Office”, effective April 1, 2022.
③ Initiatives for Sustainability
Our management vision for 2025 is to achieve sustainable growth by helping resolve social issues, and we have integrated sustainability into our management strategy. We now make decisions on sustainability issues at through our Sustainability Committee, which comprises Executive Management Board members, and therefore, we are responding to our own sustainable development issues and other broad social issues in a timely manner. Sustainability promotion in Nomura has value in two ways. One is to support the sustainability efforts of our clients and various stakeholders. The second is to promote ESG risk managementthe sustainability efforts in our own operations.
Supporting the sustainability efforts of our clients and stakeholders
Our core role as a financial services group is to support clients through the flow of funds and capital. We believe it is important to strengthen our functions to promote the sustainable circulation of
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capital by underwriting green bonds and social bonds issued by companies and financial institutions, providing strategic advisory services such as M&A advisory, and by developing
ESG-related
funds as investments and providing them to individual investors. In addition, we will take advantage of our comprehensive strengths in providing solutions to social issues by leveraging the functions we have cultivated over many years, including support for business opportunities, including climate change, from various perspectives while globally sharing knowledge. In particular,succession, promoting innovation in the fields of regional revitalization, agriculture and medical care, and our expertise and knowledge in the field of sustainable finance, where there is a great demandresearch and analysis. Since the 1990s, we have been providing financial and economics education programs in Japan for elementary and junior high school students as well as adults. Starting from April 2022, Japanese high schools have classes on financial fundseducation, based on the new guidelines of education. In response to this policy, we have appointed Executive in charge of Financial Education, and will continue to strengthen initiatives to improve the financial literacy of society as a resultwhole.
Our company’s own efforts
We have committed to achieve net zero greenhouse gas (“GHG”) emissions for our own operations by 2030, and to transition attributable GHG emissions from our lending and investment portfolios to align with pathways achieving net zero by 2050. To materialize these initiatives, we joined the
Net-Zero
Banking Alliance (“NZBA”) in 2021. We participate in and endorse numerous initiatives besides NZBA to further promote the realization of the transition to a decarbonizedsustainable environment and society in cooperation with stakeholders regarding how we will implement advantage of our strengths as a global financial services group.
address social issues.
The challenges and strategies in each division are as follows:
 
Retail Division
Based on the basic concept of “Enriching clients by responding to their concerns about assets”, theour Retail Division aims to become a financial institution fulfilling the needs of many people. We will continue working on improving the skills of our Partners,clients, and enhance our wide range of products and services in order to accurately respond to diversifying clients’ asset issues such as inheritance or anxiety about lack of funds after retirement. In addition, we will strengthen our operating model to provide solutionsenhance online services and services that enable us further flexible approaches to the entire balance sheet of our clients.remote consulting service through contact centers.
 
Investment Management Division
We established a newOur Investment Management Division by replacing the Asset Management Division and the Merchant Banking Division, effective April 1, 2021.
Investment Management Division, which is responsible for expanding product offerings and improving our services to meet the diversifying investment needs of our clients in the broad asset management businessbusiness. By combining our expertise in a broad sense, aims to increase added value by combining various types of expertise that have been accumulated within the group, from traditional assets such as stocks and bonds to alternative assets such as
non-listed
equities. Recognizing private equity, we provide added value and offer advanced services and solutions to meet the diversifying investmentdiverse needs of clients andour clients. In the downward pressure on management fees as challenges,public market business, we aim to strengthen existing businesses and improve through digital transformation. In the private market business, we will strive to expand our business through providing a wide range of investment opportunitiesproduct offerings as investors’ demand for alternative investments increases. We will also seek to execute inorganic strategies (such as alliances and providing performancesequity investments) to expand our product offerings and solutions that exceed expectations.
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In addition, we will advance the sophistication of the asset management business and governance while ensuring the independence, diversity and swiftness of the investment and management companies in Investment Management Division.client base.
 
Wholesale Division
TheOur Wholesale Division faces challenges presented by increasingly sophisticated client needs and technological advancement, coupled with uncertainty in the market environment and the potential forpossibility of an economic downturn. To ensure continuity of service as well as added value to clients, we will continue to enhance collaboration across regions and divisions while ensuring tight risk control. We will continue efforts to diversify our business portfolio andthrough targeted growth in areas including private markets as well as deploy financial resources to selective, high growth opportunities.
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Global Markets aims to provide uninterrupted liquidity to our clients while positioning our portfolio to weather a possible economic downturn, while reinforcing risk control and governance. Additionally, we aim to further diversify our business portfolio, reinforce global connectivity and cross-sell to leverage our global platform and client franchise, opportunistically pursue growth opportunities such as structured financing and solution business as well as international wealth management business, and continue to build on the strength of our Flow trading businesses.
Investment banking aims to provide advisory services and financing to domestic as well as cross-bordercrossborder restructurings and industry-wide consolidations, as well as interest rate and FX solutions related to these transactions as volatile business environments impact our clients’ businesses. While we expand our global advisory business, we will focus on broadening ESG related businesses with initiatives such as further utilization of Nomura Greentech’s expertise and enhancement of our sustainable finance platform.
 
Risk Management and Compliance, etc.
AtWe have defined our risk appetite in our Risk Appetite Statement which includes the types and level of risk that the Nomura Group the types and levelsis willing to assume in pursuit of risks for the purpose of achievingour strategic objectives and business plans based on management philosophy is set forth as the Risk Appetite. We willplans. Further, we continue to develop aour risk management framework which ensures financial soundness, enhances corporate value, andin a way that is strategically aligned to theour business planplans and incorporated in decision makingincorporates decision-making by senior management, thereby securing capital soundness and enhancing our corporate value.
We recognized substantial losses during the years ended March 31, 2021 and 2022 as a result of the U.S. Prime Brokerage Event (as described in Item 11. “
Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
”).
To address this issue, we have launched an extensive internal remediation and enhancement program (The “Risk Management Enhancement Program” or “RMEP”) in order to identify specific issues which may have contributed to the loss and areas of improvement in order to strengthen our risk management.
As a part of RMEP, we have clearly defined in our Risk Appetite Statement that all executives and employees must actively engage in risk management through our Three Lines of Defense framework and have provided extensive training to all executives and employees affected by RMEP.
With regard to compliance, we will continue to focus on improving the management structure to comply with local laws and regulations in the countries where we operate. We also continue to review our internal systems and rules so that all executive management and employees can work autonomously with high ethical standards.
In order to ensure not only compliance with laws and regulations, but also that all directors, officers and employees are able to act in accordance with social norms, we have established the “Nomura Group Code of Conduct” as guidelines for actions to be taken, and through associated trainingtrainings and other measures, we are working to promote appropriate actions (“Conduct”) based on the Code of Conduct. At the ‘Nomura Founding Principles and Corporate Ethics Day’ held in every August, all directors, officers and employees reaffirm the lessons learned from past incidents and renew our determination to prevent similar incidents then to maintain and gain the trust society places in us; discussions are held regarding the proper way to conduct after looking back on past incidents, and a pledge is made to comply with the Code of Conduct.
In September 2020, however, an incident occurred in Nomura Securities Co., Ltd. (“Nomura Securities”) in which a portionorder for us to be able to respond to the changing demands of corporate client information was leaked to outside due to fraudulent third-party approaches. Nomura Group companies including Nomura Securities are working to further strengthen our information management systems and to further promotesociety, the Code of Conduct.Conduct is regularly reviewed to constantly examine ourselves and to ensure that our thinking aligns with society’s norms. In March 2022, we added a new item “Managing Risks Appropriately” to instill a robust risk culture within Nomura Group, and articulated in writing that each executive and employee will deepen one’s knowledge and understanding on risks, properly recognize and evaluate them, and actively engage in risk management to prepare for all possible contingencies.
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By addressing and resolving the above issues, we will strive for the stability and further development of financial markets as well as the sustainable growth of the Nomura Group.
(3) Human Capital Initiatives
44① Nomura’s Approach to Human Resources
Philosophy of “Human resources is the greatest asset”
With the belief that our people are our most valuable asset, we consistently aim to create a workplace where our employees can build long-term careers and play an active role in our business and are implementing various initiatives to enhance the physical and mental health of our employees.
Talent Management Based on Corporate Philosophy
We regard “We help to enrich society through our expertise in capital markets” as our social mission in our corporate philosophy. To realize this mission, we have set “Entrepreneurial Leadership,” “Teamwork” and “Integrity” as being core values that must be maintained at all times, and established the Nomura Code of Conduct to provide clear guidelines for connecting our corporate philosophy with these values. As talent management embodies these needs, we are working on the following various initiatives to foster and embed these values in our employees.
② Talent Management Initiatives
We are working on the following Initiatives to foster values of “Entrepreneurial Leadership,” “Teamwork,” and “Integrity” that must be maintained at all times.
Main ObjectiveExamples of Initiatives
Securing diverse human resources
•  
Internship and Nomura passport
We offer internship programs in Nomura Securities which offer students the opportunity to experience working in various areas of our business, and to deepen their knowledge of the financial services industry. In addition to this, students also learn about the roles and purpose of the securities industry. This helps students broaden their knowledge and experience and gives them the opportunity to think about their future careers.
We have also introduced an employment program called “Nomura Passport” for students pursuing doctoral degrees in the fields of science and technology in order to identify talent with expertise in such areas as AI development, data science and digitalization which will be increasingly critical to our business going forward.
Providing and supporting growth opportunities and developing professional human resources
•  
Training
In addition to training programs for new hires, training programs in Japan mainly consist of group training and
on-the-job
training to develop and train our employees. Global training is conducted separately by year of entry and position. Additionally, we conduct a leadership program aimed at developing our next generation of leaders and a program to support the development of women as executives with participants selected based on their performance and potential. We also offer a global program that is held annually
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Main ObjectiveExamples of Initiatives
in our Tokyo headquarters for managers of our overseas entities. In addition, we have established a self-improvement support system, consisting of a large number of external training and correspondence courses as well as voluntary group training on weekends at our company training facilities, in order to support the development of our employees on a voluntary basis.
•  
Study-abroad program
Over the past 60 years, more than 600 Nomura Securities employees have studied at business and law schools in more than 20 countries and regions, mainly in the United Kingdom and the United States.
•  
Global Mobility (International Transfer)
In addition to transferring from Japan to overseas, we actively provide opportunities for employees of our overseas entities to transfer to Japan to develop employees with experience of working in different countries and cultures.
•  
Digital IQ program
As we enter an era in which digital-related knowledge determines the competitiveness of global financial institutions, we have introduced the “Digital IQ” Program. This program is an online program for all of our global employees to improve their knowledge and skills.
Proper evaluation and treatment
•  
Compensation system based on the
pay-for-performance
principle
Based on our principle that employees are paid based on their performance, we ensure our compensation policies and practices are sound and competitive from a market perspective. This helps us realize our business strategy and generate long-term profits, with the aim of achieving sustainable growth and improving enterprise value over the medium to long term.
•  
360-degree
evaluation
We conduct a “360 degree evaluation” in which relevant managers are evaluated by colleagues other than their immediate superiors. This leads to further skill development and behavioral change for managers.
•  
ERCC goal
We have introduced a standard ERCC goal, which set goal from the perspectives of ethics, risk management, compliance, and conduct. We aim to raise the awareness of the Code for each employee and to instill the concept of the Code throughout our business, thereby creating an environment in which employees can speak out.
Employee engagement
•  
Employee engagement survey
We conduct the “Nomura Group Employee Survey” to monitor, maintain and improve the status of communication across our
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Main ObjectiveExamples of Initiatives
business and to understand the level of our employee satisfaction. As part of the most recent survey conducted during the year ended March 31, 2022, many employees responded positively to the question, “I am proud to work for the firm.”
Fostering a risk culture
•  
Fostering a risk culture
We have made it an objective for all of our global employees to foster a risk culture within our business by encouraging respectful relationships (Respect), reporting to their manager (Escalate), and performing constructive checks (Challenge).
DE & I, Health &Productivity Management, and provision of equal opportunities and prohibition of discrimination
•  
DE&I
As we have employees from about 90 different nationalities across our business, the development of human resources that respect diversity is one of our most important issues. These diverse human resources are our greatest asset. We believe that through mutual recognition and cooperation with others who have different backgrounds and values, we can meet the diverse needs of our clients and provide higher value-added services.
Based on this philosophy, our Sustainability Committee, chaired by the Group CEO, discuss and promote global strategies about DE&I. In addition, voluntary employee networks are promoting diversity issues in our offices globally. We are working on these issues from both a
top-down
and
bottom-up
approach. In accordance with the enactment of the “The Act on Promotion of Women’s Participation and Advancement in the Workplace” in Japan, we have formulated an action plan focused on the promotion of women’s participation and advancement and we are implementing various programs to achieve this.
•  
Health & Productivity Management
In July 2016, we adopted the Nomura Health & Productivity Declaration Statement as part of our efforts led by the Group Chief Health Officer (CHO) to maintain and improve the health of our employees. Starting in the year ended March 31, 2021, in order to work toward our management vision of “Achieve sustainable growth by helping resolve social issues,” we are communicating to all employees our goal that “All people who work at Nomura will not simply be healthy, but also physically, mentally and socially sound (overall well-being).”
•  
Provision of equal opportunities and prohibition of discrimination
For each and every employee to be active and successful in utilizing their capabilities and personal strengths, we provide equal opportunities in recruitment, development, evaluation, promotion and assignment. As part of the “Respect diversity and human rights” Section of the Nomura Group Code of Conduct, we state that “We promote equal opportunity and do not discriminate on grounds
such as nationality, race, sex, gender identity, sexual orientation, creed, social status, or existence of or nonexistence of disability.”
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C. Organizational Structure.
The following table lists the Company and its significant subsidiaries and their respective countries of incorporation.incorporation as of March 31, 2022. Indentation indicates the principal parent of each subsidiary. Proportions of ownership interest include indirect ownership.
 
Name
  
Country/Region
  
Ownership

Interest
 
      
(%)
 
Nomura Holdings, Inc.
  Japan   —   
Nomura Securities Co., Ltd.
  Japan   100 
Nomura Asset Management Co., Ltd.
  Japan   100 
The Nomura Trust & Banking Co., Ltd.
  Japan   100 
Nomura Babcock & Brown Co., Ltd.
  Japan   100 
Nomura Capital Investment Co., Ltd.
  Japan   100 
Nomura Investor Relations Co., Ltd.
  Japan   100 
Nomura FundsFiduciary Research and Technologies& Consulting Co., Ltd.
  Japan   100 
Nomura Research & Advisory Co., Ltd.
  Japan   100 
Nomura Business Services Co., Ltd.
  Japan   100 
Nomura Facilities,Properties, Inc.
(1)
  Japan   100 
Nomura Institute of Capital Markets Research
  Japan   100 
Nomura Healthcare Co., Ltd.
  Japan   100 
Nomura Agri Planning & Advisory Co., Ltd.
Japan100
Nomura Land and Building Co., Ltd.
(1)
  Japan   100 
Nomura Financial Products & Services, Inc.
  Japan   100 
Nomura Institute of Estate Planning
  Japan   100 
N-Village
Co., Ltd.
  Japan   100 
Nomura Capital Partners Co., Ltd.
  Japan   100 
Nomura Mezzanine Partners Co., Ltd.
  Japan   100 
Corporate Design Partners Co., Ltd.
  Japan   100 
Nomura Kagayaki Co., Ltd.
  Japan   100 
Nomura Asia Pacific Holdings Co., Ltd.
  Japan   100 
Nomura International (Hong Kong) Limited
  Hong Kong   100 
Nomura Singapore Limited
  Singapore   100 
Nomura Securities Singapore Pte. Ltd.
  Singapore   100 
Nomura Australia Limited
  Australia   100 
PT Nomura Sekuritas Indonesia
  Indonesia   96 
Nomura Asia Investment (Fixed Income) Pte. Ltd.
  Singapore   100 
Nomura Asia Investment (Singapore) Pte. Ltd.
  Singapore   100 
Capital Nomura Securities Public Co., Ltd.
  Thailand   99 
Nomura Financial Advisory and Securities (India) Private Limited
  India   100 
Nomura Holding America Inc.
(1)
  U.S.   100 
Nomura Securities International, Inc.
  U.S.   100 
Nomura Corporate Research and Asset Management Inc.
  U.S.   100 
Nomura Derivative Products Inc.
  U.S.   100 
Nomura America Mortgage Finance, LLC
  U.S.   100 
Nomura Global Financial Products, Inc.
  U.S.   100 
NHI Acquisition Holding, Inc.
  U.S.   100 
Instinet Incorporated
(1)
  U.S.   100 
Nomura Europe Holdings plc
  U.K.   100 
Nomura International plc
  U.K.   100 
Nomura Bank International plc
  U.K.   100 
Nomura Financial Products Europe GmbH
  Germany   100 
Banque Nomura France
  France   100 
Nomura Bank (Luxembourg) S.A.
  Luxemburg   100 
Nomura Bank (Switzerland) Ltd.
  Switzerland   100 
Nomura Europe Finance N.V.
  The Netherlands   100 
Nomura European Investment Limited
  U.K.   100 
Nomura Asia Investment (India Powai) Pte. Ltd.
  Singapore   100 
Nomura Services India Private Limited
  India   100 
Nomura International Funding Pte. Ltd.
  Singapore   100 
Nomura Orient International Securities Co., Ltd.
  China   51 
 
(1)
Following an internal reorganization effective April 1, 2022, Instinet Incorporated and its group entities are now subsidiaries of Nomura Holding America Inc.
45
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(1)
Wholly owned subsidiaries, Nomura Facilities, Inc. (“NFI”) and Nomura Land and Building Co., Ltd. (“NLB”), merged effective on April 1, 2021. NFI is a surviving entity and NLB is an absorbed entity. The company name has been changed to Nomura Properties Inc.
D. Property, Plants and Equipment.
Our Properties
As of March 31, 2021,2022, our principal head office is located in Tokyo, Japan and occupies 934,955861,463 square feet of office space. Our other major offices in Japan are our Osaka branch office, which occupies 131,470 square feet, our Nagoya branch office, which occupies 89,567 square feet, and the head office of NAM in Tokyo, which occupies 161,835128,715 square feet.
As of March 31, 2021,2022, our major offices outside Japan are the head offices of NIP located in London, which occupies 237,030250,616 square feet, the New York head office of Nomura Securities International, Inc., which occupies 199,538188,957 square feet, and the offices of Nomura International (Hong Kong) Limited located in Hong Kong which occupies 111,826111,837 square feet. We lease most of our overseas office space.
As of March 31, 2021,2022, the major office of Nomura Services India Private Limited, our specialized service company in Mumbai, India, occupies 500,952217,668 square feet.
As of March 31, 2021,2022, the aggregate book value of the land and buildings we owned was ¥116¥99 billion, and the aggregate book value of equipment we owned, including communications and data processing facilities, was ¥59¥32 billion.
As of March 31, 2022, we plan to construct a new facility as follows:
Name
 Location Segment 
Nature of the plan
 Estimate of the
amount of
expenditures
(million yen)		  Amount of
expenditures
already paid
(million yen)		  Method of
financing		 Date of start of the
activity		 Estimated
date of
completion of
the activity
NHI Tokyo Other Nihonbashi
1-Chome
Naka Area Type 1 Urban Area Redevelopment Project		  120,000   8,267  Own funds December 2021 March 2026
Item 4A. Unresolved Staff Comments
We are a large accelerated filer as defined in Rule
12b-2
under the Securities Exchange Act of 1934. There are no written comments which have been provided by the staff of the Securities and Exchange Commission regarding our periodic reports under that Act not less than 180 days before the end of the fiscal year ended March 31, 20212022 and which remain unresolved as of the date of the filing of this annual report with the Commission.
Item 5. Operating and Financial Review and Prospects
A. Operating Results.
You should read the following discussion of our operating and financial review and prospects together with Item 3.A“Selected Financial Data” of this annual report and our consolidated financial statements included elsewhere in this annual report.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of factors, including, but not limited to, those under Item 3.D “Risk Factors” and elsewhere in this annual report.
Business Environment
Japan
The performance of Japan’sglobal economy deteriorated substantiallyexperienced repeated slowdowns in reaction to the
COVID-19
pandemic. In April-June 2020, exports declined sharply as economic activity was restricted worldwide to stem the spread of
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the disease. The Japanese government declared a state of emergency in April 2020, causing a decline in consumer spending as consumers stayed in their homes and a reduction in corporate capex in response to heightened uncertainty. Real gross domestic product (“GDP”) decreased a sharp 28.6% on a
quarter-on-quarter
annualized basis in April-June 2020. Real GDP growth then rebounded sharply (up 22.9%) in July-September 2020, driven by exports and consumer spending, as economic activity resumed both in Japan and abroad as the spread of infections calmed somewhat. In October-December 2020, capex also increased, and GDP rose by 11.6%. The second wave of infections in summer 2020 was quelled to a large extent by calls from national and local governments to refrain from unnecessary trips outside the home, but a third wave hit toward the end of the year, and the Japanese government declared a second state of emergency in January 2021. Although exports continued to grow on an ongoing recovery in global manufacturing activity, consumer spending in Japan turned downward again, and real GDP fell by 5.1% in January-March 2021. Although real GDP for the quarter was 6.8% higher than in April-June 2020 under the first state of emergency declaration, it was 2.3% lower than October-December 2019, prior to the pandemic. During this period, the Japanese government supported corporate funding and employment through massive stimulus packages in April and May 2020 totaling ¥233.9 trillion. It added an additional ¥73.6 trillion in stimulus in December 2020, beginning to work on structural reforms in environmental and digital fields in addition to stimulating demand through public-sector investment.
Corporate earnings were hit by the
COVID-19
pandemic across a wide range of sectors, but with a pronounced recovery in the manufacturing sector from around midway through the fiscal year ended March 2021 (“FY2020”), recurring profits at major companies finished up slightly from the fiscal year ended March 2019 (“FY2019”) levels. When adjusting for the impact of higher profits in the investment businesses of some companies, however, profits were down year on year. When excluding the rebound from transitory losses and impairment booked in FY2019, profit growth in FY2020 was driven by the electrical machinery & precision equipment and software sectors. In the electrical machinery & precision equipment sector, profits were boosted by increased
stay-at-home
demand, including for video games, as well as increased demand for electronic components and semiconductors in a wide range of fields, including automotive applications and smartphones, which are moving to 5G. Profit growth in the software sector was driven mainly by an increase in
stay-at-home
demand and amusement software, which has benefited from digital distribution efforts. In contrast, earnings deteriorated in sectors such as retail, services, and transportation as companies were asked to suspend operations under the state of emergency declaration and as the number of foreign visitors to Japan dropped off. We estimate that recurring profits at major companies (constituents of the Russell/Nomura Large Cap Index) rose in the fiscal year ending in March 2021 after falling in FY2019. ROE (based on shareholders’ equity) improved from 6.7% in the previous fiscal year to 7.2% at major companies (constituents of the Russell/Nomura Large Cap Index).
In the equity market, share prices reacted favorably on moves toward normalization of economic activity, although the market shifted between optimism and pessimism throughout the fiscal year31, 2022 in response to
COVID-19-relatedflare-ups
news. Key Japanese equity indices rose on a fiscal-year basis for the first time in three years, buoyed by economic stimulus measures and monetary easing in Japan and elsewhere, and by improved sentiment on the development and rollout of
COVID-19
vaccines. Despite the state of emergency declared in April 2020, Japanese share prices rose on the resumption of economic activity once the spread of the disease waned around the world. Japanese share prices then continued to head upward on expectations for policy support from government spending and monetary policy. In the latter half of 2020, there were some periods of accelerated growth in
COVID-19
case numbers in Japan and elsewhere, but the impact on Japanese equities was muted. Uncertainty regarding the political situation in the U.S. decreased after the presidential election in November, and the U.S. equities rose on expectations for further government spending, leading to a renewed rise in Japanese equities as well. The Nikkei Stock Average (“Nikkei 225”) temporarily broke above ¥30,000 for the first time in roughly 30 years on February 15, 2021. Upside was subsequently held down by the rise in the U.S. long-term interest rates and a sharp rise in coronavirus infections in Europe, but the overarching upward trend in Japanese share prices held true throughout the fiscal year. The Tokyo Stock Price Index (the “TOPIX”), a broadly representative index of Japanese stock performance, rose by 39.3% from 1,403.04 at the end of March 2020 to
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1,954.00 at the end of March 2021. The Nikkei 225 similarly rose by 54.2% from 18,917.01 at the end of March 2020 to 29,178.80 at the end of March 2021.
In the bond market, yields generally remained low amid expectations for the Bank of Japan (“BOJ”) to maintain its program of quantitative and qualitative easing with yield curve control. In April and May 2020, when the Japanese economy fell sharply under the declaration of a state of emergency and as economic activity was restricted worldwide in an effort to get the pandemic under control, yields on newly issued
10-year
Japanese government bonds (“JGBs”) trended around 0%. Beginning in June, yields remained above 0% as the economy recovered, but remained in a narrow range between zero and 0.05% throughout 2020. The government drew up three successive supplementary budgets, and while additional JGB issuance totaled around ¥110 trillion, the BOJ set no upper limit for its JGB purchases at its April 27 2020 monetary policy meeting, pledging to purchase any amount necessary, and this announcement contributed to the avoidance of a major rise in interest rates. At its December 18 meeting the BOJ announced it would “conduct an assessment for further effective and sustainable monetary easing.” Joe Biden was inaugurated as President in the U.S., and the U.S. long-term interest rates rose sharply on expectations for massive stimulus policies to bolster the U.S. economy. With heightening expectations for the Bank of Japan to allow for a rise in interest rates in Japan as well, yields on newly issued
10-year
JGBs reached 0.15% at the end of February 2021. On March 5, however, BOJ Governor Haruhiko Kuroda made comments counter to these expectations, and the rise in yields paused. The results of the aforementioned assessment were announced on March, 19 and while the range in which the BOJ intended to allow long-term yields to fluctuate was expanded from plus or minus 0.2% to plus or minus 0.25%, the change was small, and yields on newly issued
10-year
JGBs fell back below 0.1%. These yields then ended the fiscal year at 0.12% at the end of March, in reaction to the BOJ’s JGB purchase schedule for April, which suggested a decline in monthly purchases compared with March.
In foreign exchange markets, the U.S. Dollar/Japanese Yen started the fiscal year above $1 = ¥107, but the environment shifted to push the yen up versus the U.S. dollar throughout 2020 as second and third waves of
COVID-19
pandemic hit Europe and North America. the U.S. long-term yields broke below 0.5% in August 2020 in response to comments from the U.S. Federal Reserve Board suggesting that it would extend its easing policies, and the drop in the U.S. interest rates put downward pressure on the dollar across the board. An unclear political outlook ahead of the U.S. presidential election in November also increased pressure to sell the dollar. Although Democrat Joe Biden won the presidency, the Republican Party was forecast to retain its majority in the Senate, and expectations for fiscal outlays and a resultant rise in the U.S. interest rates dropped off, temporarily adding further momentum to dollar depreciation. From the beginning of 2021, however, while the U.S.D/JPY fell as far as $1 = ¥102.59 on January 6, the U.S. interest rates then rose and investors made a clear shift to buying the U.S. dollars again once the Democratic party secured a majority in the Senate after winning both seats in the Georgia runoff elections in January. The U.S.D/JPY shifted toward yen depreciation and dollar appreciation, reaching $1 = ¥110.97 on March 31, the highest level since in nearly a year since the previous March. While EUR/JPY started fiscal 2020 at around €1 = ¥118, the yen strengthened versus the euro as far as €1 = ¥114.43 on May 6 in reaction to uncertainty about the pandemic. In May, however, the euro turned upward versus both the U.S. dollar and the yen, as global economic sentiment showed signs of bouncing back, share prices strengthened their rebound, and expectations heightened for the German and French governments to contribute to the European recovery fund. In the Eurozone, factors such as the European Central Bank’s (“ECB’s”) efforts to restrain euro appreciation and concerns about the spread of the coronavirus and the political situation in Italy at times put downward pressure on the euro, but the overall trend of euro strength and yen weakness continued nonetheless, with EUR/JPY ending March 2021 at 129.86 after climbing to as high as 130.67 on March 18.
Overseas
The global economy has been recovering from the initial shock of the
COVID-19
pandemic. The second and third waves of infections damaged service industries such as restaurants and tourism worldwide, but manufacturingEven so, economic activity held up well, and the impact of subsequent waves was less pronounced than that seen
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during the first wave in March and April 2020. The global economic recovery was also helped along by fiscal and monetary policy support around the world, including in less economically developed countries. The International Monetary Fund (“IMF”) estimates that global economic growth turned substantially negative in 2020, falling 3.3% comparedresumed to the previous year, but it projects high growth of 6.0% in 2021. In the U.S. in particular, expectations have risen for more aggressive fiscal outlays, with Joe Biden having won the presidency in November 2020 and the Democratic Party having secured a majority in both the House of Representatives and the Senate. The U.S. has also made progress in vaccinating its population, and its GDP growth rose by 6.4% on a
quarter-on-quarter
annualized basis in January-March 2021, up for a third consecutive quarter. At the same time, disparities have opened upgreat extent, particularly in the pace of recovery, as growth is estimated to have been negative in January-March in areas that have fallen behind in vaccinations, such as Europe and Japan.
The U.S. economy has recovered rapidly after plunging immediately after the initial outbreak. The social distancing and lockdown measures taken in response to the outbreak caused a historically steep decline in real GDP in April-June 2020 (down 31.4% on a
quarter-on-quarter
annualized basis), but real GDP then rebounded rapidly, rising 33.4% in July-September 2020. In part thanks to large-scale economic policy and the Federal Reserve Board’s adoption of a zero interest rate policy (“ZIRP”), quantitative easing, and credit easing, the economy and financial markets stabilized. Subsequently, the U.S. presidential election in November 2020 and the Georgia runoff election in January 2021 gave the Democratic Party controlcountries of the White House and majorities in both houses of Congress in a “Blue Wave” of victories. Interest rates also rose on expectations for the massive government spending advocated by the Democratic Party. Subsequently the Democratic majority in Congress was able to independently push through a stimulus bill costing roughly $2 trillion in March 2021. The Federal Reserve Board remained steadfastly dovish during this period, maintaining its ZIRP and quantitative easing. GDP fell by 3.5% over the full year in 2020, after having risen by 2.2% in 2019. Consumer price inflation increased from 1.5% March 2020 to 2.6% in March 2021. The Dow Jones Industrial Average rose by 50% from 21,917West that were at the end of March 2020 to 32,982 at the end of March 2021.forefront in administering
COVID-19
vaccination programs. The yield on
10-year
U.S. Treasuries also rose by 1.07ppt from 0.67% at the end of March 2020 to 1.74% at the end of March 2021.
Real GDP in the euro area fell by 6.7% in 2020 compared to the previous year, the worst decline since the launch of the euro in 1999. Real GDP fell by 11.6% on a
quarter-on-quarter
annualized basis in April-June 2020 as countries in the region were hit by increases in
COVID-19
case numbers and responded with major restrictions on economic activity, including effective bans on retail sales of all but essential items and temporary shutdowns of many manufacturing facilities. Real GDP in the euro area then turned sharply upward in July-September 2020, up by 12.5%, as many of these restrictions were lifted after case numbers began to head downward in June. Case numbers then turned upward again in October, however, and with economic activity once again restricted, real GDP fell by 0.7% in October-December 2020 and fell by 0.6% in January-March 2021. The ECB in December 2020 extended the Pandemic Emergency Purchase Programme (“PEPP”) quantitative easing program, which it launched in March 2020, through March 2022 and increased the envelope of its asset purchases to EUR1.85 trillion. In March 2021 it announced that it would increase purchases under PEPP in April–June to higher than January-March levels. The U.K. signed a trade accord with the European Union (“EU”) immediately prior to the Brexit deadline, allowing it to maintain trade with EU countries in 2021 and thereafter.
In
ex-Japan
Asia, China was able to maintain positive GDP growth in 2020, with real GDP up by 2.3% compared to the previous year, as it was able to increase exports in response to special pandemic-related demand after ramping production back up earlier than other countries. In the second half of 2020, China countered a renewed surge in
COVID-19
pandemic with area-specific lockdowns and thorough PCR testing, enabling a solid level of economic activity to prevail overall. Domestic demand has been recovering in China, with brisk construction activity on investments in infrastructure and real estate, normalization of service spending, and the corporate sector more eager to make capital investments again. Since the National People’s Congress in March 2021, however, Chinese authorities have been working to hold down the rise in the debt ratio, and construction activity is expected to slow gradually as a result of restrictions in areas such as regional government lending and real estate and construction funding. Elsewhere in Asia, the spread of
COVID-19
pandemic and delays in securing vaccine supplies have held back economic recoveries in India and other less economically developed
 
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had a lingering impact on emerging market economies in particular, causing sluggishness in production and distribution that, when combined with the
countries. In contrast,pent-up
demand unleashed by the economic recovery, led to increasingly severe supply constraints and, in turn, rising inflation. Despite initial expectations that it would not last, this rise in inflation became protracted, and as a result the central banks of major countries that produce high-tech products such as South Korea, Taiwan, and Singapore are well positionedregions around the world became more inclined to benefit fromexecute monetary policy tightening sooner than they had previously expected to, or to raise their policy interest rates in larger increments. This led to greater concern over rising interest rates in financial markets. Global equity markets stayed in an overall uptrend, albeit punctuated by numerous downward adjustments prompted by worries over sustained inflation and rising market interest rates. China’s economic growth slowed, in foreign demandpart due to curbs on production executed in the interest of stepping up the pace of decarbonization and tightening controls and regulations under China’s “common prosperity” drive.
Japan’s economy performed sluggishly. The country suffered repeated
flare-ups
in the pandemic—in part because it was slower than the countries of the West to roll out vaccinations—and supply constraints ended up causing a slump in exports. However, in spite of lackluster performance in the real economy and rising costs (including in the form of higher prices for semiconductorsimported raw materials due to accelerating global inflation and related products.
high market prices for raw materials and fuel), earnings at major Japanese companies kept up solid growth. The Japanese equity market set a fresh post-bubble high in September, buoyed by rising global equity markets and improvement in corporate earnings at home, but performance thereafter softened under the influence of downward adjustments in equity markets around the world triggered in part by worries over rising interest rates.
Executive Summary
[«Overall results of business]business»
We recognized net revenue of ¥1,401.9¥1,363.9 billion for the fiscal year ended March 31, 2021, an increase2022, a decrease of 8.9%2.7% from the previous fiscal year.
Non-interest
expenses increaseddecreased by 12.7%2.9% to ¥1,171.2¥1,137.3 billion, income before income taxes was ¥230.7¥226.6 billion, and net income attributable to the shareholders of Nomura Holdings, Inc. was ¥153.1¥143.0 billion. Return on equity was 5.7%5.1%. EPS
(1)
for the fiscal year ended March 31, 20212022 was ¥48.63,¥45.23, a decrease from ¥66.20¥48.63 for the fiscal year ended March 31, 2020.2021. We have decided to pay a dividend of ¥15¥14 per share to shareholders of record as of March 31, 2021.2022. As a result, the total annual dividend will be ¥35¥22 per share for the fiscal year ended March 31, 2021.2022.
[«Management’s assessment of events that had a particular impact on the results of the year]year»
On March 26, 2021, a U.S. client defaulted on margin calls made by one of our U.S. subsidiaries, namely Nomura Global Financial Products Inc., in connection with prime brokerage transactions entered into withIn the client, which has resulted in us incurring significant losses. See “—U.S. Prime Brokerage Event” for further information onRetail Division, the nature of this event. Our results forshift towards the full year and fourth quarter ended March 31, 2021 include losses of ¥245.7 billion in respect of this matter, primarily incurred fromasset consulting business is progressing. In the winding down and liquidation of hedges against these positions which we closed out as a result of the default. These losses also include additional provisions for current expected credit losses against financing extended to the same client collateralized by a portfolio of securities. This event had a major impact on our financial results for the full year and particularly the fourth quarter ended March 31, 2021. However, excluding this impact, our core business of Retail, Asset Management and our Wholesale global business all delivered strong results. We also observe that our financial soundness remains robust, including our capital metrics and liquidity.
U.S. Prime Brokerage Event
In March 2021, following the default by one of our prime brokerage clients in the United States on its obligations to post additional margin in respect of its positions with us, we issued a closeout notice to the client following which we began to winddown the positions held by us and liquidate hedges held against those positions. Due to fluctuations in the market values of the hedges against the positions and our expectation that we will not be able to recover those losses from the client, we recognized significant losses during the fourth quarter and fiscal year ended March 31, 2021,2022, there was an increase in stock and expectconsulting revenues due to recognize additional lossesa net increase in investment trusts and discretionary investment balances. However, because of
flare-ups
in the
COVID-19
pandemic, changes to the monetary policy of central banks, and heightened geopolitical risks, clients’ risk aversion attitude became prominent, and profits from flows such as stock and investment trust transactions decreased.
In the Investment Management Division, investment income decreased by market factors. On the other hand, there was an inflow of funds for the fourth consecutive quarter, and in December of last year, the balance of assets under management reached a record high. Thereby operating income mainly from management fees increased.
Profits in the quarter ending June 30, 2021. We refer to these events, describedWholesale Division increased. In Investment Banking, the advisory business, particularly overseas, performed well, resulting in more detail below as the “U.S. Prime Brokerage Event.”
Ourhighest earnings in the past six years. In Global Markets, loss of Equity arising from transactions with thea US client comprised (i) total return swaps (“TRS transactions”), which are transactions that allow the client to obtain synthetic (i.e., derivative) long or short exposure to underlying individual equities or indices, as well as (ii) providing financing against a portfolio of securities in the client’s cash prime brokerage account. To manage credit risk in relation to prime brokerage clients, we require that prime brokerage clients deposit collateral (referred to as “margin”) in respect of their positions with us in accordance with the margin ratios applied to them. These margin ratios are determined based on the results of an internal risk assessment of the specific client and the composition of the client’s positions and may require that they post additional margin based on the effect of market movements on these ratios. TRS transactions are hedged from a market risk perspective by holding long or short positions in individual equities or indices and through derivative transactions, depending on the positions taken by the relevant client. For long equity positions taken by the client, we hold cash equity long positions in the underlying equities as well as derivative transactions. For short equitydecreased.
 
 
(Note):
1. 
Diluted net income attributable to Nomura Holdings’ shareholders per share.
 
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positions taken byAlso, the client, we hold cash equity short positions and derivative transactions. Lending transactions against cash prime brokerage portfolios are generally overcollateralized, and therefore not separately hedged, and we may enter into separate hedges if the value of the collateral falls.
Particularly between January and March 2021, transaction amounts and volumes with the client increased significantly as a result of changes in market prices as well as new positions entered into by the client. However, in March 2021, the market value of certain securities in which the client held a large synthetic position experienced a sharp decline, after which we requested that the client deposit additional margin with us pursuant to our contractual agreements with the client. The client defaulted on its obligation to post additional margin, and we issued a closeout notice to the client. It became clear that the client had similar large positions with other financial institutions, and that the client had also defaulted on margin calls with these financial institutions. Although we endeavored to take a disciplined approach to unwind the positions and liquidate the hedges for the TRS transactions, taking into account both market impact and our own trading losses, due to the significant volume of positions being closed by both us and the other affected financial institutions and the effect on market prices, we recognized ¥204.2 billion of losses in earnings reported within
Net gain (loss) on trading
in the quarter and fiscal year ended March 31, 2021. We also2022 was affected by a variety of temporary factors. Continuing from the fiscal year ended March 2021, we recognized additional provisions for current expected credit lossesloss of ¥41.6¥65.4 billion arising from transactions with a US client during the first quarter, part of which is estimated to be recoverable resulting in recognition of profit of ¥14.7 billion in earnings reported within
Otherthe third and fourth quarters. In addition, approximately ¥62 billion related to legacy transactions in the U.S. from before the global financial crisis (2007–2008) was recognized including legal expenses as well as certain transactions intended to mitigate future losses. On the other hand, we recognized income of approximately ¥79.0 billion from the sale of a part of its shares held in Nomura Research Institute, Ltd, which is affiliated company, in the first and fourth quarters.
during
The fiscal year ended March 2022 was more challenging than the same period against loans extended toprevious fiscal year. However, we believe that the client collateralized by a cash portfolioresults of securities, reflectingour
medium-to
long-term initiatives were steady. At the reduced likelihood of recovery on these lending transactions. Allend of the positions with the client were closed out and hedges liquidated by May 17, 2021, as a result of which we expect to recognize losses of approximately ¥65 billion during the quarter ending June 30, 2021.
For a description of the stepsfiscal year, we have taken and are takingalmost completed the accounting treatment of legacy transactions in the Americas from before the global financial crisis, freeing up management resources to address the risk management and other related issues raised by the U.S. Prime Brokerage Event, see Item 4. “Business—B. Business Overview—Management Challenges and Strategies—Issues Relatingbe allocated to the U.S. Prime Brokerage Event.”
growth areas.
[«Capital policy and shareholder returns]returns»
We plan to maintain appropriate capital ratios and aim for sustainable growth through optimal capital allocation. As preparatory steps to achieve our management vision, while controlling cost levels, we are investing for growth to realize our management strategy of expanding the scope of our business from public into private markets, in order to balance investment and shareholder returns, and maximize shareholder value by improving productivity and expanding revenue sources.
We strive to pay dividends using a consolidated payout ratio of 30 % of each semi-annual consolidated earnings as a key indicator. Additionally we aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 %. The total amount of shareholder returns for each fiscal year is determined by comprehensively taking into account trends in the regulatory environment in Japan and overseas, including the strengthening of Basel regulations, as well as the consolidated results of our business divisions. For further details of our dividend policy, refer to Item 5.B. “
Liquidity and Capital Resources
—
Capital Management
—
Dividends
”.
[«Summary by Segment]Segment»
In our Retail Division, net revenue for the year ended March 31, 2021 increased2022 decreased by 9.6%11.1% from the previous fiscal year to ¥368.8¥328.0 billion.
Non-interest
expenses decreased by 3.6%2.8% to ¥276.5¥268.7 billion. As a result, income before income taxes increaseddecreased by 86.8%35.8% to ¥92.3¥59.2 billion. Based on the basic concept of “Enriching clients by responding to their asset concerns”, our Retail Division has been working on consulting business in close cooperation with each client with the aim of becoming “the most trusted partner”. During the current fiscal year, purchases of stocks and investment trusts were sluggish due to the stronguncertain market environment, boosted client confidence and ledbut we expanded our recurring revenue assets by consulting on the entire assets of our clients.
We are also enhancing our initiatives to strong sales of investment trusts, stocks and foreign bonds. By alsoreach the working generation by strengthening our remote consulting system through contact centers, we have achieved results that exceed expectations. In addition tocenters. Going forward, not only providing support for asset management, we will strive to enhance our products and services such as; Real Estate, Inheritance, or Succession, which aims to provide various solutions for a variety of client issues, such as real estate and advicesinheritance. In addition, we will aim to allestablish a new business model by combining both digital and human touch service.
In our Investment Management Division, net revenue for the year ended March 31, 2022 decreased by 9.3% from the previous fiscal year to ¥148.0 billion.
Non-interest
expenses increased by 6.0% to ¥76.5 billion. As a result, income before income taxes decreased by 21.4% to ¥71.5 billion. The Investment Management Division, which was established on April 1, 2021, has been broadly engaged in the asset management business while expanding its product lineup and improving its services to meet the diversifying investment needs of ourclients. During the fiscal year under review, the balance of assets under management remained high, due to inflows of funds which continued for four consecutive quarters, resulting in an increase in business revenue that is relatively stable in nature.
 
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clients’ assets. We are also taking digital approaches in addition to
face-to-face
approaches, to provide services to a wider range of clients. We will further strengthen our digital approach.
In our Asset Management Division, net revenue for the year ended March 31, 2021 increased by 45.5% from the previous fiscal year to ¥134.8 billion.
Non-interest
expenses decreased by 5.2% to ¥60.5 billion. As a result, income before income taxes increased by 158.0% to ¥74.2 billion. As a major institutional investor, our Asset Management Division has expanded its investment strategy to focus on ESG (Environment, Society and Governance), which contributes to social development as well as medium to long term asset formation, for example by establishing multiple
ESG-related
investment trusts. Funds continued to flow into ETFs (Exchange Traded Funds) during this term. On the 25th anniversary sinceother hand, although Nomura Capital Partners recorded profit from valuation and sale of shares of its investee company following its initial public offering, a decrease in gain related to American Century Investments resulted in a year on year decrease in investment gain and loss. As part of our efforts to expand our private market products, Nomura Asset ManagementSPARX Investment, a joint venture with the SPARX Group Co., Ltd. (“NAM”) listed Japan’s first ETF productwas established and started managing an investment corporation that invests in 1995, we rebranded our ETF products including unifying the names of certain products as “NEXT FUNDS”. unlisted companies.
In addition, NAM listed an ETF targetingin collaboration with Japan Search Fund Accelerator Co., Ltd., we established Japan Search Fund Platform Investment Limited Partnership, which specializes in investments for business succession, and completed the S&P 500 ESG Index, which incorporated ESG factors into the selection criteria for constituent stocks. In the investment trust business, we invested in a wide rangefirst close of sectors and funds flowed into bond funds which pursue total returns while controlling price fluctuations, and also we observed outflow of funds in Japan from emerging market funds throughout the year. The fair value of our investment in American Century Investments also increased during the year as a result of an upturn in the US stock markets and we also increased global cooperation with our investee.fund raising.
In our Wholesale Division, net revenue for the year ended March 31, 20212022 increased by 6.6%1.7% from the previous fiscal year to ¥691.4¥703.1 billion.
Non-interest
expenses increased by 0.2% to 628.6 billion. As a result, income before income taxes increased by 15.8% to ¥74.5 billion. In Global Markets, we continued to reinforce our core strengths across regions, enhanced risk control and governance and focused on providing uninterrupted service and liquidity to help our clients, as they navigated through periods of high market volatility andrebalance their portfolio rebalancing amidst the challenges arising from the global
COVID-19
pandemic. We continued to reinforce our core strengths across regions and also supported sovereign and supranational issuers in fund raising for pandemic relief.highly volatile markets. We delivered steady performance, by deepening engagement with clients across flow as well as structured financing and increasing market share.solution business. In Investment Banking, client activity was suppressed due to concerns of the spread of
COVID-19
in the first quarter, but in the following quartersactive and, we were able to execute large domestic as well as cross-border business restructurings and industry-wide consolidations by carefully responding to our clients’ needs. In addition to M&A advisory and underwriting businesses for both equity and debt, the recoveryexpansion of the acquisition finance market also led to robust growth for the fiscal year. The acquisitionnumber of deals executed by Nomura Greentech increased and ancontributed to revenue, while we were able to deepen our alliance with Wolfe Research also contributed positivelyLLC and have started joint branding which has led to revenue growth.an increase in deal numbers.
However, these increases in revenue were largely offset by trading losses of ¥204.2 billion incurred in connection with the U.S. Prime Brokerage Event, as described in further detail in “
—Executive Summary—U.S. Prime Brokerage Event
”. Furthermore,
non-interest
expenses increased by 12.7% to ¥627.1 billion, due in large part to the recognition of provisions for current expected credit losses of ¥41.6 billion also incurred in connection with the U.S. Prime Brokerage Event. As a result, income before income taxes for the Wholesale Division decreased by 30.3% to ¥64.3 billion.
Progress on Key Performance Indicators
[«Management Indicators]Indicators»
One component of Nomura’s management vision is “achieving sustainable growth by solving social issues” and we have set Return on Equity (ROE) as one of the most important indicators towards the fiscal year ending March 2025. After the introduction of the Corporate Governance Code in Japan, the importance of management having an awareness of capital costs has increased among Japanese companies. In addition, since the financial services industry is subject to stringent financial capital regulations, more effective use of capital is required. As a result, we believe that the optimal allocation of management resources will become even more important for our company in the future. Accordingly, beginning in the year ended March 31, 2020,2021, we adopted ROE as a key management indicator, which management uses to track the progress of our sustainable business transformation. At the Board of Directors meeting held in May 2020,
in-depth
discussions were held on the management indicators and basic concepts described as follows.
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Return on equity
ROE is defined and calculated as net income attributable to NHI shareholders divided by total NHI shareholders’ equity. We believe that disclosure of ROE is useful to investors in that it helps them to assess business conditions and effective use of capital to enhance corporate value. We currently calculate and measure ROE on a quarterly basis.
We have set a medium to long-term ROE target of
8-10%
for the fiscal year end March 2025, reflecting the cost of capital demanded by our company. However, ROE may be of limited use in that it does not necessarily reflect financial soundness. In order to avoid the excessive pursuit of capital efficiency with the aim of improving ROE at the expense of financial soundness, we attach importance to the creation of corporate value, giving due consideration to financial soundness, and thereby improving ROE. ROE for the year ended March 31, 20212022 decreased to 5.7%5.1% from 8.2%5.7% for the prior fiscal year, primarily due to losses recognized in connection with the U.S. Prime Brokerage Event which occurred in March 2021 and which is discussed above.year.
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Common equity Tier1 ratio (CET1 ratio)
In addition to ROE, there are multiple global financial regulations that we must comply with, including capital regulations established by Basel Committee on Banking Supervision as interpreted and implemented by the FSA which have a direct impact on the way we conduct business. For this reason, we have set a target of maintaining a common equity Tier 1 ratio (CET1 ratio) of at least 11%, so that we will take into consideration the financial soundness including certain buffer against severe market stress. Our CET1 ratio increased to 17.22% as of March 31, 2022 from 15.81% as of March 31, 2021 from 15.34% as of March 31, 2020.2021. For further details, on the key capital requirements we must follow, see Item 5.B. “
Consolidated Regulatory Capital Requirements
—”.
[«Indicators by Business Segment]Segment»
In addition to the Group KPIs, our management also uses certain divisional specific KPIs to monitor and assess performance of the divisions.
Retail
We have adopted the following key indicators in the Retail Division to quantify the outcomes of those efforts and monitor our business: Recurring revenue assets; Consulting-related revenue; and Net inflows of cash and securities; Active clients; so that our management will be able to monitor the progress and target sustainable and further business growth. We believe that disclosure of those indicators is useful to investors in that it helps them to assess the progress of the division’s client-facing activities as well as digest and understand our growth potential.
 
                                                                                           
   
Year ended March 31 (Billions of yen)
 
   
2019*
   
2020
   
% Change from
previous year
  
2021
   
% Change from
previous year
 
Recurring revenue assets
  ¥—     ¥15,300    —  %  ¥18,200    19.0% 
Consulting-related revenue
  ¥—     ¥14.9    —  %  ¥13.4    -10.1% 
                         
Net inflows of cash and securities
  ¥—     ¥-429.4    —  %  ¥887.7    —  % 
Active clients
   —      1,071,000    —  %   1,019,000    -4.9% 
                         
*
These segment KPIs have been defined and introduced since 2020 hence there is no number to be provided for the year of 2019.
                                                                                           
   
Year ended March 31 (Billions of Japanese Yen)
 
   
2020
  
2021
   
% Change from
previous year
  
2022
   
% Change from
previous year
 
Recurring revenue assets
  ¥15,300  ¥18,200    19%  ¥19,600    7.7% 
Consulting-related revenue
  ¥14.9  ¥13.4    (10.1)%  ¥16.7    24.6% 
   
 
 
  
 
 
   
 
 
  
 
 
   
 
 
 
Net inflows of cash and securities
  ¥(429.4)  ¥887.7    
—  
%  ¥351.5    (60.4)% 
Active clients
   1,071,000   1,019,000    (4.9)%   1,009,000    (1.0)% 
   
 
 
  
 
 
   
 
 
  
 
 
   
 
 
 
Recurring revenue assets
Recurring revenue assets are defined and calculated as aby adding related loans to the total amount of assets, under custodysuch as investment trusts and related loans,discretionary investments, for which management fees and other fees are charged. The total amount of Loan is reported by ¥470¥614.3 billion within
Loans receivable
in the consolidated balance sheets as of March 31, 2021.2022. Recurring revenue assets such as investment trusts and discretionary investments grew driven by the market rally and net inflows into investment trusts, contributing to higher Recurringrecurring revenue.
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Consulting-related revenue
Consulting-related revenue is definedconsists of revenues that are not derived from purchase and sales of securities, but revenue related to service such as perinsurance and real estate. For the
Fees from investment banking
. Consulting-related revenue improved from third current fiscal year, pension insurance and business insurance contracts and M & A contracts contributed to fourth quarter on contributions from annuities and other products.the increase compared to the fiscal year ended March 2021.
Net inflows of cash and securities
Net inflows of cash and securities is defined and calculated as cash and securities inflows minus outflows, excluding regional financial institutions. Net inflows of cash and securities was over ¥800¥351.5 billion in annual total which combined with market factors to liftfactors. Retail client assets to a record high of ¥126.6was ¥122.1 trillion as of March 31, 2021.
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Active clients
Active clients are defined as a number of clients who transacted at least onceone purchase since April 1 (accumulated). Growth in the number of Active clients was slowexceeded previous fiscal year results until the 3rd Quarter but slowed down due to the U.S. monetary policy and heightened geopolitical risks.
Investment Management Division
We have set the balance of assets under management as a key performance indicator for the Investment Management Division. The businesses in the Investment Management Division generally earn management and similar fees based on the amount of assets under management, meaning that revenue trends for these businesses tend to follow trends in the amount of assets under management, and our management considers this measure to be effective in monitoring the progress of these businesses. We also believe that it is an important indicator of how well investment products are received by investors.
                                                                                           
   
Year ended March 31 (Trillions of Japanese Yen)
 
   
2020*
   
2021
   
% Change from
previous year
  
2022
   
% Change from
previous year
 
Assets under management
   ¥N/A   ¥64.7    —  %  ¥67.9    4.9% 
   
 
 
   
 
 
   
 
 
  
 
 
   
 
 
 
*
No comparable data available for 2020.
The balance of assets under management includes the net balance (after deducting duplications) of assets under management (gross) of Nomura Asset Management, Nomura Corporate Research and Asset Management, and Wealth Square, as well as third-party investments in funds managed by Nomura SPARX Investment, Nomura Mezzanine Partners, Nomura Capital Partners, and Nomura Research & Advisory.
During the fiscal year ended March 31, 2022, the balance of investment trusts increased mainly through bank channels and ETFs. In addition to large inflows from domestic pension funds in the investment advisory services, for our overseas business, funds flowed into Nomura Corporate Research and Asset Management’s high yield bond strategy. In addition to these inflows, the balance increased due to market factors.
Wholesale
Starting April 2019, we have adopted a
cost-to-income
ratio and a revenue to modified RWA ratio as additional key performance indicators in our Wholesale Division. We believe that disclosure of these indicators would be useful for investors to assess progress in terms of cost and resource efficiency. Additionally, we use these indicators to evaluate our business based on progress on cost savings initiatives and return on resources.
                                                                                           
   
Year ended March 31
 
   
2020
  
2021
  
% Change from
previous year
  
2022
  
% Change from
previous year
 
Cost-to-income
ratio
   86%   91%   5.8%   89%   (2.2)% 
Revenue/modified RWA
   6.5%   6.4%   (1.5)%   7.0%   9.4% 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Cost-to-income
ratio
The
cost-to-income
ratio for the Wholesale Division is calculated by dividing
non-interest
expenses for the Division for a given reporting period by net revenue generated by the Division for the same period, calculated consistently, in each case, with our segment presentation for the division. It is monitored at a divisional level to track operating margins for the business. The ratio decreased during the year ended March 31, 2022 compared to the prior fiscal year primarily due to less impact from the U.S. Prime Brokerage Event on revenue and cost during the year. However, there was some effect on costs due to international hiring in line with strategic
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initiatives and market-driven base salary adjustments. The ratio increased during the year ended March 31, 2021 compared to the prior fiscal year because of the impact of the U.S. Prime Brokerage Event on revenue and cost for the year. However, the negative impact was mitigated by other increases in revenue as well as
pro-active
cost management after adjusting for the impact of pay for performance and other revenue driven costs.
Revenue to modified Risk Weighted Asset (RWA) ratio
The revenue to modified RWA ratio for the Wholesale division is calculated by dividing net revenue generated by our Wholesale Division for a given reporting period (in the case of net revenue for the Wholesale Division for periods shorter than a full fiscal year, on an annualized basis) by the average balance of modified RWA used by the Wholesale Division for the same period. The Revenue to modified RWA ratio is monitored to track our revenue earning capacity against risk resources deployed. Modified RWA is the total of (i) average daily risk-weighted assets as calculated and presented under Basel regulations as interpreted and implemented by the FSA and (ii) an adjustment equal to the regulatory adjustment to common equity tier1 (CET1) capital calculated and presented under Basel regulations as interpreted and implemented by the FSA divided by our internal minimum capital ratio target of 12.5%. (daily average for the accounting period), which we use to estimate the amount of deductions to RWA generated by the division. The revenue to modified RWA as we calculate and present it may differ from similarly titled measures presented by our competitors due to the approach and methodologies used for calculation. Our credit risk-weighted assets and operational risk equivalent assets are calculated by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, Market risk equivalent assets are calculated by using the Internal Models Approach for market risk. The conversion of Wholesale RWA to modified RWA is based on adjustments reflecting our internal minimum capital ratio target. Moreover, the usefulness of this ratio may be limited in that the adjustment applied to RWA, which is intended to capture the appropriate amount of RWA to attribute to our businesses (as opposed to RWA as calculated for regulatory capital purposes), is an estimate incorporating our internal risk tolerance; however, this adjustment may not appropriately reflect the actual regulatory capital impact of the charged assets that are used by our business. Revenue to modified RWA increased for the year ended March 31, 2022 compared to the prior fiscal year primarily because of less impact from the U.S. Prime Brokerage Event on revenue as well as increased Investment Banking revenue. The impact of the U.S. Prime Brokerage Event was the main reason why the ratio declined for the year ended March 31, 2021 compared to the prior fiscal year.
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Results of Operations
Overview
The following table provides selected consolidated statements of income information for the years ended March 31, 2020, 2021 and 2022.
   
Millions of yen, except percentages
 
   
Year ended March 31
 
   
2020
  
2021
  
% Change from
previous year
  
2022
  
% Change from
previous year
 
Non-interest
revenues:
                     
Commissions
  ¥308,805  ¥376,897   22.1%  ¥332,344   (11.8)% 
Fees from investment banking
   103,222   108,681   5.3   149,603   37.7 
Asset management and portfolio service fees
   238,202   230,047   (3.4)   269,985   17.4 
Net gain on trading
   356,609   310,040   (13.1)   368,799   19.0 
Gain (loss) on private equity and debt investments
   (93)   12,734   —     30,768   141.6 
Gain (loss) on investments in equity securities
   (14,726)   14,053   —     5,446   (61.2) 
Other
   165,991   208,317   25.5   152,832   (26.6) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
Non-interest
revenues
   1,158,010   1,260,769   8.9   1,309,777   3.9 
Net interest revenue
   129,819   141,103   8.7   54,113   (61.7) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
   1,287,829   1,401,872   8.9   1,363,890   (2.7) 
Non-interest
expenses
   1,039,568   1,171,201   12.7   1,137,267   (2.9) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income before income taxes
   248,261   230,671   (7.1)   226,623   (1.8) 
Income tax expense
   28,894   70,274   143.2   80,090   14.0 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income
  ¥219,367  ¥160,397   (26.9)%  ¥146,533   (8.6)% 
Less: Net income attributable to noncontrolling interests
   2,369   7,281   207.3   3,537   (51.4) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income attributable to NHI shareholders
  ¥216,998  ¥153,116   (29.4)%  ¥142,996   (6.6)% 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Return on equity
   8.2%   5.7%       5.1%     
Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. This decrease is primarily driven by
Commissions
earned by Retail Division.
Commissions
decreased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to a decrease in commissions received from the brokerage commissions from equity and equity-related products and the distribution of investment trusts.
Fees from investment banking
increased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to an increase in revenue from advisory services.
Asset management and portfolio service fees
increased from the year ended March 31, 2021 to the year ended March 31, 2022 mainly due to increases in recurring revenue in Retail Division and in revenue from high level of asset under management in Investment Management Division.
Net gain on trading
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to the U.S. Prime Brokerage Event subsided.
Net gain on trading
also included total gains of ¥8.2 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a widening of Nomura’s credit spread.
Gain (loss) on investments in equity securities
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to a result of market appreciation during the year ended March 31, 2021, not repeated in March 31, 2022.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a
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long-term basis in order to promote existing and potential business relationships.
Other
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to American Century Investments related gain/loss.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021 despite recognizing significant losses in connection with the U.S. Prime Brokerage Event in our Wholesale Division. This increase is primarily driven by Commissions earned by Retail Division.
Commissions
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity related products.
Fees from investment banking
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in revenue from M&A advisory services and our solution services associated with fund raising.
Asset management and portfolio service fees
decreased from the year ended March 31, 2020 to the year ended March 31, 2021 mainly due to decreases in fee ratios.
Net gain on trading
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to the U.S. Prime Brokerage Event.
Net gain on trading
also included total losses of ¥13.4 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a tightening of Nomura’s credit spreads which were temporarily widened at the end of March 2020 due to the
COVID-19
pandemic.
Gain (loss) on investments in equity securities
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to a result of market appreciation during the year ended March 31, 2021.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships.
Other
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to recognizing a
non-recurring
gain of ¥71.1 billion resulting from the rights conversion related to the Tokyo Nihonbashi district redevelopment project.
Net interest revenue
is a function of the level and mix of total assets and liabilities, which includes trading assets and financing and lending transactions, and the level, term structure and volatility of interest rates.
Net interest revenue
is an integral component of trading activity. In assessing the profitability of our overall business and of our Global Markets business in particular, we view
Net interest revenue
and
Non-interest
revenues
in aggregate. For the year ended March 31, 2022, interest revenue, including a dividend from our investment in American Century Investments decreased by 20%, and interest expense increased by 7% from the year ended March 31, 2021. As a result,
Net
interest revenue
for the year ended March 31, 2022 decreased from the year ended March 31, 2021. For the year ended March 31, 2021, interest revenue, including a dividend from our investment in American Century Investments decreased by 55%, and interest expense decreased by 68% from the year ended March 31, 2020. As a result, Net interest revenue for the year ended March 31, 2021 increased from the year ended March 31, 2020.
Non-interest
expenses
for the year ended March 31, 2022 decreased from the year ended March 31, 2021, primarily due to the credit losses related to the U.S. Prime Brokerage Event subsiding compared to previous fiscal year whenand the absence of an impairment loss
of ¥47.7 billion 
on our equity method investments in Nomura Real Estate Holdings.
Non-interest
expenses
for the year ended March 31, 2021 increased from the year ended March 31, 2020, primarily due to provisions for credit losses of ¥41.6 billion recognized as a result of the U.S. Prime Brokerage Event and an impairment loss of ¥47.7 billion on our equity method investments in Nomura Real Estate Holdings.
We are subject to a number of clients
re-entering
different taxes in Japan and have adopted the market increased asconsolidated tax filing system permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax. Nomura’s domestic effective statutory tax rate was approximately 31% for the market plunged.fiscal year ended March 31, 2020, 2021 and 2022, respectively. Our foreign subsidiaries are subject to the income taxes of the countries in which they
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Asset Management
operate, which are generally lower than those in Japan. The Company’s effective statutory tax rate in any one year is therefore dependent on our geographic mix of profits and losses and also on the specific tax treatment applicable in each location.
For operating results including key indicator
Income tax expense
for the year ended March 31, 2022, represented an effective tax rate of Asset Management Division, see Item 5.A. “35.3%. The significant factors causing the difference between the effective tax rate of 35.3% and the effective statutory tax rate of 31% was the changes in deferred tax valuation allowances which increased the effective tax rate by 18.0% , partially offset by the effect of changes in foreign tax laws which decreased the effective tax rate by 14.4%.
Income tax expense
for the year ended March 31, 2021, represented an effective tax rate of 30.5%. The significant factors causing the difference between the effective tax rate of 30.5% and the effective statutory tax rate of 31% was the effect of the tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates which decreased the effective tax rate by 8.7%, partially offset by changes in deferred tax valuation allowances which increased the effective tax rate by 8.7%.
Income tax expense
for the year ended March 31, 2020, represented an effective tax rate of 11.6%. The significant factors causing the difference between the effective tax rate of 11.6% and the effective statutory tax rate of 31% was the effect of
non-taxable
income which decreased the effective tax rate by 23.5%, partially offset by
non-deductible
expenses which increased the effective tax rate by 2.9%.
Results by Business Segment
—
Asset Management
”.
Investment Management
In April 1, 2021, Nomura established a new Investment Management Division. The Investment Management Division will replace the Asset Management Division and Merchant Banking Division. Key indicator(s) decided for Investment Management Division, as a new business segment, will be disclosed from fiscal year ending March 31, 2022.
Wholesaleof Operations
Starting April 2019, we have adopted aOverview
cost-to-income
ratioThe following table provides selected consolidated statements of income information for the years ended March 31, 2020, 2021 and a revenue to modified RWA ratio as additional key performance indicators in our Wholesale Division. We believe that disclosure of these indicators would be useful for investors to assess progress in terms of cost and resource efficiency. Additionally, we use these indicators to evaluate our business based on progress on cost savings initiatives and return on resources.2022.
 
                                                                           
   
Year ended March 31
 
   
2019*
1
  
2020
  
% Change from
previous year
  
2021
  
% Change from
previous year
 
Cost-to-income
ratio
   
105*
1
%   86%   -18.1%   91%   5.8% 
Revenue/modified RWA
   5.0%   6.5%   30.0%   6.4%   -1.5% 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
(1)
Excludes the ¥81 billion goodwill impairment included in
Non-interest
expenses
, recognized through earnings during the year ended March 31, 2020
   
Millions of yen, except percentages
 
   
Year ended March 31
 
   
2020
  
2021
  
% Change from
previous year
  
2022
  
% Change from
previous year
 
Non-interest
revenues:
                     
Commissions
  ¥308,805  ¥376,897   22.1%  ¥332,344   (11.8)% 
Fees from investment banking
   103,222   108,681   5.3   149,603   37.7 
Asset management and portfolio service fees
   238,202   230,047   (3.4)   269,985   17.4 
Net gain on trading
   356,609   310,040   (13.1)   368,799   19.0 
Gain (loss) on private equity and debt investments
   (93)   12,734   —     30,768   141.6 
Gain (loss) on investments in equity securities
   (14,726)   14,053   —     5,446   (61.2) 
Other
   165,991   208,317   25.5   152,832   (26.6) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
Non-interest
revenues
   1,158,010   1,260,769   8.9   1,309,777   3.9 
Net interest revenue
   129,819   141,103   8.7   54,113   (61.7) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
   1,287,829   1,401,872   8.9   1,363,890   (2.7) 
Non-interest
expenses
   1,039,568   1,171,201   12.7   1,137,267   (2.9) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income before income taxes
   248,261   230,671   (7.1)   226,623   (1.8) 
Income tax expense
   28,894   70,274   143.2   80,090   14.0 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income
  ¥219,367  ¥160,397   (26.9)%  ¥146,533   (8.6)% 
Less: Net income attributable to noncontrolling interests
   2,369   7,281   207.3   3,537   (51.4) 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income attributable to NHI shareholders
  ¥216,998  ¥153,116   (29.4)%  ¥142,996   (6.6)% 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Return on equity
   8.2%   5.7%       5.1%     
Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. This decrease is primarily driven by
Cost-to-incomeCommissions
ratioearned by Retail Division.
Commissions
Thedecreased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to a decrease in commissions received from the brokerage commissions from equity and equity-related products and the distribution of investment trusts.
cost-to-incomeFees from investment banking
ratio forincreased from the Wholesaleyear ended March 31, 2021 to the year ended March 31, 2022 primarily due to an increase in revenue from advisory services.
Asset management and portfolio service fees
increased from the year ended March 31, 2021 to the year ended March 31, 2022 mainly due to increases in recurring revenue in Retail Division is calculated by dividingand in revenue from high level of asset under management in Investment Management Division.
non-interest
Net gain on trading
expenses for
increased from the Division foryear ended March 31, 2021 to the year ended March 31, 2022, primarily due to the U.S. Prime Brokerage Event subsided.
Net gain on trading
also included total gains of ¥8.2 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a given reporting period by net revenue generated bywidening of Nomura’s credit spread.
Gain (loss) on investments in equity securities
decreased from the Division foryear ended March 31, 2021 to the same period, calculated consistently, in each case, with our segment presentation for the division. It is monitored atyear ended March 31, 2022, primarily due to a divisional level to track operating margins for the business. The ratio increasedresult of market appreciation during the year ended March 31, 2021, compared to the prior fiscal year primarily due to the negative impact of the U.S. Prime Brokerage Eventnot repeated in March 31, 2022.
Gain (loss) on revenueinvestments in equity securities
includes both realized and cost
unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a
 
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forlong-term basis in order to promote existing and potential business relationships.
Other
decreased from the year. However,year ended March 31, 2021 to the negative impact was mitigatedyear ended March 31, 2022, primarily due to American Century Investments related gain/loss.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021 despite recognizing significant losses in connection with the U.S. Prime Brokerage Event in our Wholesale Division. This increase is primarily driven by other increasesCommissions earned by Retail Division.
Commissions
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity related products.
Fees from investment banking
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in revenue as well asfrom M&A advisory services and our solution services associated with fund raising.
pro-active
cost
Asset management after adjusting forand portfolio service fees
decreased from the impactyear ended March 31, 2020 to the year ended March 31, 2021 mainly due to decreases in fee ratios.
Net gain on trading
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to the U.S. Prime Brokerage Event.
Net gain on trading
also included total losses of pay for performance and other revenue driven costs. The ratio decreased¥13.4 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a tightening of Nomura’s credit spreads which were temporarily widened at the end of March 2020 due to the
COVID-19
pandemic.
Gain (loss) on investments in equity securities
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to a result of market appreciation during the year ended March 31, 2021.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships.
Other
increased from the year ended March 31, 2020 compared to the prior fiscal year because Wholesale profitability improved onended March 31, 2021, primarily due to recognizing a
non-recurring
gain of ¥71.1 billion resulting from the backrights conversion related to the Tokyo Nihonbashi district redevelopment project.
Net interest revenue
is a function of the revenue pickuplevel and mix of total assets and liabilities, which includes trading assets and financing and lending transactions, and the cost reduction associated withlevel, term structure and volatility of interest rates.
Net interest revenue
is an integral component of trading activity. In assessing the strategic actions taken since 2019. We have excluded goodwill impairmentprofitability of our overall business and of our Global Markets business in particular, we view
Net interest revenue
and
Non-interest
revenues
in aggregate. For the year ended March 31, 2022, interest revenue, including a dividend from our investment in American Century Investments decreased by 20%, and interest expense increased by 7% from the denominator used to calculate the ratio year ended March 31, 2021. As a result,
Net
interest revenue
for the year ended March 31, 2020 as this is significant non-recurring cost which we believe would distort usefulness of2022 decreased from the ratio asyear ended March 31, 2021. For the year ended March 31, 2021, interest revenue, including a KPI.
Revenue to modified Risk Weighted Asset (RWA) ratio
Thedividend from our investment in American Century Investments decreased by 55%, and interest expense decreased by 68% from the year ended March 31, 2020. As a result, Net interest revenue to modified RWA ratio for the Wholesale division is calculated by dividing net revenue generated by our Wholesale Division for a given reporting period (in the case of net revenue for the Wholesale Division for periods shorter than a full fiscal year, on an annualized basis) by the average balance of modified RWA used by the Wholesale Division for the same period. The Revenue to modified RWA ratio is monitored to track our revenue earning capacity against risk resources deployed. Modified RWA is the total of (i) average daily risk-weighted assets as calculated and presented under Basel regulations as interpreted and implemented by the FSA and (ii) an adjustment equal to the regulatory adjustment to common equity tier1 (CET1) capital calculated and presented under Basel regulations as interpreted and implemented by the FSA divided by our internal minimum capital ratio target of 12.5%. (daily average for the accounting period), which we use to estimate the amount of deductions to RWA generated by the division. The revenue to modified RWA as we calculate and present it may differ from similarly titled measures presented by our competitiors due to the approach and methodologies used for calculation. Our credit risk-weighted assets and operational risk equivalent assets are calculated by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, Market risk equivalent assets are calculated by using the Internal Models Approach for market risk. The conversion of Wholesale RWA to modified RWA is based on adjustments reflecting our internal minimum capital ratio target. Moreover, the usefulness of this ratio may be limited in that the adjustment applied to RWA, which is intended to capture the appropriate amount of RWA to attribute to our businesses (as opposed to RWA as calculated for regulatory capital purposes), is an estimate incorporating our internal risk tolerance; however, this adjustment may not appropriately reflect the actual regulatory capital impact of the charged assets that are used by our business. Revenue to modified RWA increased for the year ended March 31, 2021 increased from the year ended March 31, 2020.
Non-interest
expenses
for the year ended March 31, 2022 decreased from the year ended March 31, 2021, primarily due to the credit losses related to the U.S. Prime Brokerage Event subsiding compared to the priorprevious fiscal year was primarily becauseand the absence of an increaseimpairment loss
of ¥47.7 billion 
on our equity method investments in revenue offset in part byNomura Real Estate Holdings.
Non-interest
expenses
for the impactyear ended March 31, 2021 increased from the year ended March 31, 2020, primarily due to provisions for credit losses of ¥41.6 billion recognized as a result of the U.S. Prime Brokerage Event discussed above.and an impairment loss of ¥47.7 billion on our equity method investments in Nomura Real Estate Holdings.
We are subject to a number of different taxes in Japan and have adopted the consolidated tax filing system permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax. Nomura’s domestic effective statutory tax rate was approximately 31% for the fiscal year ended March 31, 2020, 2021 and 2022, respectively. Our foreign subsidiaries are subject to the income taxes of the countries in which they
 
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operate, which are generally lower than those in Japan. The Company’s effective statutory tax rate in any one year is therefore dependent on our geographic mix of profits and losses and also on the specific tax treatment applicable in each location.
Income tax expense
for the year ended March 31, 2022, represented an effective tax rate of 35.3%. The significant factors causing the difference between the effective tax rate of 35.3% and the effective statutory tax rate of 31% was the changes in deferred tax valuation allowances which increased the effective tax rate by 18.0% , partially offset by the effect of changes in foreign tax laws which decreased the effective tax rate by 14.4%.
Income tax expense
for the year ended March 31, 2021, represented an effective tax rate of 30.5%. The significant factors causing the difference between the effective tax rate of 30.5% and the effective statutory tax rate of 31% was the effect of the tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates which decreased the effective tax rate by 8.7%, partially offset by changes in deferred tax valuation allowances which increased the effective tax rate by 8.7%.
Income tax expense
for the year ended March 31, 2020, represented an effective tax rate of 11.6%. The significant factors causing the difference between the effective tax rate of 11.6% and the effective statutory tax rate of 31% was the effect of
non-taxable
income which decreased the effective tax rate by 23.5%, partially offset by
non-deductible
expenses which increased the effective tax rate by 2.9%.
Results of Operations
Overview
The following table provides selected consolidated statements of income information for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen, except percentages
   
Millions of yen, except percentages
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
% Change from
previous year
 
2021
 
% Change from
previous year
   
2020
 
2021
 
% Change from
previous year
 
2022
 
% Change from
previous year
 
Non-interest
revenues:
                 
Commissions
  ¥293,069  ¥308,805   5.4%  ¥376,897   22.1%   ¥308,805  ¥376,897   22.1%  ¥332,344   (11.8)% 
Fees from investment banking
   101,521   103,222   1.7   108,681   5.3    103,222   108,681   5.3   149,603   37.7 
Asset management and portfolio service fees
   245,519   238,202   (3.0)   230,047   (3.4)    238,202   230,047   (3.4)   269,985   17.4 
Net gain on trading
   342,964   356,609   4.0   310,040   (13.1)    356,609   310,040   (13.1)   368,799   19.0 
Gain (loss) on private equity and debt investments
   1,007   (93)   —     12,734   —      (93)   12,734   —     30,768   141.6 
Gain (loss) on investments in equity securities
   (6,983)   (14,726)   —     14,053   —      (14,726)   14,053   —     5,446   (61.2) 
Other
   81,057   165,991   104.8   208,317   25.5    165,991   208,317   25.5   152,832   (26.6) 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Total
Non-interest
revenues
   1,058,154   1,158,010   9.4   1,260,769   8.9    1,158,010   1,260,769   8.9   1,309,777   3.9 
Net interest revenue
   58,616   129,819   121.5   141,103   8.7    129,819   141,103   8.7   54,113   (61.7) 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Net revenue
   1,116,770   1,287,829   15.3   1,401,872   8.9    1,287,829   1,401,872   8.9   1,363,890   (2.7) 
Non-interest
expenses
   1,154,471   1,039,568   (10.0)   1,171,201   12.7    1,039,568   1,171,201   12.7   1,137,267   (2.9) 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Income (loss) before income taxes
   (37,701)   248,261   —     230,671   (7.1) 
Income before income taxes
   248,261   230,671   (7.1)   226,623   (1.8) 
Income tax expense
   57,010   28,894   (49.3)   70,274   143.2    28,894   70,274   143.2   80,090   14.0 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Net income (loss)
  ¥(94,711)  ¥219,367   
—  
%  ¥160,397   (26.9)% 
Net income
  ¥219,367  ¥160,397   (26.9)%  ¥146,533   (8.6)% 
Less: Net income attributable to noncontrolling interests
   5,731   2,369   (58.7)   7,281   207.3    2,369   7,281   207.3   3,537   (51.4) 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Net income (loss) attributable to NHI shareholders
  ¥(100,442)  ¥216,998   —  %  ¥153,116   (29.4)% 
Net income attributable to NHI shareholders
  ¥216,998  ¥153,116   (29.4)%  ¥142,996   (6.6)% 
  
 
  
 
  
 
  
 
  
 
   
 
  
 
  
 
  
 
  
 
 
Return on equity
   (3.7)%   8.2%    5.7%     8.2%   5.7%     5.1%   
Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. This decrease is primarily driven by
Commissions
earned by Retail Division.
Commissions
decreased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to a decrease in commissions received from the brokerage commissions from equity and equity-related products and the distribution of investment trusts.
Fees from investment banking
increased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to an increase in revenue from advisory services.
Asset management and portfolio service fees
increased from the year ended March 31, 2021 to the year ended March 31, 2022 mainly due to increases in recurring revenue in Retail Division and in revenue from high level of asset under management in Investment Management Division.
Net gain on trading
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to the U.S. Prime Brokerage Event subsided.
Net gain on trading
also included total gains of ¥8.2 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a widening of Nomura’s credit spread.
Gain (loss) on investments in equity securities
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to a result of market appreciation during the year ended March 31, 2021, not repeated in March 31, 2022.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a
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long-term basis in order to promote existing and potential business relationships.
Other
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to American Century Investments related gain/loss.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021 despite recognizing significant losses in connection with the U.S. Prime Brokerage Event in our Wholesale Division. This increase is primarily driven by
Commissions
earned by Retail Division.
Commissions
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity-relatedequity related products.
Fees from investment banking
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in revenue from M&A advisory services and our solution services associated with fund raising.
Asset management and portfolio service fees
decreased from the year ended March 31, 2020 to the year ended March 31, 2021 mainly due to decreases in fee ratios.
Net gain on trading
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to the U.S. Prime Brokerage Event.
Net gain on trading
also included total losses of ¥13.4 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a tightening of Nomura’s credit spreads which were temporarily widened at the end of March 2020 due to the
COVID-19
pandemic.
Gain (loss) on investments in equity securities
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to a result of market appreciation during the year ended March 31, 2021.
Gain (loss) on investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships.
Other
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to recognizing a
non-recurring
gain of ¥71.1 billion resulting from the rights conversion related to the Tokyo Nihonbashi district redevelopment project.
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Net revenue
increased from the year ended March 31, 2019 to the year ended March 31, 2020. This increase is primarily driven by
Commissions
and
Net gain on trading
in our Retail and Wholesale Division.
Commissions
increased from the year ended March 31, 2019 to the year ended March 31, 2020 primarily due to an increase in commissions received from the distribution of investment trusts and brokerage commissions received from equity and equity-related products.
Fees from investment banking
increased from the year ended March 31, 2019 to the year ended March 31, 2020 primarily due to an increase in revenue from M&A advisory services and our solution services associated with fund raising.
Asset management and portfolio service fees
decreased from the year ended March 31, 2019 to the year ended March 31, 2020 in response to the decrease in assets under management.
Net gain on trading
increased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily driven by an increase in revenue from our Fixed Income business within our Wholesale Division.
Net gain on trading
also included total gains of ¥17.5 billion attributable to changes in Nomura’s own creditworthiness with respect to derivative liabilities primarily due to a widening of Nomura’s credit spreads particularly as a result of the
COVID-19
pandemic during the fiscal year.
Other
increased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to the realized gain of ¥73,293 million by the partial sale of Nomura’s investment in ordinary shares of Nomura Research Institute, Ltd.
Net interest revenue
is a function of the level and mix of total assets and liabilities, which includes trading assets and financing and lending transactions, and the level, term structure and volatility of interest rates.
Net interest revenue
is an integral component of trading activity. In assessing the profitability of our overall business and of our Global Markets business in particular, we view
Net interest revenue
and
Non-interest
revenues
in aggregate. For the year ended March 31, 2022, interest revenue, including a dividend from our investment in American Century Investments decreased by 20%, and interest expense increased by 7% from the year ended March 31, 2021. As a result,
Net
interest revenue
for the year ended March 31, 2022 decreased from the year ended March 31, 2021. For the year ended March 31, 2021, interest revenue, including a dividend from our investment in American Century Investments decreased by 55%, and interest expense decreased by 68% from the year ended March 31, 2020. As a result,
Net
interest revenue
for the year ended March 31, 2021 increased from the year ended March 31, 2020. For the year ended March 31, 2020, interest revenue, including dividends from our investment in American Century Investments increased by 2%, and interest expense decreased by 8% from the year ended March 31, 2019. As a result,
Net interest revenue
Non-interest
expenses
for the year ended March 31, 2020 increased2022 decreased from the year ended March 31, 2019.2021, primarily due to the credit losses related to the U.S. Prime Brokerage Event subsiding compared to previous fiscal year and the absence of an impairment loss
of ¥47.7 billion 
Gain (loss) on our equity method investments in equity securities
includes both realized and unrealized gains and losses on investments in equity securities held for operating purposes which are our investments in unaffiliated companies, which we hold on a long-term basis in order to promote existing and potential business relationships. Unrealized and realized gains were recognized on these investments during the year ended March 31, 2021 as a result of market appreciation during the year.Nomura Real Estate Holdings.
Non-interest
expenses
for the year ended March 31, 2021 increased from the year ended March 31, 2020, primarily due to provisions for credit losses of ¥41.6 billion recognized as a result of the U.S. Prime Brokerage Event and an impairment loss of ¥47.7 billion on our equity method investments in Nomura Real Estate Holdings.
Non-interest
expenses
for the year ended March 31, 2020 decreased from the year ended March 31, 2019, primarily due to the absence of the goodwill impairment charge of ¥81,372 million attributable to the Wholesale Division recognized in the prior fiscal year.
We are subject to a number of different taxes in Japan and have adopted the consolidated tax filing system permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax. Nomura’s domestic effective statutory tax rate was approximately 31% for the fiscal year ended March 31, 2019, 2020, 2021 and 2021,2022, respectively. Our foreign subsidiaries are subject to the income taxes of the countries in which they
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operate, which are generally lower than those in Japan. The Company’s effective statutory tax rate in any one year is therefore dependent on our geographic mix of profits and losses and also on the specific tax treatment applicable in each location.
Income tax expense
for the year ended March 31, 2022, represented an effective tax rate of 35.3%. The significant factors causing the difference between the effective tax rate of 35.3% and the effective statutory tax rate of 31% was the changes in deferred tax valuation allowances which increased the effective tax rate by 18.0% , partially offset by the effect of changes in foreign tax laws which decreased the effective tax rate by 14.4%.
Income tax expense
for the year ended March 31, 2021, represented an effective tax rate of 30.5%. The significant factors causing the difference between the effective tax rate of 30.5% and the effective statutory tax
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rate of 31% was the effect of the tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates which decreased the effective tax rate by 8.7%, partially offset by changes in deferred tax valuation allowances which increased the effective tax rate by 8.7%.
Income tax expense
for the year ended March 31, 2020, represented an effective tax rate of 11.6%. The significant factors causing the difference between the effective tax rate of 11.6% and the effective statutory tax rate of 31% was the effect of
non-taxable
income which decreased the effective tax rate by 23.5%, partially offset by
non-deductible
expenses which increased the effective tax rate by 2.9%.
Income tax expense
for the year ended March 31, 2019, represented an effective tax rate of a negative 151.2%. The significant factors causing the difference between the effective tax rate of a negative 151.2% and the effective statutory tax rate of 31% was the effect of
non-deductible
expenses which decreased the effective tax rate by 110.3%, partially offset by
non-taxable
income which increased the effective tax rate by 16.8%.
Results by Business Segment
OurOn April 1, 2021, the Investment Management Division was newly established and replaced the Asset Management Division and the Merchant Banking Division. Accordingly, our operating management and management reporting for the year ended March 31, 2021 isare prepared based on ourthe Retail, Assetthe Investment Management and the Wholesale divisions and wesegments. We disclose business segment information in accordance with this structure. Our Merchant Banking division is reported asstructure from the first quarter commencing on April 1, 2021.
Net gain (loss) related to economic hedging transactions, a part of our Other segment. On April 1, 2021, we created the Investment Management Division which mainly comprises our former Asset Management and Merchant Banking divisions.
Realizedrealized gain (loss) on investments in equity securities held for operating purposes, our share of equity in the earnings of affiliates, corporate items and other financial adjustments (including the operating results of our Merchant Banking division) are included as “Other” operating results outside of business segments in our segment information. A part of unrealized gain (loss) on certain investments in equity securities held for operating purposes is classified as a reconciling item outside of our segment information. The following segment information should be read in conjunction with Item 4.B “
Business Overview
” of this annual report and Note 2221 “
Segment and geographic information
” in our consolidated financial statements included in this annual report. The reconciliation of our segment results of operations and consolidated financial statements is provided in Note 2221 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Retail
Operating Results of Retail
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
   
2020
   
% Change from
previous year
 
2021
   
% Change from
previous year
   
2020
   
2021
   
% Change from
previous year
 
2022
   
% Change from
previous year
 
Non-interest
revenue
  ¥331,743   ¥329,983    (0.5)%  ¥366,271    11.0%   ¥329,983   ¥366,271    11.0%  ¥324,642    (11.4)% 
Net interest revenue
   7,737    6,376    (17.6)   2,538    (60.2)    6,376    2,538    (60.2)   3,343    31.7 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
   339,480    336,359    (0.9)   368,809    9.6    336,359    368,809    9.6   327,985    (11.1) 
Non-interest
expenses
   289,990    286,926    (1.1)   276,480    (3.6)    286,926    276,480    (3.6)   268,745    (2.8) 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Income before income taxes
  ¥49,490   ¥49,433    (0.1)%  ¥92,329    86.8%   ¥49,433   ¥92,329    86.8%  ¥59,240    (35.8)% 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
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Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022 primarily due to a decrease in commissions earned from brokerage commissions and the distribution of investment trusts.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to an increase in brokerage commissions.
Net revenue
Non-interest
expenses
decreased from the year ended March 31, 20192021 to the year ended March 31, 20202022 primarily due to a decrease in fees from investment banking services, partially offsetbonus expense driven by increased commissions from the distribution of investment trusts.a decrease in revenue.
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Non-interest
expenses
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to a decrease in occupancy expenses.
Non-interest
expenses
decreased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to a decrease in business development expenses including advertising costs.
The following table shows the breakdown of Retail
non-interest
revenues for the year ended March 31, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2020
   
2021
   
% Change from
previous year
   
2020
   
2021
   
% Change from
previous year
 
2022
   
% Change from

previous year
 
Commissions
  ¥153,170   ¥187,678    22.5%   ¥153,170   ¥187,678    22.5%  ¥138,525    (26.2)% 
Brokerage commissions
   61,207    92,589    51.3    61,207    92,589    51.3   67,419    (27.2) 
Commissions for distribution of investment trusts
   66,940    68,352    2.1    66,940    68,352    2.1   43,537    (36.3) 
Other commissions
   25,023    26,737    6.9    25,023    26,737    6.9   27,569    3.1 
Net gain on trading
   56,756    58,357    2.8    56,756    58,357    2.8   43,981    (24.6) 
Fees from investment banking
   23,239    20,354    (12.4)    23,239    20,354    (12.4)��  19,003    (6.6) 
Asset management fees
   92,139    88,996    (3.4)    92,139    88,996    (3.4)   109,300    22.8 
Others
   4,679    10,886    132.7    4,679    10,886    132.7   13,833    27.1 
  
 
   
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Non-interest
revenues
  ¥329,983   ¥366,271    11.0%   ¥329,983   ¥366,271    11.0%  ¥324,642    (11.4)% 
  
 
   
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Commissions
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to decrease in brokerage commissions received from equity and equity-related products and in commissions for distribution of investment trusts.
Net gain on trading
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to a decrease in income related to debt securities.
Commissions increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to increases in brokerage commissions received from equity and equity-related products.
Fees from investment banking
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to decreases in commissions related to debt securities offering.
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Retail Client Assets
The following table presents amounts and details regarding the composition of Retail client assets as of March 31, 20202021 and 2021.2022. Retail client assets consist of clients’ assets held in our custody and assets relating to variable annuity insurance products.
 
  
Trillions of yen
   
Trillions of yen
 
  
Year ended March 31, 2020
   
Year ended March 31, 2021
 
  
Balance at

beginning of year
   
Gross inflows
   
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
   
Balance at

beginning of year
   
Gross inflows
   
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
 
Equities
  ¥71.9   ¥12.4   ¥(13.4)  ¥(8.2)  ¥62.7   ¥62.7   ¥24.4   ¥(24.9)  ¥20.1  ¥82.3 
Debt securities
   18.8    29.3    (27.3)   (2.4)   18.4    18.4    12.3    (9.9)   (2.7)   18.1 
Stock investment trusts
   9.0    3.1    (3.2)   (1.3)   7.6    7.6    3.1    (3.0)   2.5   10.2 
Bond investment trusts
   6.8    0.9    (0.5)   0.1   7.3    7.3    1.4    (0.6)   (0.1)   8.0 
Overseas mutual funds
   1.1    0.1    (0.1)   (0.1)   1.0    1.0    0.2    (0.1)   (0.0)   1.1 
Others
   7.1    0.8    (1.0)   0.1   7.0    7.0    0.9    (0.7)   (0.3)   6.9 
  
 
   
 
   
 
  
 
  
 
   
 
   
 
   
 
  
 
  
 
 
Total
  ¥114.7   ¥46.6   ¥(45.5)  ¥(11.8)  ¥104.0   ¥104.0   ¥42.3   ¥(39.2)  ¥19.5  ¥126.6 
  
 
   
 
   
 
  
 
  
 
   
 
   
 
   
 
  
 
  
 
 
 
   
Trillions of yen
 
   
Year ended March 31, 2022
 
   
Balance at

beginning of year
   
Gross inflows
   
Gross outflows
  
Market

appreciation /

(depreciation)
  
Balance at

end of year
 
Equities
  ¥82.3   ¥19.5   ¥(19.8)  ¥(4.5)  ¥77.5 
Debt securities
   18.1    15.5    (13.3)   (2.6)   17.7 
Stock investment trusts
   10.2    2.4    (2.1)   0.3   10.8 
Bond investment trusts
   8.0    0.3    (0.6)   (0.2)   7.5 
Overseas mutual funds
   1.1    0.2    0.0   0.0   1.3 
Others
   6.9    1.1    (0.5)   (0.2)   7.3 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total
  ¥126.6   ¥39.0   ¥(36.3)  ¥(7.2)  ¥122.1 
   
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
59
Table of Contents
   
Trillions of yen
 
   
Year ended March 31, 2021
 
   
Balance at

beginning of year
   
Gross inflows
   
Gross outflows
  
Market

appreciation /

(depreciation)
  
Balance at

end of year
 
Equities
  ¥62.7   ¥24.4   ¥(24.9)  ¥20.1  ¥82.3 
Debt securities
   18.4    12.3    (9.9)     (2.7)   18.1 
Stock investment trusts
   7.6    3.1    (3.0)   2.5   10.2 
Bond investment trusts
   7.3    1.4    (0.6)   (0.1)   8.0 
Overseas mutual funds
   1.0    0.2    (0.1)   (0.0)   1.1 
Others
   7.0    0.9    (0.7)   (0.3)   6.9 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total
  ¥104.0   ¥42.3   ¥(39.2)  ¥19.5  ¥126.6 
  
 
 
   
 
 
   
 
 
  
 
 
  
 
 
 
Retail client assets decreased from March 31, 2021 to March 31, 2022. The balances of our clients’ equity and equity-related products increased from March 31, 2021 to ¥77.5 trillion as of March 31, 2022, mainly due to market depreciation during the year. The balances of our clients’ investment trusts increased by ¥0.3 trillion from ¥19.3 trillion as of March 31, 2021 to ¥19.6 trillion as of March 31, 2022.
Retail client assets increased from March 31, 2020 to March 31, 2021. The balances of our clients’ equity and equity-related products increased from March 31, 2020 to ¥82.3 trillion as of March 31, 2021, mainly due to market appreciation during the year. The balances of our clients’ investment trusts increased by ¥3.4 trillion from ¥15.9 trillion as of March 31, 2020 to ¥19.3 trillion as of March 31, 2021.
Retail client assets decreased from March 31, 2019 to March 31, 2020. The balances
60
Table of our clients’ equity and equity-related products decreased by ¥9.2 trillion from ¥71.9 trillion as of March 31, 2019 to ¥62.7 trillion as of March 31, 2020, mainly due to the disruptions in the Japanese equity market from February 2020 reflecting the effect of the
COVID-19
pandemic and increase of net outflows. The balances of our clients’ investment trusts decreased by ¥1.0 trillion from ¥16.9 trillion as of March 31, 2019 to ¥15.9 trillion as of March 31, 2020.Contents
Asset
Investment Management
Operating Results of AssetInvestment Management
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
   
2020
   
% Change from
previous year
 
2021
   
% Change from
previous year
   
2020
   
2021
   
% Change from
previous year
 
2022
   
% Change from
previous year
 
Non-interest
revenue
  ¥89,607   ¥85,190    (4.9)%  ¥126,874    48.9%   ¥101,130   ¥153,523    51.8%  ¥129,848    (15.4)% 
Net interest revenue
   8,238    7,415    (10.0)   7,900    6.5    6,807    9,627    41.4   18,145    88.5 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
   97,845    92,605    (5.4)   134,774    45.5    107,937    163,150    51.2   147,993    (9.3) 
Non-interest
expenses
   63,660    63,833    0.3   60,529    (5.2)    74,364    72,142    (3.0)   76,478    6.0 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Income before income taxes
  ¥34,185   ¥28,772    (15.8)%  ¥74,245    158.0%   ¥33,573   ¥91,008    171.1%  ¥71,515    (21.4)% 
  
 
   
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to decreasing in unrealized gains recognized in respect of our investment in American Century Investments.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to unrealized gains recognized in respect of our investment in American Century Investments.
Net revenue
Non-interest
expenses
decreasedincreased from the year ended March 31, 20192021 to the year ended March 31, 2020,2022, primarily due to unrealized losses recognizedan increases in respect of our investmentpersonnel expenses driven by an increase in American Century Investments and the decrease in asset management and portfolio service fees.business revenue.
Non-interest
expenses
decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to decreases in commission expenses related to fund management.
The breakdown of net revenue for Investment Management is as follows.
Non-interest
expenses
increased slightly from the year ended March 31, 2019
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
   
% Change from
previous year
  
2022
   
% Change from
previous year
 
Business revenue
(1)
  ¥121,495  ¥111,946    (7.9)%  ¥119,920    7.1% 
Investment gain/ loss
(2)
   (13,558)   51,204    
—
   28,073    (45.2) 
  
 
 
  
 
 
   
 
 
  
 
 
   
 
 
 
Net revenue
  ¥107,937  ¥163,150    51.2%  ¥147,993    (9.3)% 
Note: Prior period amounts have been reclassified to conform to the current year ended March 31, 2020.presentation.
(1)
Consists of division revenue, other than investment gain/loss, including revenue generated by our asset management business (excluding gains and losses related to our investment in American Century Investments), revenues generated by Nomura Babcock & Brown Co., Ltd.’s aircraft leasing-related businesses and management fee revenues generated from our private equity and other investment businesses
(2)
Consists of division revenue attributable to investments (including fair value fluctuations, funding cost and dividends), including gains and losses related to our investment in American Century Investments, our investments held in our private equity and other investment businesses and our investment in Mebuki Financial Group, Inc.
 
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The following table presents assets under management of each principal Nomura entity within the AssetInvestment Management Division as of March 31, 20202021 and 2021.2022.
 
 
Billions of yen
  
Billions of yen
 
 
Year ended March 31, 2020
  
Year ended March 31, 2021
 
 
Balance at

beginning of year
 
Gross inflows
 
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
  
Balance at

beginning of year
 
Gross inflows
 
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
 
Nomura Asset Management Co., Ltd .
 ¥53,371  ¥26,098  ¥(25,076)  ¥(3,745)  ¥50,648  ¥50,648  ¥28,675  ¥(27,705)  ¥14,540  ¥66,158 
Nomura Corporate Research and Asset Management Inc.
  3,011   568   (739)   (351)   2,489 
Nomura Corporate Research and Asset Management Inc. etc
  2,543   906   (927)   778   3,300 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Combined total
  56,382   26,666   (25,815)   (4,096)   53,137   53,191   29,581   (28,632)   15,318   69,458 
Shared across group companies
  (5,008)   (882)   1,501   577   (3,812)   (3,860)   (1,169)   1,431   (1,194)   (4,792) 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
  51,374   25,784   (24,314)   (3,519)   49,325  ¥49,331  ¥28,412  ¥(27,201)  ¥14,124  ¥64,666 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
Billions of yen
  
Billions of yen
 
 
Year ended March 31, 2021
  
Year ended March 31, 2022
 
 
Balance at

beginning of year
 
Gross inflows
 
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
  
Balance at

beginning of year
 
Gross inflows
 
Gross outflows
 
Market

appreciation /

(depreciation)
 
Balance at

end of year
 
Nomura Asset Management Co., Ltd .
 ¥50,648  ¥28,675  ¥(27,705)  ¥14,540  ¥66,158  ¥66,158  ¥26,883  ¥(25,549)  ¥2,100  ¥69,592 
Nomura Corporate Research and Asset Management Inc.
  2,489   871   (910)   771   3,221 
Nomura Corporate Research and Asset Management Inc. etc
  3,300   944   (690)   313   3,867 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Combined total
  53,137   29,546   (28,615)   15,311   69,379   69,458   27,827   (26,239)   2,413   73,459 
Shared across group companies
  (3,812)   (1,141)   1,414   (1,187)   (4,726)   (4,792)   (1,462)   1,163   (455)   (5,546) 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
  49,325   28,405   (27,201)   14,124   64,653  ¥64,666  ¥26,365  ¥(25,076)  ¥1,958  ¥67,913 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
In our investment trust business, assetAsset under management increased primary due to the market appreciationa continued inflow into equity funds such as ETFs during the year ended March 31, 2021.2022.
The following table presents NAM’s share, in terms of net asset value, of the Japanese publicly offered investment trusts market as of March 31, 2019, 2020, 2021 and 2021.2022.
 
  
March 31
   
March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Total of publicly offered investment trusts
   28%   28%   28%    28%   28%   27% 
Stock investment trusts
   26%   26%   26%    26%   26%   25% 
Bond investment trusts
   45%   44%   44%    44%   44%   44% 
(Source) Nomura’s own calculation based on data published by the Investment Trusts Association, Japan.
Investment trust assets included in assets under management by NAM were ¥47.9 trillion as of March 31, 2022, a ¥1.3 trillion, 3% increase from March 31, 2021. This increase is due to positive net inflows of ¥1.0 trillion and market appreciation of ¥0.3 trillion. The balances of certain investment trusts, such as TOPIX Exchange Traded Fund increased.
Investment trust assets included in assets under management by NAM were ¥46.6 trillion as of March 31, 2021, a ¥12.6 trillion, 37% increase from March 31, 2020. This increase is due to positive net inflows of ¥2.8 trillion and market appreciation of ¥9.8 trillion. The balances of certain investment trusts, such as TOPIX Exchange Traded Fund and NIKKEINikkei 225 Exchange Traded Fund increased.
Investment trust assets included in assets under management by NAM were ¥34.0 trillion as of March 31, 2020, a ¥1.6 trillion, 4% decrease from March 31, 2019. This decrease is due to positive net inflows of ¥1.4 trillion and market depreciation of ¥3.0 trillion. Despite the market depreciation, the balances of certain investment trusts, such as TOPIX Exchange Traded Fund increased.
 
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Wholesale
Operating Results of Wholesale
The operating results of our Wholesale Division comprise the combined results of our Global Markets and Investment Banking businesses. Our Global Markets business comprises our Fixed Income and Equities businesses.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
   
% Change from
previous year
 
2021
   
% Change from
previous year
   
2020
   
2021
   
% Change from
previous year
 
2022
   
% Change from
previous year
 
Non-interest
revenue
  ¥496,484  ¥506,203    2.0%  ¥524,019    3.5%   ¥506,203   ¥524,019    3.5%  ¥617,227    17.8% 
Net interest revenue
   58,904   142,416    141.8   167,337    17.5    142,416    167,337    17.5   85,828    (48.7) 
  
 
  
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
   555,388   648,619    16.8   691,356    6.6    648,619    691,356    6.6   703,055    1.7 
Non-interest
expenses
   666,787   556,399    (16.6)   627,051    12.7    556,399    627,051    12.7   628,563    0.2 
  
 
  
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Income (loss) before income taxes
  ¥(111,399)  ¥92,220    
—  
%  ¥64,305    (30.3)%   ¥92,220   ¥64,305    (30.3)%  ¥74,492    15.8% 
  
 
  
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
increased from the year ended March 31, 2021 to the year ended March 31, 2022. Fixed Income revenues in Global Markets decreased due to a slowdown from last year’s strong performance in macro products. Equities revenues in Global Markets increased primarily due to losses related to the U.S. Prime Brokerage Event recognized during the previous fiscal year. Investment Banking revenues increased primarily due to increases in advisory business deals during the year.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021 despite the significant losses recognized in respect of the U.S. Prime Brokerage Event.Event recognized during the year ended March 31, 2021. Fixed Income revenues in Global Markets increased year on year due to a strong performance in rates, credit and securitization products. Equities revenues in Global Markets decreased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to recognizing trading losses in respect of the U.S. Prime Brokerage Event. Investment Banking revenuerevenues increased from the year ended March 31, 2020 to the year ended March 31, 2021 primarily due to increases in M&A advisory and equity financing deals during the year.
Net revenue
Non-interest
expenses
slightly increased from the year ended March 31, 20192021 to the year ended March 31, 2020. Fixed Income revenues increased year on year2022, primarily due to strong performanceincreases in foreign currency and emerging market products, and Equities revenues also increased due to higher client activities in response
yen-denominated
expenses at overseas driven by the weaker yen, partially offset with credit losses related to the higher market volatilities. Income before income taxes for the year ended March 31, 2020 includes provisions for credit losses and negative fair value adjustments of approximately ¥35 billion primarily against lending activities dueU.S. Prime Brokerage Event subsiding compared to market dislocation in March caused by the
COVID-19
pandemic.previous fiscal year.
Non-interest
expenses
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to additional provisions for credit losses as a result of the U.S. Prime Brokerage Event.
Non-interest
expenses
decreased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to the goodwill impairment loss recognized in December 2018.
The following table presents a breakdown of net revenue for Wholesale for the year ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
   
% Change from
previous year
 
2021
   
% Change from
previous year
   
2020
   
2021
   
% Change from
previous year
 
2022
   
% Change from
previous year
 
Wholesale net revenue:
                 
Global Markets net revenue
  ¥453,044  ¥562,927      24.3%  ¥575,533    2.2%   ¥562,927   ¥575,533    2.2%  ¥556,417    (3.3)% 
Investment Banking net revenue
   102,344   85,692    (16.3)   115,823     35.2    85,692    115,823    35.2   146,638    26.6 
  
 
  
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
Net revenue
  ¥  555,388   ¥648,619    16.8%  ¥691,356    6.6%    ¥648,619   ¥691,356    6.6%  ¥703,055    1.7% 
  
 
  
 
   
 
  
 
   
 
   
 
   
 
   
 
  
 
   
 
 
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Table of Contents
Global Markets
We have a proven track record in sales and trading of debt securities, equity securities, and foreign exchange, as well as derivative products based on these financial instruments, mainly to domestic and overseas
63
Table of Contents
institutional investors. In response to the increasingly diverse and complex needs of our clients, we continue to enhance our trading and product origination capabilities to offer superior products not only to domestic and overseas institutional investors, but also to our Retail and AssetInvestment Management Divisions. This cross-divisional approach also extends to Investment Banking, where close collaboration leads to high value-adding solutions for our clients. These ties enable us to identify the types of product of interest for investors and develop and deliver products that meet their needs. We continue to develop extensive ties with institutional investors in Japan and international markets, as well as wealthy investors, public-sector agencies, and regional financial institutions in Japan, and government agencies, financial institutions, and corporations around the world.
Net
reve
nue
decreased from the year ended March 31, 2021 to the year ended March 31, 2022. In our Fixed Income businesses,
Net revenue
decreased from ¥441,893 million for the year ended March 31, 2021 to ¥326,918 million for the year ended March 31, 2022 primarily due to a slow from last year’s strong performance in macro products. In our Equities business,
Net revenue
increased from ¥133,640 million for the year ended March 31, 2021 to ¥229,499 million for the year ended March 31, 2022, primarily due to losses related to the U.S. Prime Brokerage Event subsiding compared to the previous fiscal year.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021. In our Fixed Income businesses,
Net revenue
increased from ¥337,480 million for the year ended March 31, 2020 to ¥441,893 million for the year ended March 31, 2021 primarily due to strong performance mainly in rates, credit and securitization products. In our Equities business,
Net revenue
decreased from ¥225,447 million for the year ended March 31, 2020 to ¥133,640 million for the year ended March 31, 2021, primarily due to recognizing a trading loss from the transactions withrelated to the U.S. client.
Net
reve
nue
increased from the year ended March 31, 2019 to the year ended March 31, 2020. In our Fixed Income businesses,
Net revenue
increased from ¥232,835 million for the year ended March 31, 2019 to ¥337,480 million for the year ended March 31, 2020 primarily due to strong performance mainly in foreign currency and emerging market products. In our Equities business,
Net revenue
increased from ¥220,209 million for the year ended March 31, 2019 to ¥225,447 million for the year ended March 31, 2020 due to higher client activities due to market volatilities.Prime Brokerage event.
Investment Banking
We provide a broad range of investment banking services, such as underwriting and advisory activities. We underwrite offerings of debt, equity and other financial instruments in major financial markets, such as Asia, Europe and the U.S. We have been enhancing our M&A and financial advisory expertise to secure more high-profile deals both across and within regions. We develop and forge solid relationships with clients on a long-term basis by providing extensive resources in a seamless fashion to facilitate bespoke solutions.
Net revenue
increased from the year ended March 31, 2021 to the year ended March 31, 2022, primarily due to increases in advisory business during the year.
Net revenue
increased from the year ended March 31, 2020 to the year ended March 31, 2021, primarily due to increases in M&A advisory and equity financing deals during the year.
Net revenue
decreased from the year ended March 31, 2019 to the year ended March 31, 2020, primarily due to market downturn from February 2020 resulting from the effect of the
COVID-19
pandemic.
Other Operating Results
Other operating results include net gain (loss) related to economic hedging transactions, a part of realized gaingain(loss) on investments in equity securities held for operating purposes, equity in earnings of affiliates, operating results of the Merchant Banking Division, corporate items, and other financial adjustments. See Note 2221 “
Segment and geographic information
” in our consolidated financial statements included within this annual report.
Income (loss) before income taxes
in Other operating results were ¥(2,773) million for the year ended March 31, 2019, ¥99,163¥94,362 million for the year ended March 31, 2020, and ¥(11,753)¥(28,516) million for the year ended March 31, 2021 and ¥15,753 million for the year ended March 31, 2022, primarily due to a gainrecognizing income of ¥71,075 million resultingapproximately ¥79.0 billion from the rights conversionsale of a part of its shares held in Nomura Research Institute, Ltd. and loss of approximately ¥62.0 billion related to legacy transactions in the Tokyo Nihonbashi district redevelopment projectU.S. from before the global financial crisis (2007 – 2008) that was recognized including legal expenses as well as certain transactions intended to mitigate future losses.
Other operating results for the year ended March 31, 2022 include the positive impact of our own creditworthiness on derivative liabilities which resulted in gains of ¥6,731 million and recognizing an impairment losslosses from changes in counterparty credit spreads of ¥47,661 million on¥1,249 million.
 
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Nomura’s equity method investments in Nomura Real Estate Holdings, Inc. which is one of our affiliated companies.
Other operating results for the year ended March 31, 2021 include the negative impact of our own creditworthiness on derivative liabilities which resulted in losses of ¥12,052 million and gains from changes in counterparty credit spreads of ¥11,988 million.
Other operating results for the year ended March 31, 2020 include the negative impact of our own creditworthiness on derivative liabilities which resulted in gains of ¥16,333 million and losses from changes in counterparty credit spreads of ¥12,056 million.
Other operating results for the year ended March 31, 2019 include the negative impact of our own creditworthiness on derivative liabilities which resulted in gains of ¥183 million and losses from changes in counterparty credit spreads of ¥725 million.
Summary of Regional Contribution
For a summary of our
net revenue, income (loss) before income taxes
and long-lived assets by geographic region, see Note 2221 “
Segment and geographic information
” in our consolidated financial statements included in this annual report.
Selected Financial Data
The following table presents selected financial information as of and for the years ended March 31, 2018, 2019, 2020, 2021 and 2022 which is derived from our consolidated financial statements.
   
Millions of yen, except per share data and percentages
 
   
Year ended March 31
 
   
2018
  
2019
  
2020
  
2021
  
2022
 
Statement of income data:
      
Revenue
  ¥1,972,158  ¥1,835,118  ¥1,952,482  ¥1,617,235  ¥1,593,999 
Interest expense
   475,189   718,348   664,653   215,363   230,109 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
   1,496,969   1,116,770   1,287,829   1,401,872   1,363,890 
Non-interest
expenses
   1,168,811   1,154,471   1,039,568   1,171,201   1,137,267 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
   328,158   (37,701)   248,261   230,671   226,623 
Income tax expense
   103,866   57,010   28,894   70,274   80,090 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss)
  ¥224,292  ¥(94,711)  ¥219,367  ¥160,397  ¥146,533 
Less: Net income attributable to noncontrolling interests
   4,949   5,731   2,369   7,281   3,537 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss) attributable to NHI shareholders
  ¥219,343  ¥(100,442)  ¥216,998  ¥153,116  ¥142,996 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance sheet data (period end):
      
Total assets
  ¥40,343,947  ¥40,969,439  ¥43,999,815  ¥42,516,480  ¥43,412,156 
Total NHI shareholders’ equity
   2,749,320   2,631,061   2,653,467   2,694,938   2,914,605 
Total equity
   2,799,824   2,680,793   2,731,264   2,756,451   2,972,803 
Common stock
   594,493   594,493   594,493   594,493   594,493 
Per share data:
      
Net income (loss) attributable to NHI shareholders—basic
  ¥63.13  ¥(29.90)  ¥67.76  ¥50.11  ¥46.68 
Net income (loss) attributable to NHI shareholders—diluted
   61.88   (29.92)   66.20   48.63   45.23 
Total NHI shareholders’ equity
(1)
   810.31   794.69   873.26   879.79   965.80 
Cash dividends
(1)
   20.00   6.00   20.00   35.00   22.00 
Cash dividends in USD
(2)
  $0.19  $0.05  $0.19  $0.32  $0.18 
Weighted average number of shares outstanding (in thousands)
(3)
   3,474,593   3,359,565   3,202,370   3,055,526   3,063,524 
Return on equity
(4)
:
   7.9%   (3.7%)   8.2%   5.7%   5.1% 
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(1)
Calculated using the number of shares outstanding at year end.
(2)
Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
(3)
The number shown is used to calculate basic earnings per share.
(4)
Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity.
Regulatory Capital Requirements
Many of our business activities are subject to statutory capital requirements, including those of Japan, the U.S., the U.K. and certain other countries in which we operate. For further discussion on statutory capital requirements, see Note 1918 “
Regulatory requirements
” in our consolidated financial statements included in this annual report.
Translation Exposure
A significant portion of our business is conducted in currencies other than Japanese Yen—most significantly, U.S. Dollars, British pounds and Euros. We prepare financial statements of each of our consolidated subsidiaries in its functional currency, which is the currency of the primary economic environment in which the entity operates. Translation exposure is the risk arising from the effect of fluctuations in exchange rates on the net assets of our foreign subsidiaries. Translation exposure is not recognized in our consolidated statements of income unless and until we dispose of, or liquidate, the relevant foreign subsidiary.
Critical Accounting Policies and Estimates
Critical accounting policies are the accounting policies which have the most significant impact on the preparation of our consolidated financial statements included within this annual report and which require the most difficult, subjective and complex judgments by management to develop estimates used in the application of these policies. Such estimates determined by management include estimates regarding the fair value of financial instruments and the outcome of litigation and other
non-financial
assets and other matters that affect the reported amounts of assets and liabilities as well as the disclosures in the consolidated financial statements. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of available information. Actual results in future periods may differ from current estimates, which could have a material impact on the consolidated financial statements.
The following table summarizes the critical accounting policies within our consolidated financial statements which have had the most significant impact on our financial condition and financial performance during the year ended March 31, 2021. For each such critical accounting policy, the following table also identifies the critical
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accounting estimates inherent within application of those policies, the nature of the estimates, the underlying assumptions made by management during the year to derive those estimates and the financial impact of if we had used different estimates or assumptions during the year. Similar to the year ended March 31, 2020, we also summarize if/how the
COVID-19
pandemic has impacted application of these critical accounting policies during the year. See Note 1
“Summary of Accounting Policies”
in our consolidated financial statements included in this annual report for more information on the critical accounting policies we apply for all of these areas and the relevant additional footnotes referred to in the table for more information around how these critical accounting policies and critical accounting estimates have been applied.
Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2021 (including impact of COVID-19)
Fair value of financial instruments
Note 2
“Fair value measurements”
Estimating fair value for financial instruments
A significant portion of our financial instruments is carried at fair value. The fair value of these financial instruments are not only measured at quoted price but by other factors including valuation models and assumptions with judgement.
Election of appropriate valuation techniques
•  For financial instruments measured at fair value where quoted prices are available in active markets, Nomura generally uses the prices as level 1 inputs for determining the fair value of these financial instruments.
•  For financial instruments where such quoted prices are not available, fair value of the financial instruments are measured by level 2 or level 3 input. Significant judgment is involved in selection of appropriate valuation techniques and validation of assumptions applied in models because the fair value measured could be varied by the selection of those models and assumptions. When selecting valuation techniques, various factors such as the particular circumstances where these financial instruments are traded, availability of reliable inputs, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs are considered.
See Note 2
“Fair value measurements”
in our consolidated financial statements included in this annual report for Valuation methodology including active/ inactive principal market, as well as our policy in fair value hierarchy.
Although we have observed recovery in the financial markets, effects of the ongoing COVID-19 pandemic may still have adverse impact on price transparency of for certain financial instruments
Balance of financial instrument with level 3 hierarchy (assets net of derivative liabilities) during the year decreased from ¥722 billion to ¥566 billion. Level 3 financial assets as a proportion of total financial assets carried at fair value on a recurring basis was 5% as of March 31, 2021 (5% as of March 31, 2020.)
See Note 2,
“Fair Value of Financial Instruments”
for further quantitative and qualitative information regarding level 3 inputs, including how increases in those inputs would affect the fair value of the underlying financial instrument.
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2021 (including impact of COVID-19)
Significance of level 3 inputs
•  Fair value measurement is more judgmental in respect of level 3 financial instruments, which are valued based on significant non-market based unobservable inputs
Litigation provisions
Note 21
“Commitments, contingencies and guarantees”
Determination of whether a loss is probable and measurement of provisions and reasonably possible loss
In the normal course of business, Nomura is involved in investigations, lawsuits and other legal proceedings and, as a result, may suffer loss from any penalties or settlements Nomura chooses to make to resolve the matter could be significant to Nomura’s results of operation.
Determination if a loss is probable
•  Recognition of litigation provisions are only required if a loss is probable and can be reasonably estimated.
•  Significant judgment required in deciding whether loss from litigation, investigations, claims or other actions is probable or just reasonably possible.
•  Such judgment usually involves consideration of external legal counsel opinion, our own historical experiences in court and similar matters, the progress of regulatory investigation or litigation proceedings and management or our counterparty’s appetite to settle the matter.
•  If a loss is only considered to be reasonably possible, no provision is required.
Measurement of a probable / reasonably possible loss
•  Once a loss has been determined as being probable of occurring, a provision is recognized when a loss is probable and the amount of such loss or range of loss can be reasonably estimated.
See Note 21 “
Commitments, contingencies and guarantees
” in our consolidated financial statements included in this annual report for details of the various legal matters Nomura is currently involved with, including those where provisions have been recognized or where loss is only considered reasonably possible.
While
COVID-19
continues to delay the potential resolution of certain litigation matters, no direct significant impact on litigation provisions as of March 31, 2021 and reasonably possible loss disclosed.
If we concluded as of June 25, 2021 that for those cases where an estimate of the range of reasonably possible losses can be made, such loss was actually now probable, we would recognize additional legal provisions through earnings of ¥48 billion. However this does not include the impact of probable losses where we cannot reasonably estimate the loss. See Note.21.
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2021 (including impact of COVID-19)
•  Where a loss is not probable but reasonably possible and an estimate of the range of reasonably possible losses can be made based on current information available as of the date of its consolidated financial statements, the reasonably possible maximum loss in excess of amounts recognized as a liability is disclosed.
•  This determination is often inherently difficult due to the uncertainties, especially for legal claims or regulatory review that are indeterminate or still at an early stage.
•  Similarly for other matters, there could be a wide range of possible outcomes.
•  For certain exceptional matters, given the inherent complexities where we believe a loss is probable or reasonably possible, we may be unable to reasonably estimate the loss and therefore we are unable to recognize a provision or disclose the reasonably possible maximum loss in excess of amounts recognized as a liability for the matter. In these situations, we disclose this fact.
Level 3 financial assets as a proportion of total financial assets, carried at fair value on a recurring basis were 5% as of March 31, 2021 (5% as of March 31, 2020) as listed below:
   
Billions of yen
 
   
March 31, 2021
 
   
Level 1
   
Level 2
   
Level 3
   
Counterparty

and Cash
Collateral

Netting
  
Total
 
Financial assets measured at fair value (Excluding derivative assets)
  ¥7,862   ¥8,446   ¥673   ¥—    ¥16,981 
Derivative assets
   43    15,801    162    (14,786)   1,220 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Total
  ¥7,905   ¥24,247   ¥835   ¥(14,786)  ¥18,201 
  
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
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See Note 2 “
Fair value measurements
” in our consolidated financial statements included in this annual report.
Derivative contracts
We use a variety of derivative financial instruments including futures, forwards, swaps and options, for trading and
non-trading
purposes. All derivatives are carried at fair value, with changes in fair value recognized either through the consolidated statements of income or the consolidated statements of comprehensive income depending on the purpose for which the derivatives are used.
Derivative assets and liabilities with the same counterparty documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
“
Balance Sheet—Offsetting
” and ASC 815 “
Derivatives and Hedging
” are met. These criteria include requirements around the legal enforceability of such
close-out
and offset rights under the master netting agreement. In addition, fair value amounts recognized for the right to reclaim cash collateral (a receivable) and the obligation to return cash collateral (a payable) are also offset against net derivative liabilities and net derivative assets, respectively, where certain additional criteria are met.
Derivative contracts consist of listed derivatives and OTC derivatives. The fair value of listed derivatives are determined based on quoted market prices or valuation models. OTC derivatives are valued using valuation models. Listed derivative and OTC derivative assets and liabilities after netting are shown below:
   
Billions of yen
 
   
March 31, 2020
 
   
Assets
   
Liabilities
 
Listed derivatives
  ¥559   ¥716 
OTC derivatives
   1,383    1,093 
  
 
 
   
 
 
 
  ¥1,942   ¥1,809 
  
 
 
   
 
 
 
   
Billions of yen
 
   
March 31, 2021
 
   
Assets
   
Liabilities
 
Listed derivatives
  ¥179   ¥543 
OTC derivatives
   1,041    952 
  
 
 
   
 
 
 
  ¥1,220   ¥1,495 
  
 
 
   
 
 
 
The following table presents the fair value of OTC derivative assets and liabilities as of March 31, 2021 by remaining contractual maturity.
   
Billions of yen
 
   
March 31, 2021
 
   
Years to Maturity
   
            
  
            
 
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
5 to 7

years
   
More than

7 years
   
Cross-maturity

netting
(1)
  
Total

fair value
 
OTC derivative assets
  ¥1,572   ¥1,138   ¥803   ¥488   ¥2,699   ¥(5,659)  ¥1,041 
OTC derivative liabilities
   1,769    1,095    775    566    2,172    (5,425)   952 
(1)
Represents the impact of netting derivative assets with derivative liabilities for the same counterparty across maturity band categories. Derivative assets and derivative liabilities with the same counterparty in the same maturity category are netted within the maturity category. This column also includes cash collateral netting with the same counterparty.
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The fair value of derivative contracts includes adjustments for credit risk, both with regards to counterparty credit risk on positions held and our own creditworthiness on positions issued. We realize gains or losses relating to changes in credit risk on our derivative contracts together with the movements of trading positions, which include derivatives that are expected to mitigate the above mentioned impact of changes in credit risk.
Assets and Liabilities Associated with Investment and Financial Services Business
Exposure to Certain Financial Instruments and Counterparties
Market conditions continue to impact numerous products to which we have certain exposures. We also have exposures to Special Purpose Entities (“SPEs”) and others in the normal course of business.
Leveraged Finance
We provide loans to clients in connection with leveraged
buy-outs
and leveraged
buy-ins.
As this type of financing is usually initially provided through a commitment, we have both funded and unfunded exposures on these transactions.
The following table sets forth our exposure to leveraged finance with unfunded commitments, presenting funded and unfunded portions by geographic location of the target company as of March 31, 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31, 2021
   
March 31, 2022
 
  
Funded
   
Unfunded
   
Total
   
Funded
   
Unfunded
   
Total
 
Europe
  ¥3,454   ¥80,888   ¥84,342   ¥6,361   ¥69,040   ¥75,401 
Americas
   8,322    94,058    102,380    17,370    106,915    124,285 
Asia and Oceania
   16,171    11,388    27,559    10,448    27,289    37,737 
  
 
   
 
   
 
   
 
   
 
   
 
 
Total
  ¥27,947   ¥186,334   ¥214,281   ¥34,179   ¥203,244   ¥237,423 
  
 
   
 
   
 
   
 
   
 
   
 
 
Special Purpose Entities (“SPEs”)
Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of involvement with SPEs include guarantee agreements and derivative contracts.
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For further discussion on Nomura’s involvement with variable interest entities, see Note 6 “
Securitizations and Variable Interest Entities
” in our consolidated financial statements included in this annual report.
Accounting Developments
See Note 1“
Summary of accounting policies: New accounting pronouncements adopted during the current year
” in our consolidated financial statements included in this annual report.
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Deferred Tax Assets
Details of deferred tax assets and liabilities
The following table presents details of deferred tax assets and liabilities reported within
Other assets—assets
—
Other and Other liabilities
, respectively, in the consolidated balance sheets as of March 31, 2021.2022.
 
   
Millions of yen
 
   
March 31, 20212022
 
Deferred tax assets
  
Depreciation, amortization and valuation of fixed assets
  ¥22,77030,441 
Investments in subsidiaries and affiliates
   20,22021,390 
Valuation of financial instruments
   73,905102,021 
Accrued pension and severance costs
   19,94720,492 
Other accrued expenses and provisions
   60,28079,061 
Operating losses
   353,326370,481 
Lease liabilities
   52,25149,060 
Other
   15,01115,425 
  
 
 
 
Gross deferred tax assets
   617,710688,371 
Less
—
Valuation allowances
   (428,014466,145) 
  
 
 
 
Total deferred tax assets
   189,696222,226 
  
 
 
 
Deferred tax liabilities
  
Investments in subsidiaries and affiliates
   85,63691,040 
Valuation of financial instruments
   40,80785,301 
Undistributed earnings of foreign subsidiaries
   2,4862,745 
Valuation of fixed assets
   23,52123,962 
Right-of-use
assets
   51,67148,519 
Other
   5,5467,044 
  
 
 
 
Total deferred tax liabilities
   209,667258,611 
  
 
 
 
Net deferred tax assets (liabilities)
  ¥(19,97136,385) 
  
 
 
 
Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to us, which are not deemed more likely than not to be realized.
B. Liquidity and Capital Resources.
Funding and Liquidity Management
Overview
We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s
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creditworthiness or deterioration in market conditions. This risk could arise from Nomura-specific or market-wide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit ratings, a failure to manage unplanned changes in funding requirements, a failure to liquidate assets quickly and with minimal loss in value, or changes in regulatory capital restrictions which may prevent the free flow of funds between different group entities. Our global liquidity risk management policy is based on liquidity risk appetite formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under market-wide stress and in addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all
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funding requirements and unsecured debt obligations across one year and
30-day
periods, respectively, without raising funds through unsecured funding or through the liquidation of assets. We are required to meet regulatory notice on the liquidity coverage ratio issued by the FSA.
We have in place a number of liquidity risk management frameworks that enable us to achieve our primary liquidity objective. These frameworks include (1) Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio; (3) Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets; (4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and (6) Contingency Funding Plan.
Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial Officer (“CFO”) has the operational authority and responsibility over our liquidity management based on decisions made by the EMB.
1.    Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio.
We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes. As for the usage of funds, the CFO decides the maximum amount of available funds, provided without posting any collateral, for allocation within Nomura and the EMB allocates the funds to each business division. Global Treasury monitors usage by businesses and reports to the EMB.
In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities by regulated broker-dealers or banking entities within the Nomura Group and seek to raise unsecured funding primarily through the Company or through unregulated subsidiaries. The primary benefits of this strategy include cost minimization, wider investor name recognition and greater flexibility in providing funding to various subsidiaries across the Nomura Group.
To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury apart from other assets, in the form of cash and highly liquid, unencumbered securities that may be sold or pledged to provide liquidity. As of March 31, 2021,2022, our liquidity portfolio was ¥5,658.3¥7,074.2 billion which sufficiently met liquidity requirements under the stress scenarios.
The following table presents a breakdown of our liquidity portfolio by type of financial assets as of March 31, 20202021 and 20212022 and averages maintained for the years ended March 31, 20202021 and 2021.2022. Yearly averages are calculated using
month-end
amounts.
 
  
Billions of yen
   
Billions of yen
 
  
Average for

year ended

March 31, 2020
   
March 31,

2020
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Cash, cash equivalents and time deposits
(1)
  ¥2,323.6   ¥2,540.4   ¥2,775.9   ¥2,765.0   ¥2,775.9   ¥2,765.0   ¥3,151.6   ¥2,997.5 
Government debt securities
   2,371.5    2,412.2    3,082.8    2,641.2    3,082.8    2,641.2    3,629.8    3,674.2 
Others
(2)
   310.6    401.8    254.0    252.1    254.0    252.1    298.3    402.5 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
Total liquidity portfolio
  ¥5,005.7   ¥5,354.4   ¥6,112.7   ¥5,658.3   ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
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(1)
Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks and market counterparties that are readily available to support the liquidity position of Nomura.
(2)
Others include other liquid financial assets such as money market funds and U.S. agency securities.
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The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 20202021 and 20212022 and averages maintained for the years ended March 31, 20202021 and 2021.2022. Yearly averages are calculated using
month-end
amounts.
 
  
Billions of yen
   
Billions of yen
 
  
Average for

year ended

March 31, 2020
   
March 31,

2020
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Japanese Yen
  ¥1,500.6   ¥1,341.9   ¥2,298.1   ¥966.5   ��2,298.1   ¥966.5   ¥1,913.7   ¥1,409.8 
U.S. Dollar
   2,219.9    2,732.5    2,441.2    3,367.1    2,441.2    3,367.1    3,567.3    3,924.1 
Euro
   818.4    789.5    795.1    793.5    795.1    793.5    792.3    868.5 
British Pound
   310.5    315.5    405.4    333.8    405.4    333.8    578.3    597.5 
Others
(1)
   156.3    175.0    172.9    197.5    172.9    197.5    228.1    274.3 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
Total liquidity portfolio
  ¥5,005.7   ¥5,354.4   ¥6,112.7   ¥5,658.3   ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
(1)
Includes other currencies such as the Australian dollar, the Canadian dollar and the Swiss franc.
We assess our liquidity portfolio requirements globally as well as by each major operating entity in the Nomura Group. We primarily maintain our liquidity portfolio at Nomura Holdings, Inc. (“NHI”) and Nomura Securities Co. Ltd. (“NSC”), our other major broker-dealer subsidiaries, our bank subsidiaries, and other group entities. In determining the amounts and entities which hold this liquidity portfolio, we consider legal, regulatory and tax restrictions which may impact our ability to freely transfer liquidity across different entities in the Nomura Group. For more information regarding regulatory restrictions, see Note 1918 “
Regulatory requirements
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 20202021 and 2021.2022.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
NHI and NSC
(1)
  ¥1,382.9   ¥981.8   ¥981.8   ¥1,395.4 
Major broker-dealer subsidiaries
   2,645.8    2,632.6    2,632.6    3,118.5 
Bank subsidiaries
(2)
   775.8    752.6    752.6    1,008.5 
Other affiliates
   549.9    1,291.3    1,291.3    1,551.8 
  
 
   
 
   
 
   
 
 
Total liquidity portfolio
  ¥5,354.4   ¥5,658.3   ¥5,658.3   ¥7,074.2 
  
 
   
 
   
 
   
 
 
 
(1)
NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has direct access to the BOJ Lombard facility through which same day funding is available for our securities pool. Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound immediately when needed.
(2)
Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank Luxembourg S.A.
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2.    Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.
In addition to our liquidity portfolio, we had ¥2,771.6¥2,665.7 billion of other unencumbered assets comprising mainly of unpledged trading assets that can be used as an additional source of secured funding. Global Treasury monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding plan has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio and other unencumbered assets as of March 31, 20212022 was ¥8,429.9¥9,739.9 billion, which represented 332.2
287.8%%
of our total unsecured debt maturing within one year.
 
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Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
Net liquidity value of other unencumbered assets
  ¥2,573.6   ¥2,771.6   ¥2,771.6   ¥2,665.7 
Liquidity portfolio
   5,354.4    5,658.3    5,658.3    7,074.2 
  
 
   
 
   
 
   
 
 
Total
  ¥7,928.0   ¥8,429.9   ¥8,429.9   ¥9,739.9 
  
 
   
 
   
 
   
 
 
3.    Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets
We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of our assets. We also seek to achieve diversification of our funding by market, instrument type, investors, currency, and staggered maturities in order to reduce unsecured refinancing risk.
We diversify funding by issuing various types of debt instruments—these include both structured loans and structured notes with returns linked to interest rates, currencies, equities, commodities, or related indices. We issue structured loans and structured notes in order to increase the diversity of our debt instruments. We typically hedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent to our unsecured long-term debt. The proportion of our
non-Japanese
Yen denominated long-term debt increased to 47.2%51.4% of total long-term debt outstanding as of March 31, 20212022 from 46.1%47.2% as of March 31, 2020.2021.
3.1    Short-Term Unsecured Debt
Our short-term unsecured debt consists of short-term bank borrowings (including long-term bank borrowings maturing within one year), other loans, commercial paper, deposit at banking entities, certificates of deposit and debt securities maturing within one year. Deposits at banking entities and certificates of deposit comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term unsecured debt includes the current portion of long-term unsecured debt.
The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 20202021 and 2021.2022.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
Short-term bank borrowings
  ¥572.1   ¥265.8   ¥265.8   ¥148.0 
Other loans
   154.3    138.7    138.7    228.1 
Commercial paper
   525.1    460.0    460.0    131.9 
Deposits at banking entities
   1,116.2    1,149.9    1,149.9    1,520.7 
Certificates of deposit
   12.1    83.6    83.6    127.8 
Debt securities maturing within one year
   692.5    831.5    831.5    775.6 
  
 
   
 
   
 
   
 
 
Total short-term unsecured debt
  ¥3,072.3   ¥2,929.5   ¥2,929.5   ¥2,932.1 
  
 
   
 
   
 
   
 
 
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3.2    Long-Term Unsecured Debt
We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate maturity profile by routinely funding through long-term debt and diversifying across various maturities and currencies.
Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelf offerings and our U.S. registered medium-term note programs, our Euro medium-term note programs, registered shelf offerings in Japan and various other debt programs.
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As a globally competitive financial services group in Japan, we have access to multiple global markets and major funding centers. The Company, NSC, Nomura Europe Finance N.V., NBI, Nomura International Funding Pte. Ltd. and Nomura Global Finance Co., LTD. are the main group entities that borrow externally, issue debt instruments and engage in other funding activities. By raising funds to match the currencies and liquidities of our assets or by using foreign exchange swaps as necessary, we pursue optimization of our funding structures.
We use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor types. Our unsecured senior debt is mostly issued without financial covenants, such as covenants related to adverse changes in our credit ratings, cash flows, results of operations or financial ratios, which could trigger an increase in our cost of financing or accelerate repayment of the debt.
The following table presents an analysis of our long-term unsecured debt by type of financial liability as of March 31, 20202021 and 2021.2022.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
Long-term deposits at banking entities
  ¥147.9   ¥109.0   ¥109.0   ¥112.3 
Long-term bank borrowings
   2,591.5    2,635.2    2,635.2    2,820.5 
Other loans
   82.5    74.2    74.2    219.5 
Debt securities
(1)
   3,522.1    3,877.9    3,877.9    4,745.8 
  
 
   
 
   
 
   
 
 
Total long-term unsecured debt
  ¥6,344.0   ¥6,696.3   ¥6,696.3   ¥7,898.1 
  
 
   
 
   
 
   
 
 
 
(1)
Excludes long-term debt securities issued by consolidated special purpose entities and similar entities that meet the definition of variable interest entities under ASC 810 “
Consolidation
” and secured financing transactions recognized within
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860 “
Transfer and Servicing.
”
3.3    Maturity Profile
We also seek to maintain an average maturity for our plain vanilla debt securities and borrowings greater than or equal to three years. The average maturity for our plain vanilla debt securities and borrowings with maturities longer than one year was 4.74.4 years as of March 31, 2021.2022. A significant amount of our structured loans and structured notes are linked to interest rates, currencies, equities, commodities, or related indices. These maturities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility that these may be called prior to their scheduled maturity date, maturities are based on our internal stress option adjusted model. The model values the embedded optionality under stress market conditions in order to determine when the debt securities or borrowing is likely to be called. The graph below shows the distribution of maturities of our outstanding long-term debt securities and borrowings by the model.
On this basis, the average maturity of our structured loans and structured notes with maturities longer than one year was 8.110.1 years as of March 31, 2021.2022. The average maturity of our entire long-term debt with maturities longer than one year including plain vanilla debt securities and borrowings, was 6.57.2 years as of March 31, 2021.2022.
 
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3.4    Secured Funding
We typically fund our trading activities through secured borrowings, repurchase agreements and Japanese “Gensaki Repo” transactions. We believe such funding activities in the secured markets are more cost-efficient and less credit-rating sensitive than financing in the unsecured market. Our secured funding capabilities depend on the quality of the underlying collateral and market conditions. While we have shorter term secured financing for highly liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risks of secured funding by transacting with a diverse group of global counterparties and delivering various types of securities collateral. In addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured funding maturing in the short term for less liquid assets. For more detail of secured borrowings and repurchase agreements, see Note 5 “
Collateralized transactions
” in our consolidated financial statements.
4.    Management of Credit Lines to Nomura Group Entities
We maintain and expand credit lines to Nomura Group entities from other financial institutions to secure stable funding. We ensure that the maturity dates of borrowing agreements are distributed evenly throughout the year in order to prevent excessive maturities in any given period.
5.    Implementation of Liquidity Stress Tests
We maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model which simulates changes in cash outflow under specified stress scenarios to comply with our above mentioned liquidity management policy.
We assess the liquidity requirements of the Nomura Group under various stress scenarios with differing levels of severity over multiple time horizons. We evaluate these requirements under Nomura-specific and broad market-wide events, including potential credit rating downgrades at the Company and subsidiary levels. We call this risk analysis our Maximum Cumulative Outflow (“MCO”) framework.
 
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The MCO framework is designed to incorporate the primary liquidity risks for Nomura and models the relevant future cash flows in the following two primary scenarios:
 
Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured financing or through the liquidation of assets for a year; and
 
Acute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event coupled with credit concerns regarding Nomura’s liquidity position, without raising funds through unsecured funding or through the liquidation of assets for 30 days.
We assume that Nomura will not be able to liquidate assets or adjust its business model during the time horizons used in each of these scenarios. The MCO framework therefore defines the amount of liquidity required to be held in order to meet our expected liquidity needs in a stress event to a level we believe appropriate based on our liquidity risk appetite.
As of March 31, 2021,2022, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above.
We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate the impact of stress scenarios includes the following assumptions:
 
No liquidation of assets;
 
No ability to issue additional unsecured funding;
 
Upcoming maturities of unsecured debt (maturities less than one year);
 
Potential buybacks of our outstanding debt;
 
Loss of secured funding lines particularly for less liquid assets;
 
Fluctuation of funding needs under normal business circumstances;
 
Cash deposits and free collateral
roll-off
in a stress event;
 
Widening of haircuts on outstanding repo funding;
 
Additional collateralization requirements of clearing banks and depositories;
 
Drawdown on loan commitments;
 
Loss of liquidity from market losses;
 
Assuming a
two-notch
downgrade of our credit ratings, the aggregate fair value of assets that we would be required to post as additional collateral in connection with our derivative contracts; and
 
Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group.
6.    Contingency Funding Plan
We have developed a detailed contingency funding plan to integrate liquidity risk control into our comprehensive risk management strategy and to enhance the quantitative aspects of our liquidity risk control procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an approach for analyzing and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomura-specific and market-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP lists details of key internal and external parties to be contacted and the processes by which information is to be disseminated. This has been developed at a legal entity level in order to capture specific cash requirements at the local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiary
 
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level due to regulatory, legal or tax constraints. We periodically test the effectiveness of our funding plans for different Nomura-specific and market-wide events. We also have access to central banks including, but not exclusively, the BOJ, which provide financing against various types of securities. These operations are accessed in the normal course of business and are an important tool in mitigating contingent risk from market disruptions.
Liquidity Regulatory Framework
In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management and Supervision”. To complement these principles, the Committee has further strengthened its liquidity framework by developing two minimum standards for funding liquidity. These standards have been developed to achieve two separate but complementary objectives.
The first objective is to promote short-term resilience of a financial institution’s liquidity risk profile by ensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting for 30 days. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve this objective.
The second objective is to promote resilience over a longer time horizon by creating additional incentives for financial institutions to fund their activities with more stable sources of funding on an ongoing basis. The Net Stable Funding Ratio (“NSFR”) has a time horizon of one year and has been developed to provide a sustainable maturity structure of assets and liabilities.
These two standards are comprised mainly of specific parameters which are internationally “harmonized” with prescribed values. Certain parameters, however, contain elements of national discretion to reflect jurisdiction-specific conditions.
In Japan, the regulatory notice on the LCR, based on the international agreement issued by the Basel Committee with necessary national revisions, was published by Financial Services Agency (on October 31, 2014). The notices have been implemented since the end of March 2015 with
phased-in
minimum standards. Average of Nomura’s LCRs for the three months ended March 31, 20212022 was 192.4%241.7%, and Nomura was compliant with requirements of the above notices. As for the NSFR, the revision of the liquidity regulatory notice was published by Financial Services Agency (on March 31, 2021) and NSFR will beit has been implemented from the end of September 2021. Nomura’s NSFR as of March 31, 2022 was compliant with the regulatory requirements.
Cash Flows
Nomura’s cash flows are primarily generated from operating activities undertaken in connection with our client flows and trading and from financing activities which are closely related to such activities. As a financial institution, growth in operations tends to result in cash outflows from operating activities as well as investing activities. For the year ended March 2020, we recorded net cash outflows from operating activities and net cash inflow from investing and financing activities. For the year ended March 2021, we recorded net cash inflows from operating activities and net cash outflow from investing and financing activities. For the year ended March 2022, we recorded net cash outflows from operating activities and investing activities and net cash inflow from financing activities as discussed in the comparative analysis below.
 
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The following table presents the summary information on our consolidated cash flows for the years ended March 31, 20202021 and 2021.2022.
 
  
Billions of yen
   
Billions of yen
 
  
Year Ended March 31
   
Year Ended March 31
 
  
2020
 
2021
   
2021
 
2022
 
Net cash provided by (used in) operating activities
  ¥(15.9)  ¥665.8   ¥665.8  ¥(1,368.7) 
Net income
   219.4   160.4    160.4   146.5 
Trading assets and private equity and debt investments
   (2,754.7)   1,468.4    1,468.4   1,254.3 
Trading liabilities
   429.0   777.7    777.7   (284.7) 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
   2,224.4   (1,453.9)    (1,453.9)   (2,220.5) 
Securities borrowed, net of securities loaned
   291.8   (1,242.5)    (1,242.5)   595.1 
Other, net
   (425.7)   955.7    955.7   (859.4) 
Cash flows from investing activities:
   216.3   (139.0)    (139.0)   (45.3) 
Cash flows from financing activities:
   332.1   (269.9)    (269.9)   1,070.7 
Long-term borrowings, net
   (38.4)   (1.0)    (1.0)   1,225.0 
Increase in short-term borrowings, net
   656.2   (325.2) 
Increase (decrease) in deposits received at banks, net
   (93.3)   126.2 
Decrease in short-term borrowings, net
   (325.2)   (475.5) 
Increase in deposits received at banks, net
   126.2   448.1 
Other, net
   (192.5)   (69.9)    (69.9)   (126.9) 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   (27.3)   60.8    60.8   149.7 
  
 
  
 
   
 
  
 
 
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
   505.2   317.7    317.7   (193.6) 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year
   2,687.1   3,192.3    3,192.3   3,510.0 
  
 
  
 
   
 
  
 
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year
  ¥3,192.3  ¥3,510.0   ¥3,510.0  ¥3,316.4 
  
 
  
 
   
 
  
 
 
See the consolidated statements of cash flows in our consolidated financial statements included within this annual report for more detailed information.
For the year ended March 31, 2022, our cash, cash equivalents, restricted cash and restricted cash equivalents decreased by ¥193.6 billion to ¥3,316.4 billion. Net cash of ¥1,070.7 billion was provided by financing activities due to net cash inflows of ¥1,225.0 billion from
Long-term borrowings
. As part of trading activities, while there were net cash inflows of ¥969.6 billion mainly due to a decrease in
Trading assets and private equity and debt investments,
they were offset by net cash outflows of ¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥1,368.7 billion was used in operating activities.
For the year ended March 31, 2021, our cash, cash equivalents, restricted cash and restricted cash equivalents increased by ¥317.7 billion to ¥3,510.0 billion. Net cash of ¥269.9 billion was used in financing activities due to net cash outflows of ¥325.2 billion from
Short-term borrowings
. As part of trading activities, while there were net cash inflows of ¥2,246.1 billion mainly due to a decrease in
Trading assets and Private equity and debt investments,
they were offset by net cash outflows of ¥2,696.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥665.8 billion was provided by operating activities.
For the year ended March 31, 2020, our cash, cash equivalents, restricted cash and restricted cash equivalents increased by ¥505.2 billion to ¥3,192.3 billion. Net cash of ¥332.1 billion was provided by financing activities due to net cash inflows of ¥656.2 billion from
Short-term borrowings
. As part of trading activities, while there were net cash outflows of ¥2,325.7 billion due to an increase in
Trading assets and Private equity and debt investments
in combination with cash inflows due to an increase in
Trading liabilities,
they were offset by net cash inflows of ¥2,516.1 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥15.9 billion was used in operating activities.
 
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Balance Sheet and Financial Leverage
Total assets as of March 31, 2021,2022, were ¥42,516.5¥43,412.2 billion, a decreasean increase of ¥1,483.3¥895.7 billion compared with ¥43,999.8¥42,516.5 billion as of March 31, 2020,2021, reflecting primarily a decreasean increase in
Trading assetsSecurities purchased under agreements to resell
.
Total liabilities as of March 31, 2021,2022, were ¥39,760.0¥40,439.4 billion, a decreasean increase of ¥1,508.5¥679.3 billion compared with ¥41,268.6¥39,760.0 billion as of March 31, 2020,2021, reflecting primarily a decreasean increase in
Securities sold under agreements to repurchaseLong-term borrowings
. NHI shareholders’ equity as of March 31, 20212022 was ¥2,694.9¥2,914.6 billion, an increase of ¥41.5¥219.7 billion compared with ¥2,653.5¥2,694.9 billion as of March 31, 2020,2021, primarily due to an increase in
Retained earningsAccumulated other
.
comprehensive income.
We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements. The EMB is responsible for implementing and enforcing capital policies. This includes the determination of our balance sheet size and required capital levels. We continuously review our equity capital base to ensure that it can support the economic risk inherent in our business. There are also regulatory requirements for minimum capital of entities that operate in regulated securities or banking businesses.
As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide a leverage ratio and adjusted leverage ratio primarily for benchmarking purposes so that users of our annual report can compare our leverage against other financial institutions. Adjusted leverage ratio is a
non-GAAP
financial measure that Nomura considers to be a useful supplemental measure of leverage.
The following table presents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as of March 31, 20202021 and 2021.2022.
 
                                
  
Billions of yen, except ratios
   
Billions of yen, except ratios
 
  
March 31
   
March 31
 
  
        2020        
   
        2021        
   
        2021        
   
        2022        
 
NHI shareholders’ equity
  ¥2,653.5   ¥2,694.9   ¥2,694.9   ¥2,914.6 
Total assets
   43,999.8    42,516.5    42,516.5    43,412.2 
Adjusted assets
(1)
   28,092.7    26,477.0    26,477.0    26,535.8 
Leverage ratio
(2)
   16.6 x    15.8 x    15.8 x    14.9 x 
Adjusted leverage ratio
(3)
   10.6 x    9.8 x    9.8 x    9.1 x 
 
(1)
Represents total assets less
Securities purchased under agreements to resell
and
Securities borrowed
. Adjusted assets is a
non-GAAP
financial measure and is calculated as follows:
(2)
Equals total assets divided by NHI shareholders’ equity.
(3)
Equals adjusted assets divided by NHI shareholders’ equity.
 
                                
  
Billions of yen
   
Billions of yen
 
  
March 31
   
March 31
 
  
        2020        
   
        2021        
   
        2021        
   
        2022        
 
Total assets
  ¥43,999.8   ¥42,516.5   ¥42,516.5   ¥43,412.2 
Less:
        
Securities purchased under agreements to resell
   12,377.3    10,775.1    10,775.1    11,879.3 
Securities borrowed
   3,529.8    5,264.4    5,264.4    4,997.1 
  
 
   
 
   
 
   
 
 
Adjusted assets
  ¥28,092.7   ¥26,477.0   ¥26,477.0   ¥26,535.8 
  
 
   
 
   
 
   
 
 
Total assets decreasedincreased by 3.4%2.1% reflecting primarily a decreasean increase in
Trading assetsSecurities purchased under agreements to resell.
. Total NHI shareholders’ equity increased by 1.6%8.2% reflecting primarily an increase in
Retained earningsAccumulated other comprehensive income
. As a result, our leverage ratios were 16.6 times as of March 31, 2020 and 15.8 times as of March 31, 2021.2021 and 14.9 times as of March 31, 2022.
Adjusted assets decreasedincreased primarily due to a decreasean increase in
Trading assetsLoans receivable
. As a result, our adjusted leverage ratios were 10.6 times as of March 31, 2020 and 9.8 times as of March 31, 2021.2021 and 9.1 times as of March 31, 2022.
 
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Capital Management
Capital Management Policy
We seek to enhance shareholder value and to capture growing business opportunities by maintaining sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into consideration the economic risks inherent to operating our businesses, the regulatory requirements, and maintaining our ratings necessary to operate businesses globally.
Dividends
We believe that raising corporate value over the long term and paying dividends is essential to rewarding shareholders. We will strive to pay dividends using a consolidated
pay-out
ratio of 30 percent of each semi-annual consolidated earnings as a key indicator.
Dividend payments are determined taking into account a comprehensive range of factors such as the tightening of Basel regulations and other changes to the regulatory environment as well as the Company’s consolidated financial performance.
Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31.
Additionally we will aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 percent.
With respect to retained earnings, in order to implement measures to adapt to regulatory changes and to increase shareholder value, we seek to efficiently invest in business areas where high profitability and growth may reasonably be expected, including the development and expansion of infrastructure.
Dividends for the Fiscal Year
Based on our Capital Management Policy described above, we paid a dividend of ¥20¥8 per share to shareholders of record as of September 30, 20202021 and have decided to pay a dividend of ¥15¥14 per share to shareholders of record as of March 31, 2021.2022. As a result, the total annual dividend will be ¥35¥22 per share.
The following table sets forthpresented the amounts of dividends per share paid by us in respect of the periods indicated:
 
Fiscal year ended or ending March 31,
  
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
   
Total
   
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
   
Total
 
2016
  ¥—     ¥10.00   ¥—     ¥3.00   ¥13.00 
2017
   —      9.00    —      11.00    20.00   ¥—     ¥9.00   ¥—     ¥11.00   ¥20.00 
2018
   —      9.00    —      11.00    20.00    —      9.00    —      11.00    20.00 
2019
   —      3.00    —      3.00    6.00    —      3.00    —      3.00    6.00 
2020
   —      15.00    —      5.00    20.00    —      15.00    —      5.00    20.00 
2021
   —      20.00    —      15.00    35.00    —      20.00    —      15.00    35.00 
2022
   —      8.00    —      14.00    22.00 
Consolidated Regulatory Capital Requirements
The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005.
The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent
 
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Company in April 2011. Since then, we have been calculating our consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III since then. We have calculated a Basel
III-based
consolidated capital adequacy ratio from the end of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets calculation.
In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio is currently calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2021,2022, our common equity Tier 1 capital ratio is 15.81%17.22%, Tier 1 capital ratio is 17.80%19.60% and consolidated capital adequacy ratio is 17.83%19.60% and we are in compliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level including applicable minimum consolidated capital buffers as of March 31, 20212022 is 7.52%7.51% for the common equity Tier 1 capital ratio, 9.02%9.01% for the Tier 1 capital ratio and 11.02%11.01% for the consolidated capital adequacy ratio).
In accordance with Article 2 of the “Notice of the Establishment of Standards that Indicate Soundness pertaining to Loss-absorbing and Recapitalisation Capacity, Established as Criteria by which the Highest Designated Parent Company is to Judge the Soundness in the Management of the Highest Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57
-17
of the Financial Instruments and Exchange Act” (the ”TLAC Notification”), we have started calculating our external TLAC ratio on a risk-weighted assets basis from March 2021. As of March 31, 2021,2022, our external TLAC as a percentage of risk-weighted assets is 23.06%30.72% and we are in compliance with the requirement set out in the TLAC Notification.
The following table presents the Company’s consolidated capital adequacy ratios and External TLAC as a percentage of risk-weighted assets as of March 31, 20202021 and March 31, 2021.2022.
 
  
Billions of yen, except ratios
   
Billions of yen, except ratios
 
  
March 31
   
March 31
 
  
2020
 
2021
   
      2021      
 
      2022      
 
Common equity Tier 1 capital
  ¥2,404.6  ¥2,522.1   ¥2,522.1  ¥2,726.4 
Tier 1 capital
   2,571.5   2,840.5    2,840.5   3,103.0 
Total capital
   2,602.4   2,845.2    2,845.2   3,103.4 
Risk-Weighted Assets
      
Credit risk-weighted assets
   7,634.7   8,550.9    8,550.9   8,301.2 
Market risk equivalent assets
   5,549.3   4,951.6    4,951.6   4,899.0 
Operational risk equivalent assets
   2,490.5   2,448.5    2,448.5   2,629.7 
  
 
  
 
   
 
  
 
 
Total risk-weighted assets
  ¥15,674.5  ¥15,951.0   ¥15,951.0  ¥15,829.9 
  
 
  
 
   
 
  
 
 
Consolidated Capital Adequacy Ratios
      
Common equity Tier 1 capital ratio
   15.34%   15.81%    15.81%   17.22% 
Tier 1 capital ratio
   16.40%   17.80%    17.80%   19.60% 
Consolidated capital adequacy ratio
   16.60%   17.83%    17.83%   19.60% 
External TLAC as a percentage of risk-weighted assets
   —     23.06%    23.06%   30.72% 
Since the end of March 2011, we have been calculating credit risk-weighted assets and operational risk equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, Marketmarket risk equivalent assets are calculated by using the Internal Models Approach for market risk.Approach.
 
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We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with the requirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also for benchmarking purposes so that users of this annual report can compare our capital position against those of other financial groups to which Basel III is applied. ManagementOur management receives and reviews these capital ratios on a regular basis.
Consolidated Leverage Ratio Requirements
In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio, and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article
57-17
of the Financial Instruments and Exchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 in accordance with these Notices. We have also started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar 3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. In June 2020, in coordination with the monetary policy of the Bank of Japan in response to the impact of coronavirusthe
(“COVID-19”)COVID-19
pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio.Ratio on June 2020 and March 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 to March 31, 2021.2022. In March 2021,2022, the FSA announced this measure will be extended for one year due to the continuous uncertainty regarding the impact of
COVID-19.
March 31, 2024. As of March 31, 2021,2022, our consolidated leverage ratio is 5.63%5.98%.
In accordance with Article 2 of the TLAC Notification we have started calculating our external TLAC ratio on a total exposure basis from March 2021. As of March 31, 2021,2022, our external TLAC as a percentage of leverage ratio exposure measure is 8.24%10.30% and we are in compliance with the requirement set out in the TLAC Notification.
Regulatory changes which affect us
The Basel Committee has issued a series of announcements regarding a Basel III program designed to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following is a summary of the proposals which are most relevant to us.
On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A global regulatory framework for more resilient banks and banking systems”. They include raising the quality, consistency and transparency of the capital base; strengthening the risk coverage of the capital framework such as the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing a leverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series of measures to address concerns over the “procyclicality” of the current framework; and introducing a minimum liquidity standard including a
30-day
liquidity coverage ratio as well as a longer-term structural liquidity ratio.the net stable funding ratio to measure stability of financing structure. These standards were implemented from 2013, which includes transitional treatment, (i.e., they are phased in gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of Basel III. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation and disclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks such as capital requirements for banks’ equity investments in funds, the standardized approach for measuring
 
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measuring counterparty credit risk exposures, capital requirements for bank exposures to CCPs, supervisory framework for measuring and controlling large exposures, Basel III: The Net Stable Funding Ratio and revisions to the securitization framework, and revised framework for market risk capital requirements have been published by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important financial institutions
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-SIBs
will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution. In response to the FSB’s publication of the TLAC standard, in April 2016, the FSA published its policy to develop the TLAC framework in Japan applicable to Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised policy, the Japanese
G-SIBs
and Nomura (“TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. On March 2019, the FSA published the notices and revised the guidelines of TLAC regulations. Although Nomura is not identified as a
G-SIB
as of the date of this annual report, the TLAC Covered SIBs, including Nomura, will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, Nomura will be required to meet a minimum TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Furthermore, according to the FSA’s revised policy published in April 2018, which is subject to change based on future international discussions, the preferred resolution strategy for the TLAC Covered SIBs is Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a group by a single national resolution authority (i.e., the FSA), although the actual measures to be taken will be determined on a
case-by-case
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
To implement this SPE resolution strategy effectively, the FSA requires holding companies of the TLAC Covered SIBs (“Domestic Resolution Entities”) to (i) meet the minimum external TLAC requirements and (ii) cause their material subsidiaries that are designated as systemically important by the FSA, including but not limited to certain material
sub-groups
as provided in the FSB’s TLAC standard, to maintain a certain level of capital and debt recognized by the FSA as having loss-absorbing and recapitalization capacity, or Internal TLAC.
In addition, the TLAC Covered SIBs’ Domestic Resolution Entities will be allowed to count the amount equivalent to 2.5% of their consolidated risk-weighted assets from the implementation date of the TLAC requirements in Japan (March 31, 2021 for Nomura) and 3.5% of their consolidated risk-weighted assets from 3 years after the implementation date (March 31, 2024 for Nomura) as our external TLAC, considering the Japanese Deposit Insurance Fund Reserves.
It is likely that the FSA’s regulation and notice will be revised further to be in line with a series of rules and standards proposed by the Basel Committee, FSB or International Organization of Securities Commissions.
 
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Credit RatingsSelected Financial Data
The costfollowing table presents selected financial information as of and availability of unsecured funding are generally dependent on credit ratings. Our long-term and short-term debt is rated by several recognized credit rating agencies. We believe that our credit ratings includefor the credit ratings agencies’ assessment of the general operating environment, our positions in the markets in which we operate, reputation, earnings structure, trend and volatility of our earnings, risk management framework, liquidity and capital management. An adverse change in any of these factors could result in a downgrade of our credit ratings, and that could, in turn, increase our borrowing costs and limit our access to the capital markets or require us to post additional collateral and permit counterparties to terminate transactions pursuant to certain contractual obligations. In addition, our credit ratings can have a significant impact on certain of our trading revenues, particularly in those businesses where longer term counterparty performance is critical, such as OTC derivative transactions.
On May 13, 2020, Fitch Ratings placed the bbb+ viability ratings of the Company and NSC on negative watch.
On July 28, 2020, Fitch Ratings changed the Outlook on Japan from Stable to Negative. Accordingly, on August 5, 2020, the Outlook of the A- Issuer Default Rating of the Company and NSC was changed from Stable to Negative.
On September 14, 2020, Moody’s Investors Service changed the Outlook of the Baa1 Long Term Issuer Rating of the Company and the A3 Long Term Issuer Rating of NSC from Negative to Stable.
On November 13, 2020, Fitch Ratings changed the Outlook of the
A-
Issuer Default Rating of the Company and NSC from Negative to Stable and removed the negative watch on the bbb+ viability ratings.
Onyears ended March 31, 2018, 2019, 2020, 2021 Fitch Ratings placed the bbb+ viability ratings of the Company and NSC on negative watch.
On March 31, 2021, Moody’s Investors Service changed the Outlook of the Baa1 Long Term Issuer Rating of the Company and the A3 Long Term Issuer Rating of NSC2022 which is derived from Stable to Negative.
On March 31, 2021, Rating and Investment Information, Inc. changed the issuer rating of the Company from A+ to A.
As of May 28, 2021, the credit ratings of the Company and NSC were as follows.our consolidated financial statements.
 
   
Millions of yen, except per share data and percentages
 
   
Year ended March 31
 
   
2018
  
2019
  
2020
  
2021
  
2022
 
Statement of income data:
      
Revenue
  ¥1,972,158  ¥1,835,118  ¥1,952,482  ¥1,617,235  ¥1,593,999 
Interest expense
   475,189   718,348   664,653   215,363   230,109 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
   1,496,969   1,116,770   1,287,829   1,401,872   1,363,890 
Non-interest
expenses
   1,168,811   1,154,471   1,039,568   1,171,201   1,137,267 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
   328,158   (37,701)   248,261   230,671   226,623 
Income tax expense
   103,866   57,010   28,894   70,274   80,090 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss)
  ¥224,292  ¥(94,711)  ¥219,367  ¥160,397  ¥146,533 
Less: Net income attributable to noncontrolling interests
   4,949   5,731   2,369   7,281   3,537 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss) attributable to NHI shareholders
  ¥219,343  ¥(100,442)  ¥216,998  ¥153,116  ¥142,996 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance sheet data (period end):
      
Total assets
  ¥40,343,947  ¥40,969,439  ¥43,999,815  ¥42,516,480  ¥43,412,156 
Total NHI shareholders’ equity
   2,749,320   2,631,061   2,653,467   2,694,938   2,914,605 
Total equity
   2,799,824   2,680,793   2,731,264   2,756,451   2,972,803 
Common stock
   594,493   594,493   594,493   594,493   594,493 
Per share data:
      
Net income (loss) attributable to NHI shareholders—basic
  ¥63.13  ¥(29.90)  ¥67.76  ¥50.11  ¥46.68 
Net income (loss) attributable to NHI shareholders—diluted
   61.88   (29.92)   66.20   48.63   45.23 
Total NHI shareholders’ equity
(1)
   810.31   794.69   873.26   879.79   965.80 
Cash dividends
(1)
   20.00   6.00   20.00   35.00   22.00 
Cash dividends in USD
(2)
  $0.19  $0.05  $0.19  $0.32  $0.18 
Weighted average number of shares outstanding (in thousands)
(3)
   3,474,593   3,359,565   3,202,370   3,055,526   3,063,524 
Return on equity
(4)
:
   7.9%   (3.7%)   8.2%   5.7%   5.1% 
Nomura Holdings, Inc.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2BBB+ (Stable)
Moody’s Investors Service
—  
Baa1 (Negative)
Fitch Ratings
F1
A-
(Stable)
Rating and Investment Information, Inc.
a-1A(Stable)
Japan Credit Rating Agency, Ltd.
—  
AA-
(Stable)
Nomura Securities Co., Ltd.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2
A-
(Stable)
Moody’s Investors Service
P-2A3 (Negative)
Fitch Ratings
F1
A-
(Stable)
Rating and Investment Information, Inc.
a-1A+ (Stable)
Japan Credit Rating Agency, Ltd.
—  
AA-
(Stable)
Both Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. are credit rating agencies nationally recognized in Japan. We rely on, or utilize, credit ratings on our long-term and short-term
 
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debt provided by these Japanese credit rating agencies, as well as S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings for unsecured funding and other financing purposes and also
(1)
Calculated using the number of shares outstanding at year end.
(2)
Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
(3)
The number shown is used to calculate basic earnings per share.
(4)
Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity.
Regulatory Capital Requirements
Many of our trading and other business activities. Within the rating classification system of Rating and Investment Information, Inc.,
“a-1”
is the highest of five categories for short-term debt and indicates “a strong degree of certainty regarding debt repayment”; and “A” is the third highest of nine categories for long-term debt and indicates “a high degree of certainty regarding debt repayment with excellence in specific component factors”, with a plus (+) or minus (-) sign addedactivities are subject to a rating in that category to indicate its relative standing within that category. Within the rating classification systemstatutory capital requirements, including those of Japan, Credit Rating Agency, Ltd.the U.S., “AA” is the second highest of eleven categories for long-term debtU.K. and indicates “a very high level of capacity to honor thecertain other countries in which we operate. For further discussion on statutory capital requirements, see Note 18 “
Regulatory requirements
” in our consolidated financial commitment on the obligation”, with a plus (+) or minus (-) sign added to a ratingstatements included in that category to indicate its relative standing within that category.
There has been no change to the ratings in the above table since the date indicated.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information.
The information required by this item is set forth in Item 5.A of this annual report.
Translation Exposure
E.
Off-Balance
Sheet Arrangements.A significant portion of our business is conducted in currencies other than Japanese Yen—most significantly, U.S. Dollars, British pounds and Euros. We prepare financial statements of each of our consolidated subsidiaries in its functional currency, which is the currency of the primary economic environment in which the entity operates. Translation exposure is the risk arising from the effect of fluctuations in exchange rates on the net assets of our foreign subsidiaries. Translation exposure is not recognized in our consolidated statements of income unless and until we dispose of, or liquidate, the relevant foreign subsidiary.
Off-balance
sheet entitiesAssets and Liabilities Associated with Investment and Financial Services Business
In
Exposure to Certain Financial Instruments and Counterparties
Market conditions continue to impact numerous products to which we have certain exposures. We also have exposures to Special Purpose Entities (“SPEs”) and others in the normal course of business,business.
Leveraged Finance
We provide loans to clients in connection with leveraged
buy-outs
and leveraged
buy-ins.
As this type of financing is usually initially provided through a commitment, we engage in a variety of
off-balance
sheet arrangements with
off-balance
sheet entities which may have an impactboth funded and unfunded exposures on Nomura’s future financial position and performance.these transactions.
Off-balanceThe following table sets forth our exposure to leveraged finance with unfunded commitments, presenting funded and unfunded portions by geographic location of the target company as of March 31, 2022.
sheet arrangements with
off-balance
sheet entities include where Nomura has:
 
   
Millions of yen
 
   
March 31, 2022
 
   
Funded
   
Unfunded
   
Total
 
Europe
  ¥6,361   ¥69,040   ¥75,401 
Americas
   17,370    106,915    124,285 
Asia and Oceania
   10,448    27,289    37,737 
  
 
 
   
 
 
   
 
 
 
Total
  ¥34,179   ¥203,244   ¥237,423 
  
 
 
   
 
 
   
 
 
 
an obligation under a guarantee contract;Special Purpose Entities (“SPEs”)
a retained or contingent interest in assets transferred to an
off-balance
sheet entity or similar arrangement that serves to provide credit, liquidity or market risk support to such entity;
any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
any obligation, including a contingent obligation, arising out of a variable interest in an
off-balance
sheet entity that is held by, and material to, us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, us.
Off-balance
sheet entities may take the form of a corporation, partnership, fund, trust or other legal vehicle which is designed to fulfill a limited, specific purpose by its sponsor. We both create or sponsor these entities and also enter into arrangements with entities created or sponsored by others.
Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of
off-balance
sheet arrangements involvement with SPEs include guarantee agreements and derivative contracts. Significant involvement is assessed based on all of our arrangements with these entities, even if the probability of loss, as assessed at the balance sheet date, is remote.
 
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For further information about transactionsdiscussion on Nomura’s involvement with VIEs,variable interest entities, see Note 6 “
Securitizations and Variable Interest Entities
” in our consolidated financial statements included in this annual report.
F. Tabular Disclosure of Contractual Obligations.Accounting Developments
See Note 1“
In
Summary of accounting policies: New accounting pronouncements adopted during the ordinary course of our business, we enter into a variety of contractual obligations and contingent commitments, which may require future payments. These arrangements include:
Standby letters of credit and other guarantees:
In connection with our banking and financing activities, we enter into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have fixed expiration dates.
Long-term borrowings and contractual interest payments:
In connection with our operating activities, we issue Japanese Yen and
non-Japanese
Yen denominated long-term borrowings which incur variable and fixed interest payments in accordance with our funding policy.
Operating lease commitments:
We lease office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary course of business both in Japan and overseas as lessee. These arrangements predominantly consist of operating leases;
Separately we sublease certain real estate and equipment through operating lease arrangements.
Finance lease commitments:
We lease certain equipment and facilities in Japan and overseas which are classified as finance lease agreements.
Purchase obligations:
We have purchase obligations for goods and services which include payments for construction, advertising, and computer and telecommunications maintenance agreements.
Commitments to extend credit:
In connection with our banking and financing activities, we enter into contractual commitments to extend credit, which generally have fixed expiration dates;
In connection with our investment banking activities, we enter into agreements with clients under which we commit to underwrite securities that may be issued by clients.
As a member of certain central clearing counterparties, Nomura is committed to provide liquidity facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in a situation where a default of another clearing member occurs.
Commitments to invest in partnerships:
We have commitments to invest in interests in various partnerships and other entities and commitments to provide financing for investments related to those partnerships.
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Note 8 “
Leases
” in our consolidated financial statements contains further detail on our operating leases and finance leases. Note 11 “
Borrowings
” in our consolidated financial statements contains further detail on our short-term and long-term borrowing obligations and Note 21 “
Commitments, contingencies and guaranteescurrent year
” in our consolidated financial statements included in this annual report contains further detail on our other commitments, contingenciesreport.
Deferred Tax Assets
Details of deferred tax assets and guarantees.
The contractual amounts of commitments to extend credit represent the maximum amounts at risk should the contracts be fully drawn upon, should the counterparties default, and assuming the value of any existing collateral becomes worthless. The total contractual amount of these commitments may not represent future cash requirements since the commitments may expire without being drawn upon. The credit risk associated with these commitments varies depending on our clients’ creditworthiness and the value of collateral held. We evaluate each client’s creditworthiness on a
case-by-caseliabilities
basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on management’s credit evaluation of the counterparty.
The following table presents information regarding amountsdetails of deferred tax assets and timing of our future contractual obligationsliabilities reported within
Other assets
—
Other and contingent commitmentsOther liabilities
, respectively, in the consolidated balance sheets as of March 31, 2021.2022.
Millions of yen
March 31, 2022
Deferred tax assets
Depreciation, amortization and valuation of fixed assets
¥30,441
Investments in subsidiaries and affiliates
21,390
Valuation of financial instruments
102,021
Accrued pension and severance costs
20,492
Other accrued expenses and provisions
79,061
Operating losses
370,481
Lease liabilities
49,060
Other
15,425
Gross deferred tax assets
688,371
Less
—
Valuation allowances
(466,145) 
Total deferred tax assets
222,226
Deferred tax liabilities
Investments in subsidiaries and affiliates
91,040
Valuation of financial instruments
85,301
Undistributed earnings of foreign subsidiaries
2,745
Valuation of fixed assets
23,962
Right-of-use
assets
48,519
Other
7,044
Total deferred tax liabilities
258,611
Net deferred tax assets (liabilities)
¥(36,385) 
Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to us, which are not deemed more likely than not to be realized.
B. Liquidity and Capital Resources.
Funding and Liquidity Management
Overview
We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s
 
  
Millions of yen
 
  
Total

contractual

amount
  
Years to maturity
 
 
Less than

1 year
  
1 to 3

years
  
3 to 5

years
  
More than

5 years
 
Standby letters of credit and other guarantees
 ¥206,072  ¥174,864  ¥11,722  ¥281  ¥19,205 
Long-term borrowings
(1)
  7,851,677   463,710   1,451,430   2,375,311   3,561,226 
Contractual interest payments
(2)
  714,585   90,749   148,389   106,442   369,005 
Operating lease commitments
(3)
  218,717   42,411   60,702   46,952   68,652 
Purchase obligations
(4)
  121,604   30,120   26,367   64,649   468 
Commitments to extend credit
(5)
  2,301,943   1,506,760   198,334   204,430   392,419 
Commitments to invest
  136,367   111,576   2,339   4,338   18,114 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥11,550,965  ¥2,420,190  ¥1,899,283  ¥2,802,403  ¥4,429,089 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
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creditworthiness or deterioration in market conditions. This risk could arise from Nomura-specific or market-wide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit ratings, a failure to manage unplanned changes in funding requirements, a failure to liquidate assets quickly and with minimal loss in value, or changes in regulatory capital restrictions which may prevent the free flow of funds between different group entities. Our global liquidity risk management policy is based on liquidity risk appetite formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under market-wide stress and in addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all funding requirements and unsecured debt obligations across one year and
30-day
periods, respectively, without raising funds through unsecured funding or through the liquidation of assets. We are required to meet regulatory notice on the liquidity coverage ratio issued by the FSA.
We have in place a number of liquidity risk management frameworks that enable us to achieve our primary liquidity objective. These frameworks include (1) Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio; (3) Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets; (4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and (6) Contingency Funding Plan.
Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial Officer (“CFO”) has the operational authority and responsibility over our liquidity management based on decisions made by the EMB.
1.    Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio.
We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes. As for the usage of funds, the CFO decides the maximum amount of available funds, provided without posting any collateral, for allocation within Nomura and the EMB allocates the funds to each business division. Global Treasury monitors usage by businesses and reports to the EMB.
In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities by regulated broker-dealers or banking entities within the Nomura Group and seek to raise unsecured funding primarily through the Company or through unregulated subsidiaries. The primary benefits of this strategy include cost minimization, wider investor name recognition and greater flexibility in providing funding to various subsidiaries across the Nomura Group.
To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury apart from other assets, in the form of cash and highly liquid, unencumbered securities that may be sold or pledged to provide liquidity. As of March 31, 2022, our liquidity portfolio was ¥7,074.2 billion which sufficiently met liquidity requirements under the stress scenarios.
The following table presents a breakdown of our liquidity portfolio by type of financial assets as of March 31, 2021 and 2022 and averages maintained for the years ended March 31, 2021 and 2022. Yearly averages are calculated using
month-end
amounts.
   
Billions of yen
 
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Cash, cash equivalents and time deposits
(1)
  ¥2,775.9   ¥2,765.0   ¥3,151.6   ¥2,997.5 
Government debt securities
   3,082.8    2,641.2    3,629.8    3,674.2 
Others
(2)
   254.0    252.1    298.3    402.5 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total liquidity portfolio
  ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
 
   
 
 
   
 
 
   
 
 
 
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(1)
Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks and market counterparties that are readily available to support the liquidity position of Nomura.
(2)
Others include other liquid financial assets such as money market funds and U.S. agency securities.
The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 2021 and 2022 and averages maintained for the years ended March 31, 2021 and 2022. Yearly averages are calculated using
month-end
amounts.
   
Billions of yen
 
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Japanese Yen
  ��2,298.1   ¥966.5   ¥1,913.7   ¥1,409.8 
U.S. Dollar
   2,441.2    3,367.1    3,567.3    3,924.1 
Euro
   795.1    793.5    792.3    868.5 
British Pound
   405.4    333.8    578.3    597.5 
Others
(1)
   172.9    197.5    228.1    274.3 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total liquidity portfolio
  ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
The amounts disclosedIncludes other currencies such as the Australian dollar, the Canadian dollar and the Swiss franc.
We assess our liquidity portfolio requirements globally as well as by each major operating entity in the Nomura Group. We primarily maintain our liquidity portfolio at Nomura Holdings, Inc. (“NHI”) and Nomura Securities Co. Ltd. (“NSC”), our other major broker-dealer subsidiaries, our bank subsidiaries, and other group entities. In determining the amounts and entities which hold this liquidity portfolio, we consider legal, regulatory and tax restrictions which may impact our ability to freely transfer liquidity across different entities in the Nomura Group. For more information regarding regulatory restrictions, see Note 18 “
Regulatory requirements
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
NHI and NSC
(1)
  ¥981.8   ¥1,395.4 
Major broker-dealer subsidiaries
   2,632.6    3,118.5 
Bank subsidiaries
(2)
   752.6    1,008.5 
Other affiliates
   1,291.3    1,551.8 
  
 
 
   
 
 
 
Total liquidity portfolio
  ¥5,658.3   ¥7,074.2 
  
 
 
   
 
 
 
(1)
NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has direct access to the BOJ Lombard facility through which same day funding is available for our securities pool. Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound immediately when needed.
(2)
Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank Luxembourg S.A.
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2.    Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.
In addition to our liquidity portfolio, we had ¥2,665.7 billion of other unencumbered assets comprising mainly of unpledged trading assets that can be used as an additional source of secured funding. Global Treasury monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding plan has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio and other unencumbered assets as of March 31, 2022 was ¥9,739.9 billion, which represented 332.2
%
of our total unsecured debt maturing within one year.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Net liquidity value of other unencumbered assets
  ¥2,771.6   ¥2,665.7 
Liquidity portfolio
   5,658.3    7,074.2 
  
 
 
   
 
 
 
Total
  ¥8,429.9   ¥9,739.9 
  
 
 
   
 
 
 
3.    Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets
We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of our assets. We also seek to achieve diversification of our funding by market, instrument type, investors, currency, and staggered maturities in order to reduce unsecured refinancing risk.
We diversify funding by issuing various types of debt instruments—these include both structured loans and structured notes with returns linked to interest rates, currencies, equities, commodities, or related indices. We issue structured loans and structured notes in order to increase the diversity of our debt instruments. We typically hedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent to our unsecured long-term debt. The proportion of our
non-Japanese
Yen denominated long-term debt increased to 51.4% of total long-term debt outstanding as of March 31, 2022 from 47.2% as of March 31, 2021.
3.1    Short-Term Unsecured Debt
Our short-term unsecured debt consists of short-term bank borrowings (including long-term bank borrowings maturing within one year), other loans, commercial paper, deposit at banking entities, certificates of deposit and debt securities maturing within one year. Deposits at banking entities and certificates of deposit comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term unsecured debt includes the current portion of long-term unsecured debt.
The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Short-term bank borrowings
  ¥265.8   ¥148.0 
Other loans
   138.7    228.1 
Commercial paper
   460.0    131.9 
Deposits at banking entities
   1,149.9    1,520.7 
Certificates of deposit
   83.6    127.8 
Debt securities maturing within one year
   831.5    775.6 
  
 
 
   
 
 
 
Total short-term unsecured debt
  ¥2,929.5   ¥2,932.1 
  
 
 
   
 
 
 
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3.2    Long-Term Unsecured Debt
We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate maturity profile by routinely funding through long-term debt and diversifying across various maturities and currencies.
Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelf offerings and our U.S. registered medium-term note programs, our Euro medium-term note programs, registered shelf offerings in Japan and various other debt programs.
As a globally competitive financial services group in Japan, we have access to multiple global markets and major funding centers. The Company, NSC, Nomura Europe Finance N.V., NBI, Nomura International Funding Pte. Ltd. and Nomura Global Finance Co., LTD. are the main group entities that borrow externally, issue debt instruments and engage in other funding activities. By raising funds to match the currencies and liquidities of our assets or by using foreign exchange swaps as necessary, we pursue optimization of our funding structures.
We use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor types. Our unsecured senior debt is mostly issued without financial covenants, such as covenants related to adverse changes in our credit ratings, cash flows, results of operations or financial ratios, which could trigger an increase in our cost of financing or accelerate repayment of the debt.
The following table presents an analysis of our long-term unsecured debt by type of financial liability as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Long-term deposits at banking entities
  ¥109.0   ¥112.3 
Long-term bank borrowings
   2,635.2    2,820.5 
Other loans
   74.2    219.5 
Debt securities
(1)
   3,877.9    4,745.8 
  
 
 
   
 
 
 
Total long-term unsecured debt
  ¥6,696.3   ¥7,898.1 
  
 
 
   
 
 
 
(1)
Excludes long-term borrowings exclude financial liabilitiesdebt securities issued by consolidated special purpose entities and similar entities that meet the definition of variable interest entities under ASC 810 “
Consolidation
” and secured financing transactions recognized within long-term
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860. These are not borrowings issued for our own funding purposes860 “
Transfer and therefore do not represent actual contractual obligations by us to deliver cash.Servicing.
(2)
The amounts represent estimated future interest payments related to long-time borrowings based on the period through to their maturity and applicable interest rates as of March 31, 2021.
(3)
The amounts of operating lease commitments are undiscounted future minimum lease payments. The amounts of finance lease contracts were immaterial.
(4)
The minimum contractual obligations under enforceable and legally binding contracts that specify all significant terms. Amounts exclude obligations that are already reflected on our consolidated balance sheets as liabilities or payables. Includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment association.
(5)
Contingent liquidity facilities to central clearing counterparties are included.
”
Excluded from the above table are obligations that are generally short-term in nature, including short-term borrowings, deposits received at banks and other payables, collateralized agreements and financing transactions (such as reverse repurchase and repurchase agreements), and trading liabilities.
3.3    Maturity Profile
In additionWe also seek to amounts presented above, we have commitments under reverse repurchasemaintain an average maturity for our plain vanilla debt securities and repurchase agreements including amounts in connectionborrowings greater than or equal to three years. The average maturity for our plain vanilla debt securities and borrowings with collateralized agreements and collateralized financing. These commitments amount to ¥1,725 billion for reverse repurchase agreements and ¥1,533 billion for repurchase agreementsmaturities longer than one year was 4.4 years as of March 31, 2021.2022. A significant amount of our structured loans and structured notes are linked to interest rates, currencies, equities, commodities, or related indices. These maturities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility that these may be called prior to their scheduled maturity date, maturities are based on our internal stress option adjusted model. The model values the embedded optionality under stress market conditions in order to determine when the debt securities or borrowing is likely to be called. The graph below shows the distribution of maturities of our outstanding long-term debt securities and borrowings by the model.
On this basis, the average maturity of our structured loans and structured notes with maturities longer than one year was 10.1 years as of March 31, 2022. The average maturity of our entire long-term debt with maturities longer than one year including plain vanilla debt securities and borrowings, was 7.2 years as of March 31, 2022.
 
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Item 6. Directors, Senior Management and Employees
A. Directors3.4    Secured Funding
We typically fund our trading activities through secured borrowings, repurchase agreements and Senior Management.Japanese “Gensaki Repo” transactions. We believe such funding activities in the secured markets are more cost-efficient and less credit-rating sensitive than financing in the unsecured market. Our secured funding capabilities depend on the quality of the underlying collateral and market conditions. While we have shorter term secured financing for highly liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risks of secured funding by transacting with a diverse group of global counterparties and delivering various types of securities collateral. In addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured funding maturing in the short term for less liquid assets. For more detail of secured borrowings and repurchase agreements, see Note 5 “
Collateralized transactions
” in our consolidated financial statements.
4.    Management of Credit Lines to Nomura Group Entities
We maintain and expand credit lines to Nomura Group entities from other financial institutions to secure stable funding. We ensure that the maturity dates of borrowing agreements are distributed evenly throughout the year in order to prevent excessive maturities in any given period.
Directors
5.    Implementation of Liquidity Stress Tests
The following table provides information about DirectorsWe maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model which simulates changes in cash outflow under specified stress scenarios to comply with our above mentioned liquidity management policy.
We assess the liquidity requirements of the Nomura Group under various stress scenarios with differing levels of severity over multiple time horizons. We evaluate these requirements under Nomura-specific and broad market-wide events, including potential credit rating downgrades at the Company as of June 25, 2021.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Koji Nagai
(Jan. 25, 1959)
Director
Chairman of Board Directors
Member of the Nomination Committee
Member of the Compensation Committee
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 1981Joined the Company
Apr. 2003Director of Nomura Securities Co., Ltd.
Jun. 2003Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2007Executive Managing Director of Nomura Securities Co., Ltd.
Oct. 2008Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2009Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2011
Co-COO
and Deputy President of Nomura Securities Co., Ltd.
Apr. 2012
Senior Managing Director of the Company
Director and President of Nomura Securities Co., Ltd.
Aug. 2012
Representative Executive Officer & Group CEO of the Company
Director and President of Nomura Securities Co., Ltd.
Jun. 2013
Director, Representative Executive Officer & Group CEO of the Company
Director and President of Nomura Securities Co., Ltd.
Apr. 2017
Director, Representative Executive Officer, President & Group CEO of the Company
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 2020
Director and Chairman of the Company (Current)
Director and Chairman of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
Director, Representative Executive Officer, President and Group CEO
Representative Director and President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2010Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2012Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Aug. 2012
Senior Corporate Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Executive Managing Director and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2018
Executive Managing Director, and Group
Co-COO
and Head of Americas (based in New York) of the Company
Director, Executive Managing Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2019Executive Managing Director and Deputy President, Group
Co-COO
of the Company
Apr. 2020
Representative Executive Officer and President, Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2020
Director, Representative Executive Officer, President & Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2021
Director, Representative Executive Officer, President & Group CEO of the Company (Current)
Representative Director and President of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Tomoyuki Teraguchi
(Aug. 4, 1962)
Director, Representative Executive Officer and Deputy President
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 1986Joined the Company
Apr. 2009Senior Managing Director and Global Equity Strategy Office of Nomura Securities Co., Ltd.
Apr. 2011Senior Managing Director and Global Markets Joint COO of Nomura Securities Co., Ltd.
Feb. 2013Senior Managing Director and Global Markets COO of Nomura Securities Co., Ltd.
Apr. 2013Senior Managing Director, Global Markets COO and Global Research of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director, Group Compliance Head and Operations of the Company
Representative Executive Officer, Compliance Division and Operations of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2017
Senior Managing Director, Group Compliance Head and Operations of the Company
Representative Executive Officer, Senior Corporate Managing Director, Compliance Division and Operations of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
May. 2019
Executive Managing Director and Chief Compliance Officer of the Company
Representative Director, Executive Vice President, Compliance and Legal of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2020
Executive Managing Director, Chief of Staff and Chief Compliance Officer of the Company
Representative Director and Deputy President, Compliance and Legal of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2021
Representative Executive Officer, Deputy President, Chief of Staff and Chief Compliance Officer of the Company
Representative Director and Deputy President and Chief of Staff of Nomura Securities Co., Ltd.
Jun. 2021
Director, Representative Executive Officer, Deputy President, Chief of Staff and Chief Compliance Officer of the Company (Current)
Representative Director, Deputy President and Chief of Staff of Nomura Securities Co., Ltd. (Current)
Shoji Ogawa
(Aug. 9, 1964)
Director
Member of the Audit Committee
(full-time)
Statutory Auditor of Nomura Financial Products & Services, Inc.
Apr. 1987Joined the Company
Apr. 2007Head of Investment Banking Strategic Planning Dept of Nomura Securities Co., Ltd.
Oct. 2008Head of Capital Markets Dept. and Capital Solutions Dept. of Nomura Securities Co., Ltd.
Jul. 2009Head of Capital Markets Dept. of Nomura Securities Co., Ltd.
Apr. 2012Head of Investment Banking Strategic Planning Dept. of Nomura Securities Co., Ltd.
Jul. 2013
Head of Office of Audit Committee of the Company
Head of Office of Audit Committee of Nomura Securities Co., Ltd.
Aug. 2016
Head of Office of
Non-Executive
Directors and Audit Committee of the Company
Head of Office of
Non-Executive
Directors and Audit Committee of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director and Group Internal Audit of the Company
Senior Managing Director and Internal Audit of Nomura Securities Co., Ltd.
Apr. 2021Advisor of the Company
Jun. 2021Director of the Company (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kazuhiko Ishimura
(Sep. 18, 1954)
Outside Director
Chairman of the Nomination Committee
Chairman of the Compensation Committee
Outside Director of TDK Corporation
Outside Director of IHI Corporation
President of the National Institute of Advanced Industrial Science and Technology
Apr. 1979Joined Asahi Glass Co., Ltd. (currently, AGC Inc.) (“AGC”)
Jan. 2006Executive Officer and GM of Kansai Plant of AGC
Jan. 2007Senior Executive Officer and GM of Electronics & Energy General Division of AGC
Mar. 2008Representative Director and President & COO of AGC
Jan. 2010Representative Director and President & CEO of AGC
Jan. 2015Representative Director & Chairman of AGC
Jan. 2018Director & Chairman of AGC
Jun. 2018Outside Director of the Company (Current)
Mar. 2020Director of AGC
Apr. 2020President of the National Institute of Advanced Industrial Science and Technology (Current)
Takahisa Takahara
(Jul. 12, 1961)
Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Representative Director, President & CEO of Unicharm Corporation
Outside Director of Calbee, Inc.
Apr. 1991Joined Unicharm Corporation
Jun. 1995Director of Unicharm Corporation
Apr. 1996Director, General Manager of Procurement Division and Deputy General Manager of International Division of Unicharm Corporation
Jun. 1997Senior Director of Unicharm Corporation
Apr. 1998Senior Director, General Manager of Feminine Hygiene Business Division of Unicharm Corporation
Oct. 2000Senior Director, Responsible for Management Strategy of Unicharm Corporation
Jun. 2001Representative Director, President of Unicharm Corporation
Jun. 2004Representative Director, President & CEO of Unicharm Corporation (Current)
Jun. 2021Outside Director of the Company (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Noriaki Shimazaki
(Aug. 19, 1946)
Outside Director
Chairman of the Audit Committee
Director of Nomura Securities Co., Ltd.
Outside Director of Loginet Japan Co., Ltd.
Apr. 1969Joined Sumitomo Corporation
Jun. 1998Director of Sumitomo Corporation
Apr. 2002Representative Director and Managing Director of Sumitomo Corporation
Jan. 2003Member of the Business Accounting Council of the Financial Services Agency
Apr. 2004Representative Director and Senior Managing Executive Officer of Sumitomo Corporation
Apr. 2005Representative Director and Executive Vice President of Sumitomo Corporation
Jan. 2009Trustee of the IASC (currently, IFRS Foundation)
Jul. 2009Special Advisor of Sumitomo Corporation
Jun. 2011
Director of the Financial Accounting Standards Foundation
Chairman of Self-regulation Board and Public Governor of the Japan Securities Dealers Association
Sep. 2013
Advisor of the IFRS Foundation Asia-Oceania Office
Advisor of the Japanese Institute of Certified Public Accountants (Current)
Jun. 2016
Outside Director of the Company (Current)
Director of Nomura Securities Co., Ltd. (Current)
Aug. 2019Senior Advisor of the IFRS Foundation Asia-Oceania Office (Current)
Mari Sono
(Feb. 20, 1952)
Outside Director
Member of the Audit Committee
Auditor of WASEDA University
Oct. 1976Joined NISSHIN Audit Corporation(*)
Mar. 1979Registered as Certified Public Accountant
Nov. 1988Partner of CENTURY Audit Corporation(*)
Nov. 1990Member of “Certified Public Accountant Examination System Subcommittee”, Certified Public Accountant Examination and Investigation Board, Ministry of Finance
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 1992Member of “Business Accounting Council”, Ministry of Finance
Dec. 1994Senior Partner, CENTURY Audit Corporation(*)
Oct. 2002Member of Secretariat of the Information Disclosure, Cabinet Office (currently, Secretariat of the Information Disclosure and Personal Information Protection Review Board, Ministry of Internal Affairs and Communications)
Apr. 2005External Comprehensive Auditor, Tokyo
Jul. 2008Senior Partner of Ernst & Young ShinNihon LLC
Aug. 2012Retired Ernst & Young ShinNihon LLC
Dec. 2013Commissioner of the Securities and Exchange Surveillance Commission
Jun. 2017
Outside Director of the Company (Current)
*Each of the corporation is currently Ernst & Young ShinNihon LLC
Laura Simone Unger
(Jan. 8, 1961)
Outside Director
Independent Director of CIT Group Inc.
Independent Director of Navient Corporation
Independent Director of Nomura Holding America Inc.
Independent Director of Nomura Securities International, Inc.
Independent Director of Nomura Global Financial Products Inc.
Jan. 1988Enforcement Attorney of U.S. Securities and Exchange Commission (SEC)
Oct. 1990Counsel of U.S. Senate Committee on Banking, Housing, and Urban Affairs
Nov. 1997Commissioner of SEC
Feb. 2001Acting Chairperson of SEC
Jul. 2002Regulatory Expert of CNBC
May 2003Independent Consultant of JPMorgan Chase & Co.
Aug. 2004Independent Director of CA Inc.
Jan. 2010Special Advisor of Promontory Financial Group
Dec. 2010Independent Director of CIT Group Inc. (Current)
Nov. 2014Independent Director of Navient Corporation (Current)
Jun. 2018Outside Director of the Company (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Victor Chu
(Jun. 20, 1957)
Outside Director
Chairman and Chief Executive Officer of First Eastern Investment Group
Chair of Council, University College London
Co-Chair,
International Business Council of the World Economic Forum
Independent Director of Airbus SE
Dec. 1982Solicitor of the Supreme Court, Hong Kong
Jan. 1988Chairman and Chief Executive Officer of First Eastern Investment Group (Current)
Oct. 1988Director and Council Member of the Hong Kong Stock Exchange
Jun. 1992Advisory Committee Member of the Securities and Futures Commission, Hong Kong
Aug. 2003Foundation Board Member of the World Economic Forum
Apr 2018Independent Director of Airbus SE (Current)
Jun. 2021Outside Director of the Company (Current)
J.Christopher Giancarlo
(May 12, 1959)
Outside Director
Senior Counsel of Willkie Farr & Gallagher LLP
Independent Director of the American Financial Exchange
Chairman of Common Securitization Solutions LLC
Independent Director of BlockFi Inc.
Principal of Digital Dollar Project
Sep. 1984Associate Attorney of Mudge Rose Guthrie Alexander & Ferdon
Oct. 1985Associate Attorney of Curtis, Mallet-Prevost, Colt & Mosle
Jan. 1992Attorney, Founding Partner of Giancarlo & Gleiberman
Sep. 1997Attorney, (Equity) Partner of Thelen Reid Brown Raysman & Steiner
Apr. 2000Vice President and Legal Counsel of Fenics Software
Apr. 2001Executive Vice President of GFI Group Inc.
Jun. 2014Commissioner of the U.S. Commodity Futures Trading Commission
Jan. 2017Chairman of the U.S. Commodity Futures Trading Commission
Oct. 2019Independent Director of the American Financial Exchange (Current)
Jan. 2020Senior Counsel of Willkie Farr & Gallagher LLP (Current)
Jun. 2021Outside Director of the Company (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Patricia Mosser
(Feb. 14, 1956)
Outside Director
Senior Research Scholar*
Director of the MPA Program in Economic Policy Management*
Director of Central Banking and Financial Policy*
*Positions at Columbia University, School of International and Public Affairs
Jul. 1986Assistant Professor, Economics Department, Columbia University
Jan. 1991Economist and Vice President of the Federal Reserve Bank of New York (FRBNY)
Nov. 2006Senior Vice President, FRBNY, Member of the FX Forum, Executive Meeting of East Asia and Pacific (EMEAP) Central Banks, Bank for International Settlements
Jan. 2007Board Member of the American Economic Association’s Committee on the Status of Women in the Economics Profession
Jun. 2007Member of the Markets Committee, Bank for International Settlements
Jan 2009Acting Systemic Open Market Account Manager for the Federal Open Market Committee (FOMC)
Oct. 2013Deputy Director of the Office of Financial Research (OFR), U.S. Treasury Department
Oct. 2013Member of the Deputies Committee of the Financial Stability Oversight Council (FSOC)
Jun. 2015Senior Research Scholar and Director of Central Banking and Financial Policy at Columbia University’s School of International and Public Affairs (Current)
Jun. 2021Outside Director of the Company (Current)
Among the Directors listed above Kazuhiko Ishimura, Takahisa Takahara, Noriaki Shimazaki, Mari Sono, Laura Simone Unger, Victor Chu, J.Christopher Giancarlo and Patricia Mosser satisfy the requirements for an “Outside Director” under the Companies Act.subsidiary levels. We call this risk analysis our Maximum Cumulative Outflow (“MCO”) framework.
 
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Executive Officers
The following table provides information about the Company’s Executive Officers as of June 25, 2021.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Tomoyuki Teraguchi
(Aug. 4, 1962)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Toshiyasu Iiyama
(Feb. 24, 1965)
Executive Managing Director
Head of China Committee
Chief Health Officer
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2012Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2018
Senior Managing Director of the Company
Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2019
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2020
Senior Managing Director of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2021
Executive Managing Director and Chief Health Officer of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
Takumi Kitamura
(Nov. 26, 1966)
Executive Managing Director
Chief Financial Officer
Director, Executive Vice President of Nomura Securities Co., Ltd.
Apr. 1990Joined the Company
Apr. 2016
Executive Managing Director and Chief Financial Officer of the Company
Executive Managing Director and Financial Officer of Nomura Securities Co., Ltd.
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2019
Executive Managing Director and Chief Financial Officer of the Company
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Managing Director and Chief Financial Officer of the Company (Current)
Director, Executive Vice President of Nomura Securities Co., Ltd. (Current)
Sotaro Kato
(Oct. 9, 1969)
Executive Managing Director
Chief Risk Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Sep. 2002Joined the Company
Apr. 2020
Executive Managing Director and Chief Risk Officer of the Company (based in New York) (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Toru Otsuka
(Jun. 5, 1967)
Executive Managing Director
Chief Strategy Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Apr. 1991Joined the Company
Apr. 2018
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
May. 2019
Senior Managing Director and Chief Strategy Officer of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Managing Director and Chief Strategy Officer of the Company (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
B. Compensation of Statutory Officers
Nomura’s compensation program for statutory officers is outlined as following.
1.    Revision of Management Strategy and Compensation program of Statutory Officers
We renewed our business execution structure on April 1, 2020 and publicly released our new management vision and business strategy on May 19, 2020. In order to make sure that the management vision and business strategy are appropriately in line with our compensation program, we revised the method of determination for compensation of Statutory Officers as follows from the fiscal year, through discussion in the Compensation Committee. Also, an outside director Hiroshi Kimura assumed the position of the chairman of the Nominating Committee and the Compensation Committee since June 24, 2019. Now that other outside director Kazuhiko Ishimura assumed the position since June 21, 2021.
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Items
Before revision
After revision
Key performance implementation (KPI) regarding Performance-Linked Compensation
Pre-Tax
Income (PTI)
Earnings Per Share (EPS)
Dividend Per Share
Share price
Return on Equity (ROE)
(1)
Determination method for amounts of Performance-Linked Compensation
(Comprehensive consideration method)
In addition to 4 (four) types of indicators above, each responsibility, performance, and trends of compensation of other global competitive firms and the industry etc. are comprehensively considered.
(Determination of the achievement of KPI targets by qualitative evaluation etc.)
Determined by considering qualitative evaluation etc. by the Compensation Committee, based on the level of achievement in actual value against the target value regarding KPI.
Determination method for compensation of each Statutory OfficersDetermined linkage with each KPI for compensation in align with each responsibility in advance. At the end of the fiscal year, finally determined by considering each contribution, performance of its responsible area, qualitative evaluation etc.
Nominating Committee and Compensation Committee
(On and before June 23, 2019) Chairman: Nobuyuki Koga (chairman of board of directors,
non-executive
director)
Member: Hiroshi Kimura (outside directors)
Member: Kazuhiko Ishimura (outside directors)
(On and after June 21, 2021) Chairman: Kazuhiko Ishimura (outside directors)
Member: Takahisa Takahara (outside directors)
Member: Koji Nagai (chairman of board of directors,
non-executive
director)
(1)
The reason for selecting ROE as KPI is that it is set out in management vision and business strategy, which is publicly announced on May 19, 2020, as the most important indicator for assessment of business growth.
2.    Compensation Policy and Compensation Scheme
(1) Compensation policy
We have developed Nomura Group compensation policy for all the employees and statutory officers (“Group Compensation Policy”) and Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc. to enable us to achieve sustainable growth, realize a long-term increase in shareholder value, deliver client excellence, compete in a global market and enhance our reputation. The Compensation Committee has been setting those policies with discussion for its appropriateness on every fiscal year.
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Group Compensation Policy is as follows.
Group Compensation Policy is based around the following six key themes. It aims to:
”Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc.” is as follows:
Compensation of Directors and Executive Officers is composed of base salary, cash bonus and long-term incentive plans.
1) Base Salary
Base salary is determined based on factors such as professional background, career history, responsibilities and compensation standards of related business fields.
A portion of base salary may be paid in equity linked awards with appropriate vesting periods to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
2) Yearly Bonus
Yearly bonuses of Directors and Executive Officers are determined by taking into account both quantitative and qualitative factors. Quantitative factors include performance of the Group and the division. Qualitative factors include achievement of individual goals and subjective assessment of individual contribution.
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Depending on the level of bonus payment, a portion of payment in cash may be deferred. In addition, a portion of deferred bonus may be paid in equity linked awards with appropriate vesting periods in lieu of cash to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders. Such deferred bonus may be unpaid or forfeited under specific circumstances.
3) Long-term Incentive Plan
Long-term incentive plans may be awarded to Directors and Executive Officers, depending on their individual responsibilities and performance.
Payments under long-term incentive plans are made when a certain degree of achievements are accomplished. Payments are made in equity linked awards with appropriate vesting periods to ensure that medium to long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
(2) Scheme and details of Compensation for Directors and Executive Officers
1) Scheme of Compensation and Directors and Executive Officers and calculation method.
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The result of Total Compensation (hereafter “TC”)MCO framework is designed to incorporate the primary liquidity risks for the PresidentNomura and the Group CEO regarding the fiscal year ended as of March 31, 2021 is as follows.
   
(Millions of yen, except percentages)
 
Base Salary (Fixed Compensation)
  
Yearly Bonus (Variable Compensation)
  
Total
Compensation
(TC)
 
Base cash

salary
  
Equity-linked
compensation
  
Subtotal
  
Cash

Bonus
  
Deferred
Compensation
  
Subtotal
 
 102.0   17.4   119.4   100.5   100.5   201.0   320.4 
 31.8%   5.4%   37.3%   31.4%   31.4%   62.7%   100.0% 
The percentage of Base Salary (Fixed Compensation) and Yearly Bonus (Variable Compensation) in TC is approximately 40% : 60%. Also, Base Salary (Fixed Compensation) includes equity-linked compensation, which is delivered by Nomura’ shares aftermodels the relevant fiscal year, same as deferred compensation. To befuture cash flows in line with overall responsibility of business execution of the Nomura Group, approximately 40% (equity-linked compensation, which is a part of Base Salary (Fixed Compensation), and deferred compensation) of TC are paid as equity-linked compensation, which leads to the alignment of interest with shareholders and appropriate medium-term incentives.
2) Calculation method of the Yearly Bonus
(less than)Outline of calculation method(greater than)
In calculating the Yearly Bonus for the Directors and the Executive Officers, a different calculation method is applied depending on the position.
(less than)Specific calculation method by position(greater than)following two primary scenarios:
 
With respect toStressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured financing or through the Presidentliquidation of assets for a year; and the Group CEO, given the overall responsibility of business execution of the Nomura Group, the basic amount of the Yearly Bonus is calculated based on the level of achievement in actual value against the target value regarding ROE. In addition, TC, including the Base Salary and the Yearly Bonus, is determined by considering, as needed, qualitative evaluation etc. by the Compensation Committee.
 
With respectAcute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event coupled with credit concerns regarding Nomura’s liquidity position, without raising funds through unsecured funding or through the liquidation of assets for 30 days.
We assume that Nomura will not be able to liquidate assets or adjust its business model during the Executive Officers, same astime horizons used in each of these scenarios. The MCO framework therefore defines the Presidentamount of liquidity required to be held in order to meet our expected liquidity needs in a stress event to a level we believe appropriate based on our liquidity risk appetite.
As of March 31, 2022, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above.
We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate the Group CEO, givenimpact of stress scenarios includes the responsibilityfollowing assumptions:
No liquidation of business execution for the Nomura Group, an individual ratio is applied to calculate their basic amounts of the Yearly Bonus. In addition, the Yearly Bonus and TC are determined by reflecting the qualitative evaluation etc. such as the performance and contribution for their responsible area.assets;
 
With respectNo ability to the chairman of the Board of Directors, it is treated in the same matter as the Executive Officers.issue additional unsecured funding;
(less than)Actual value regarding the performance indicator used for the calculation of the Yearly Bonus(greater than)
Performance Indicator
  
Target value
  
Actual value for the Fiscal Year
 
ROE
   8.0%   5.7% 
3)
Yearly Bonus of Director of the audit committee member and Outside Directors
With respect to the Director of the audit committee member is paid in cash only, to exclude equity-linkage of its compensation, so as to keep its independency from business execution. Also, Outside Directors are out of the scope of the Yearly Bonus
4)
Matters relating to
Non-Monetary
Compensation
(1) Deferred Compensation (equity-linked compensation)
The Company sets half of the amount of the Yearly Bonus of the Directors and Executive Officers. In principle, equity-linked compensation (Restricted Stock Unit (“RSU”), Notional Stock Unit (“NSU”) ) that falls under the
Non-Monetary
Compensation is used for payment of the amount.
 
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Upcoming maturities of unsecured debt (maturities less than one year);
Potential buybacks of our outstanding debt;
Loss of secured funding lines particularly for less liquid assets;
Fluctuation of funding needs under normal business circumstances;
Cash deposits and free collateral
roll-off
in a stress event;
Widening of haircuts on outstanding repo funding;
Additional collateralization requirements of clearing banks and depositories;
Drawdown on loan commitments;
Loss of liquidity from market losses;
Assuming a
two-notch
downgrade of our credit ratings, the aggregate fair value of assets that we would be required to post as additional collateral in connection with our derivative contracts; and
Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group.
6.    Contingency Funding Plan
We have developed a detailed contingency funding plan to integrate liquidity risk control into our comprehensive risk management strategy and to enhance the quantitative aspects of our liquidity risk control procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an approach for analyzing and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomura-specific and market-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP lists details of key internal and external parties to be contacted and the processes by which information is to be disseminated. This has been developed at a legal entity level in order to capture specific cash requirements at the local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiary
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(2) Outlinelevel due to regulatory, legal or tax constraints. We periodically test the effectiveness of current Deferred Compensation Awards.our funding plans for different Nomura-specific and market-wide events. We also have access to central banks including, but not exclusively, the BOJ, which provide financing against various types of securities. These operations are accessed in the normal course of business and are an important tool in mitigating contingent risk from market disruptions.
Liquidity Regulatory Framework
In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management and Supervision”. To complement these principles, the Committee has further strengthened its liquidity framework by developing two minimum standards for funding liquidity. These standards have been developed to achieve two separate but complementary objectives.
The outlinefirst objective is to promote short-term resilience of current Deferred Compensation Awards is as follows.a financial institution’s liquidity risk profile by ensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting for 30 days. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve this objective.
The second objective is to promote resilience over a longer time horizon by creating additional incentives for financial institutions to fund their activities with more stable sources of funding on an ongoing basis. The Net Stable Funding Ratio (“NSFR”) has a time horizon of one year and has been developed to provide a sustainable maturity structure of assets and liabilities.
Type of award
Key features
RSU awards
•
Settled in Nomura’s common stock.
•
Graded vesting period is set as three years in principle.
•
It is introduced as the Deferred Compensation since the fiscal year ended March 31, 2018.
•
In principle, it has been granted in May every year.
NSU awards
•
Linked to the price of Nomura’s common stock and cash—settled.
•
Same as RSU awards, graded vesting period is set as three years in principle.
•
Following the introduction of RSU as a principle vehicle in 2018 NSU awards are less commonly used in Nomura.
•
Same as RSU awards, in principle, it has been granted in May every year.
As stated above, RSU awardsThese two standards are comprised mainly of specific parameters which are internationally “harmonized” with prescribed values. Certain parameters, however, contain elements of national discretion to reflect jurisdiction-specific conditions.
In Japan, the regulatory notice on the LCR, based on the international agreement issued by the Basel Committee with necessary national revisions, was published by Financial Services Agency (on October 31, 2014). The notices have been introduced as a principle vehicleimplemented since the end of March 2015 with
phased-in
minimum standards. Average of Nomura’s LCRs for the three months ended March 31, 2022 was 241.7%, and Nomura was compliant with requirements of the above notices. As for the NSFR, the revision of the liquidity regulatory notice was published by Financial Services Agency (on March 31, 2021) and it has been implemented from the fiscal year endedend of September 2021. Nomura’s NSFR as of March 31, 2018 and replaced2022 was compliant with stock acquisition rights and other awards.the regulatory requirements.
Cash Flows
(3) Effect of payment of deferred compensationNomura’s cash flows are primarily generated from operating activities undertaken in connection with our client flows and trading and from financing activities which are closely related to such activities. As a financial institution, growth in operations tends to result in cash outflows from operating activities as equity-related compensation
By providing deferred compensationwell as equity-linked compensation,investing activities. For the economic value ofyear ended March 2021, we recorded net cash inflows from operating activities and net cash outflow from investing and financing activities. For the compensation is linked toyear ended March 2022, we recorded net cash outflows from operating activities and investing activities and net cash inflow from financing activities as discussed in the stock price of Nomura, and a certain vesting period is set.comparative analysis below.
 
Alignment of interests with shareholders.
Clawback by prescribing requirements such as voluntary retirement and violation of regulations.
Medium-term incentives (*) and retention by providing an opportunity for the economic value of Deferred Compensation at the time of grant to be increased by a rise in shares during a period of time from grant to vesting.
*
In line with the introduction of RSU, among the equity-linked compensation, as the principal vehicle for Deferred Compensation, in principle, Nomura’s common stock will be paid instead of cash over the three year deferral period from the fiscal year following the fiscal year in which the deferred compensation was granted. Since the number of shares to be paid is determined based on the Nomura’s share price at the time of grant, the increase in Nomura’s share price will increase the economic value of Deferred Compensation at the time of vest. Since the increase in share prices reflects the increase in corporate value, alignment of interest with that of shareholders, in addition to medium-term incentive effects for the Directors and Executive Officers, will be achieved.
Promotion of cross-divisional collaboration and cooperation by providing a common goal of increasing corporate value over the medium to long term.
(4) Clawback prescribed in Deferred Compensation
Any voluntary resignation, material modification of the financial statements, material breach of Nomura’s internal policies and regulations etc. are subject to forfeiture, reduction or clawback (Conclusion of individual contracts including “clawback clause”).
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(5) Deferred Compensation program inThe following table presents the past
For fiscalsummary information on our consolidated cash flows for the years ended March 31, 20172021 and prior fiscal years, we granted SAR Plan B awards as a type of core deferral award to Statutory Officers and emloyees, which are stock unit awards linked to price of the Company’s common stock pursuant to several stock unit plans designed to replicate the structure of restricted stock awards commonly used in the United States and Europe. These awards are physically-settled upon exercise into the Company’s common stock, have an exercise price of ¥1 per share and graded vesting generally over three years with certain longer vesting or holding periods where required under local regulations, and are subject to forfeiture, reduction or clawback in the same way as the above awards.2022.
For fiscal years ended March 31, 2011 through to March 31, 2017, we granted supplemental deferral awards comprising Collared Notional Stock Unit (“CSU”) awards and Notional Index Unit (“NIU”) awards. CSU awards are linked to
   
Billions of yen
 
   
Year Ended March 31
 
   
2021
  
2022
 
Net cash provided by (used in) operating activities
  ¥665.8  ¥(1,368.7) 
Net income
   160.4   146.5 
Trading assets and private equity and debt investments
   1,468.4   1,254.3 
Trading liabilities
   777.7   (284.7) 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
   (1,453.9)   (2,220.5) 
Securities borrowed, net of securities loaned
   (1,242.5)   595.1 
Other, net
   955.7   (859.4) 
Cash flows from investing activities:
   (139.0)   (45.3) 
Cash flows from financing activities:
   (269.9)   1,070.7 
Long-term borrowings, net
   (1.0)   1,225.0 
Decrease in short-term borrowings, net
   (325.2)   (475.5) 
Increase in deposits received at banks, net
   126.2   448.1 
Other, net
   (69.9)   (126.9) 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   60.8   149.7 
  
 
 
  
 
 
 
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
   317.7   (193.6) 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year
   3,192.3   3,510.0 
  
 
 
  
 
 
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year
  ¥3,510.0  ¥3,316.4 
  
 
 
  
 
 
 
See the priceconsolidated statements of the Company’s stock subject to a cap and a floor and NIU awards are linked to a world stock index quoted by Morgan Stanley Capital International. Both types of award are cash-settled with graded vesting generally over three years with certain longer vesting periods where required by local regulations, and are subject to forfeiture, reduction or clawbackcash flows in the same way as the above awards.our consolidated financial statements included within this annual report for more detailed information.
FollowingFor the introduction of RSU awards, no new SAR Plan B, CSU or NIU awards were granted in May 2018 in respect of the fiscal year ended March 31, 2018. However, existing unvested awards continue2022, our cash, cash equivalents, restricted cash and restricted cash equivalents decreased by ¥193.6 billion to vest¥3,316.4 billion. Net cash of ¥1,070.7 billion was provided by financing activities due to net cash inflows of ¥1,225.0 billion from
Long-term borrowings
. As part of trading activities, while there were net cash inflows of ¥969.6 billion mainly due to a decrease in accordance with their original contractual terms.
Trading assets and private equity and debt investments,
they were offset by net cash outflows of ¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
3.    Compensation for Directors
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥1,368.7 billion was used in operating activities.
For the year ended March 31, 2021, our cash, cash equivalents, restricted cash and Executive Officersrestricted cash equivalents increased by ¥317.7 billion to ¥3,510.0 billion. Net cash of ¥269.9 billion was used in financing activities due to net cash outflows of ¥325.2 billion from
Short-term borrowings
. As part of trading activities, while there were net cash inflows of ¥2,246.1 billion mainly due to a decrease in
PursuantTrading assets and Private equity and debt investments,
they were offset by net cash outflows of ¥2,696.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to the fundamental approachresell, Securities sold under agreements to repurchase
, and framework
Securities borrowed, net of compensation as described above, and asSecurities loaned.
As a company which adopts a committee-based corporate governance system, a Compensation Committeeresult, net cash of Nomura determines compensation of its Directors and Executive Officers in accordance with our applicable compensation policy.
(1) Aggregate Compensation for Directors and Officers
  
Number of
People
(1)
  
Millions of yen
 
  
Year ended March 31, 2021
 
  
Base Salary
(2,3)
  
Performance-
linked
compensation
(4)
  
Non-monetary
compensation
(Deferred
Compensation)
(5)
  
Total
 
Directors
  10  ¥290  ¥66  ¥226  ¥582 
(Outside Directors included in above)
  (6)   (130)   (  —  )   (  —  )   (130) 
Executive Officers
  6   420   240   364   1,024 
                    
Total
  16  ¥710  ¥306  ¥590  ¥1,606 
                    
(1)
The number of people includes two Directors who retired in June 2020. There were eight Directors and six Executive Officers as of March 31, 2021. Compensation to Directors who were concurrently serving as Executive Officers is included in that of Executive Officers.
(2)
Base Salary of ¥710 million includes other compensation (commuter pass allowance) of ¥850 thousand.
(3)
In addition to base salary of Executive Officers, ¥16 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
(4)
Out of the Yearly Bonus, amounts to be paid in cash after the Fiscal Year close are shown.
(5)
Deferred compensation (such as RSU and stock options) granted during and prior to the fiscal year ended March 31, 2021 is recognized as expense in the financial statements for the fiscal year ended March 31, 2021.
(6)
Subsidiaries of the Company paid ¥65 million to Outside Directors as compensation, etc. for their directorship at those subsidiaries for the fiscal year ended March 31, 2021.
(7)
The Company abolished retirement bonuses to Directors in 2001.
¥665.8 billion was provided by operating activities.
 
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(2) Individual compensationBalance Sheet and Financial Leverage
Total assets as of DirectorsMarch 31, 2022, were ¥43,412.2 billion, an increase of ¥895.7 billion compared with ¥42,516.5 billion as of March 31, 2021, reflecting primarily an increase in
Securities purchased under agreements to resell
.
Total liabilities as of March 31, 2022, were ¥40,439.4 billion, an increase of ¥679.3 billion compared with ¥39,760.0 billion as of March 31, 2021, reflecting primarily an increase in
Long-term borrowings
. NHI shareholders’ equity as of March 31, 2022 was ¥2,914.6 billion, an increase of ¥219.7 billion compared with ¥2,694.9 billion as of March 31, 2021, primarily due to an increase in
Accumulated other
comprehensive income.
We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements. The EMB is responsible for implementing and Executive Officers receiving ¥100 millionenforcing capital policies. This includes the determination of our balance sheet size and required capital levels. We continuously review our equity capital base to ensure that it can support the economic risk inherent in our business. There are also regulatory requirements for minimum capital of entities that operate in regulated securities or morebanking businesses.
As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide a leverage ratio and adjusted leverage ratio primarily for benchmarking purposes so that users of our annual report can compare our leverage against other financial institutions. Adjusted leverage ratio is a
non-GAAP
financial measure that Nomura considers to be a useful supplemental measure of leverage.
The following table presents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as of March 31, 2021 and 2022.
 
      
Millions of yen
 
      
Fixed Remuneration

(Basic Compensation)
  
Variable Compensation
(1)
    
Name
 
Company
 
Category
 
Base Salary
  
Equity

Compensation

(RSUs)
  
Total
  
Cash

Bonus
  
Deferred

Compensation

(RSUs, etc.)
  
Total
  
Total
 
Koji Nagai
 Nomura Chairman of the Board of Directors ¥91.2  ¥0  ¥91.2  ¥50.5  ¥50.5  ¥101.0  ¥192.2 
Kentaro Okuda
(2)
 Nomura 
Director,
Representative
Executive
Officer
(Group CEO)
 ¥102.0  ¥17.4  ¥119.4  ¥100.5  ¥100.5  ¥201.0  ¥320.4 
Toshio Morita
 Nomura 
Executive Managing
Director
(Group
Co-COO)
 ¥84.0  ¥15.0  ¥99.0  ¥54.7  ¥54.7  ¥109.3  ¥208.3 
Tomoyuki Teraguchi
 Nomura 
Executive
Managing Director
 ¥66.0  ¥13.2  ¥79.2  ¥32.9  ¥32.9  ¥65.8  ¥145.0 
   
Billions of yen, except ratios
 
   
March 31
 
   
        2021        
   
        2022        
 
NHI shareholders’ equity
  ¥2,694.9   ¥2,914.6 
Total assets
   42,516.5    43,412.2 
Adjusted assets
(1)
   26,477.0    26,535.8 
Leverage ratio
(2)
   15.8 x    14.9 x 
Adjusted leverage ratio
(3)
   9.8 x    9.1 x 
 
(1)
Represents total assets less
Variable Compensation indicates the amount determined
Securities purchased under agreements to resell
and
Securities borrowed
. Adjusted assets is a
non-GAAP
financial measure and is calculated as remuneration based on the performance during the fiscal year ended March 31, 2021.
follows:
(2)
In addition to basic compensation, ¥16 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.Equals total assets divided by NHI shareholders’ equity.
During the Fiscal Year, the Compensation Committee was held 7 times and has been discussing as follows.
Date
(3)
Summary of the discussion and the resolution
Attendance records
of the member
April 24, 2020
Discussion: The yearly bonus of the previous fiscal year
perfect attendance
May 8, 2020
Resolution: The yearly bonus of the previous fiscal year
perfect attendance
June 24, 2020
Resolution: The appointment of the Director with the right to convoke the board of directors meetings and the Director who reports the executions of the committee’s duties to the board of the directors meetings.
Resolution: The compensation policies
Resolution: Individual base salary of the Directors and Executive Officers
Discussion: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
perfect attendance
August 25, 2020
Discussion: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
perfect attendance
October 28, 2020
Discussion: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
perfect attendance
December 3, 2020
Resolution: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
perfect attendance
March 26, 2021
Resolution: Individual base salary of the Directors and Executive Officers.
Discussion: The yearly bonuses of the Fiscal Year.
Discussion: The determination process of the Directors and Executive Officers compensation (bonus).
perfect attendanceEquals adjusted assets divided by NHI shareholders’ equity.
 
   
Billions of yen
 
   
March 31
 
   
        2021        
   
        2022        
 
Total assets
  ¥42,516.5   ¥43,412.2 
Less:
    
Securities purchased under agreements to resell
   10,775.1    11,879.3 
Securities borrowed
   5,264.4    4,997.1 
  
 
 
   
 
 
 
Adjusted assets
  ¥26,477.0   ¥26,535.8 
  
 
 
   
 
 
 
105
Total assets increased by 2.1% reflecting primarily an increase in
Securities purchased under agreements to resell.
Total NHI shareholders’ equity increased by 8.2% reflecting primarily an increase in
Accumulated other comprehensive income
. As a result, our leverage ratios were 15.8 times as of March 31, 2021 and 14.9 times as of March 31, 2022.
Adjusted assets increased primarily due to an increase in
Loans receivable
. As a result, our adjusted leverage ratios were 9.8 times as of March 31, 2021 and 9.1 times as of March 31, 2022.
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Through
Capital Management
Capital Management Policy
We seek to enhance shareholder value and to capture growing business opportunities by maintaining sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into consideration the discussionseconomic risks inherent to operating our businesses, the regulatory requirements, and maintaining our ratings necessary to operate businesses globally.
Dividends
We believe that raising corporate value over the resolutions above,long term and paying dividends is essential to rewarding shareholders. We will strive to pay dividends using a consolidated
pay-out
ratio of 30 percent of each semi-annual consolidated earnings as a key indicator.
Dividend payments are determined taking into account a comprehensive range of factors such as the Compensation Committee confirmed thattightening of Basel regulations and other changes to the compensationsregulatory environment as well as the Company’s consolidated financial performance.
Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31.
Additionally we will aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 percent.
With respect to retained earnings, in order to implement measures to adapt to regulatory changes and to increase shareholder value, we seek to efficiently invest in business areas where high profitability and growth may reasonably be expected, including the development and expansion of infrastructure.
Dividends for the DirectorsFiscal Year
Based on our Capital Management Policy described above, we paid a dividend of ¥8 per share to shareholders of record as of September 30, 2021 and have decided to pay a dividend of ¥14 per share to shareholders of record as of March 31, 2022. As a result, the Executive Officers regardingtotal annual dividend will be ¥22 per share.
The following table presented the Fiscal Year areamounts of dividends per share paid by us in respect of the periods indicated:
Fiscal year ended or ending March 31,
  
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
   
Total
 
2017
  ¥—     ¥9.00   ¥—     ¥11.00   ¥20.00 
2018
   —      9.00    —      11.00    20.00 
2019
   —      3.00    —      3.00    6.00 
2020
   —      15.00    —      5.00    20.00 
2021
   —      20.00    —      15.00    35.00 
2022
   —      8.00    —      14.00    22.00 
Consolidated Regulatory Capital Requirements
The FSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005.
The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent
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Company in April 2011. Since then, we have been calculating our consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with relevant compensation policiesBasel 2.5 and appropriate. Also,Basel III since then. We have calculated a Basel
III-based
consolidated capital adequacy ratio from the outlinesend of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the discussions have been reported toscope of credit risk-weighted assets calculation.
In accordance with Article 2 of the Board of Directors meeting.
3)    Status of indicators referred in determining performance-linked compensation
Performance-linked compensation has been determinedCapital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio is currently calculated based on the mechanism describedamounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2022, our common equity Tier 1 capital ratio is 17.22%, Tier 1 capital ratio is 19.60% and consolidated capital adequacy ratio is 19.60% and we are in above sectionscompliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level including applicable minimum consolidated capital buffers as of March 31, 2022 is 7.51% for the common equity Tier 1 capital ratio, 9.01% for the Tier 1 capital ratio and certain indicators. Changes11.01% for the consolidated capital adequacy ratio).
In accordance with Article 2 of the indicators between actuals“Notice of previous fiscal yearthe Establishment of Standards that Indicate Soundness pertaining to Loss-absorbing and Recapitalisation Capacity, Established as Criteria by which the Highest Designated Parent Company is to Judge the Soundness in the Management of the Highest Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57
-17
of the Financial Instruments and Exchange Act” (the ”TLAC Notification”), we have started calculating our external TLAC ratio on a risk-weighted assets basis from March 2021. As of March 31, 2022, our external TLAC as a percentage of risk-weighted assets is 30.72% and we are in compliance with the requirement set out in the TLAC Notification.
The following table presents the Company’s consolidated capital adequacy ratios and External TLAC as a percentage of risk-weighted assets as of March 31, 2021 and March 31, 2022.
   
Billions of yen, except ratios
 
   
March 31
 
   
      2021      
  
      2022      
 
Common equity Tier 1 capital
  ¥2,522.1  ¥2,726.4 
Tier 1 capital
   2,840.5   3,103.0 
Total capital
   2,845.2   3,103.4 
Risk-Weighted Assets
   
Credit risk-weighted assets
   8,550.9   8,301.2 
Market risk equivalent assets
   4,951.6   4,899.0 
Operational risk equivalent assets
   2,448.5   2,629.7 
  
 
 
  
 
 
 
Total risk-weighted assets
  ¥15,951.0  ¥15,829.9 
  
 
 
  
 
 
 
Consolidated Capital Adequacy Ratios
   
Common equity Tier 1 capital ratio
   15.81%   17.22% 
Tier 1 capital ratio
   17.80%   19.60% 
Consolidated capital adequacy ratio
   17.83%   19.60% 
External TLAC as a percentage of risk-weighted assets
   23.06%   30.72% 
Since the end of March 2011, we have been calculating credit risk-weighted assets and operational risk equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, market risk equivalent assets are calculated using the Internal Models Approach.
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We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with the requirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also for benchmarking purposes so that users of this annual report can compare our capital position against those of other financial groups to which Basel III is applied. Our management receives and reviews these capital ratios on a regular basis.
Consolidated Leverage Ratio Requirements
In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio, and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article
57-17
of the Financial Instruments and Exchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 in accordance with these Notices. We have also started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar 3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. In coordination with the monetary policy of the Bank of Japan in response to the impact of the
COVID-19
pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio on June 2020 and March 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 to March 31, 2022. In March 2022, the FSA announced this measure will be extended to March 31, 2024. As of March 31, 2022, our consolidated leverage ratio is 5.98%.
In accordance with Article 2 of the TLAC Notification we have started calculating our external TLAC ratio on a total exposure basis from March 2021. As of March 31, 2022, our external TLAC as a percentage of leverage ratio exposure measure is 10.30% and we are in compliance with the requirement set out in the TLAC Notification.
Regulatory changes which affect us
The Basel Committee has issued a series of announcements regarding a Basel III program designed to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following is a summary of the proposals which are most relevant to us.
On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A global regulatory framework for more resilient banks and banking systems”. They include raising the quality, consistency and transparency of the capital base; strengthening the risk coverage of the capital framework such as the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing a leverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series of measures to address concerns over the “procyclicality” of the current year are referred in determining the performance-linked compensationframework; and introducing a liquidity standard including a
30-day
liquidity coverage ratio as well as other qualitative information, compensation trends among competitorsthe net stable funding ratio to measure stability of financing structure. These standards were implemented from 2013, which includes transitional treatment, (i.e., they are phased in gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of Basel III. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation and industry.disclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks such as capital requirements for banks’ equity investments in funds, the standardized approach for
Please refer
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measuring counterparty credit risk exposures, capital requirements for bank exposures to Item 3.A. “CCPs, supervisory framework for measuring and controlling large exposures, and revisions to the securitization framework, and revised framework for market risk capital requirements have been published by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important financial institutions
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-SIBs
will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution. In response to the FSB’s publication of the TLAC standard, in April 2016, the FSA published its policy to develop the TLAC framework in Japan applicable to Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised policy, the Japanese
G-SIBs
and Nomura (“TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. On March 2019, the FSA published the notices and revised the guidelines of TLAC regulations. Although Nomura is not identified as a
G-SIB
as of the date of this annual report, the TLAC Covered SIBs, including Nomura, will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, Nomura will be required to meet a minimum TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Furthermore, according to the FSA’s revised policy published in April 2018, which is subject to change based on future international discussions, the preferred resolution strategy for the TLAC Covered SIBs is Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a group by a single national resolution authority (i.e., the FSA), although the actual measures to be taken will be determined on a
case-by-case
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
To implement this SPE resolution strategy effectively, the FSA requires holding companies of the TLAC Covered SIBs (“Domestic Resolution Entities”) to (i) meet the minimum external TLAC requirements and (ii) cause their material subsidiaries that are designated as systemically important by the FSA, including but not limited to certain material
sub-groups
as provided in the FSB’s TLAC standard, to maintain a certain level of capital and debt recognized by the FSA as having loss-absorbing and recapitalization capacity, or Internal TLAC.
In addition, the TLAC Covered SIBs’ Domestic Resolution Entities will be allowed to count the amount equivalent to 2.5% of their consolidated risk-weighted assets from the implementation date of the TLAC requirements in Japan (March 31, 2021 for Nomura) and 3.5% of their consolidated risk-weighted assets from 3 years after the implementation date (March 31, 2024 for Nomura) as our external TLAC, considering the Japanese Deposit Insurance Fund Reserves.
It is likely that the FSA’s regulation and notice will be revised further to be in line with a series of rules and standards proposed by the Basel Committee, FSB or International Organization of Securities Commissions.
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Selected Financial Data
”
The following table presents selected financial information as of and for the actual valuesyears ended March 31, 2018, 2019, 2020, 2021 and 2022 which is derived from our consolidated financial statements.
   
Millions of yen, except per share data and percentages
 
   
Year ended March 31
 
   
2018
  
2019
  
2020
  
2021
  
2022
 
Statement of income data:
      
Revenue
  ¥1,972,158  ¥1,835,118  ¥1,952,482  ¥1,617,235  ¥1,593,999 
Interest expense
   475,189   718,348   664,653   215,363   230,109 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net revenue
   1,496,969   1,116,770   1,287,829   1,401,872   1,363,890 
Non-interest
expenses
   1,168,811   1,154,471   1,039,568   1,171,201   1,137,267 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes
   328,158   (37,701)   248,261   230,671   226,623 
Income tax expense
   103,866   57,010   28,894   70,274   80,090 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss)
  ¥224,292  ¥(94,711)  ¥219,367  ¥160,397  ¥146,533 
Less: Net income attributable to noncontrolling interests
   4,949   5,731   2,369   7,281   3,537 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Net income (loss) attributable to NHI shareholders
  ¥219,343  ¥(100,442)  ¥216,998  ¥153,116  ¥142,996 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance sheet data (period end):
      
Total assets
  ¥40,343,947  ¥40,969,439  ¥43,999,815  ¥42,516,480  ¥43,412,156 
Total NHI shareholders’ equity
   2,749,320   2,631,061   2,653,467   2,694,938   2,914,605 
Total equity
   2,799,824   2,680,793   2,731,264   2,756,451   2,972,803 
Common stock
   594,493   594,493   594,493   594,493   594,493 
Per share data:
      
Net income (loss) attributable to NHI shareholders—basic
  ¥63.13  ¥(29.90)  ¥67.76  ¥50.11  ¥46.68 
Net income (loss) attributable to NHI shareholders—diluted
   61.88   (29.92)   66.20   48.63   45.23 
Total NHI shareholders’ equity
(1)
   810.31   794.69   873.26   879.79   965.80 
Cash dividends
(1)
   20.00   6.00   20.00   35.00   22.00 
Cash dividends in USD
(2)
  $0.19  $0.05  $0.19  $0.32  $0.18 
Weighted average number of shares outstanding (in thousands)
(3)
   3,474,593   3,359,565   3,202,370   3,055,526   3,063,524 
Return on equity
(4)
:
   7.9%   (3.7%)   8.2%   5.7%   5.1% 
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(1)
Calculated using the number of shares outstanding at year end.
(2)
Calculated using the Japanese Yen—U.S. Dollar exchange rate as of the respective fiscal year end date, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
(3)
The number shown is used to calculate basic earnings per share.
(4)
Calculated as net income (loss) attributable to NHI shareholders divided by total NHI shareholders’ equity.
Regulatory Capital Requirements
Many of our business activities are subject to statutory capital requirements, including those of Japan, the U.S., the U.K. and certain other countries in which we operate. For further discussion on statutory capital requirements, see Note 18 “
Regulatory requirements
” in our consolidated financial statements included in this annual report.
Translation Exposure
A significant portion of our business is conducted in currencies other than Japanese Yen—most significantly, U.S. Dollars, British pounds and Euros. We prepare financial statements of each of our consolidated subsidiaries in its functional currency, which is the currency of the referring indicators.primary economic environment in which the entity operates. Translation exposure is the risk arising from the effect of fluctuations in exchange rates on the net assets of our foreign subsidiaries. Translation exposure is not recognized in our consolidated statements of income unless and until we dispose of, or liquidate, the relevant foreign subsidiary.
Assets and Liabilities Associated with Investment and Financial Services Business
Exposure to Certain Financial Instruments and Counterparties
Market conditions continue to impact numerous products to which we have certain exposures. We also have exposures to Special Purpose Entities (“SPEs”) and others in the normal course of business.
Leveraged Finance
We provide loans to clients in connection with leveraged
buy-outs
and leveraged
buy-ins.
As this type of financing is usually initially provided through a commitment, we have both funded and unfunded exposures on these transactions.
The following table sets forth our exposure to leveraged finance with unfunded commitments, presenting funded and unfunded portions by geographic location of the target company as of March 31, 2022.
   
Millions of yen
 
   
March 31, 2022
 
   
Funded
   
Unfunded
   
Total
 
Europe
  ¥6,361   ¥69,040   ¥75,401 
Americas
   17,370    106,915    124,285 
Asia and Oceania
   10,448    27,289    37,737 
  
 
 
   
 
 
   
 
 
 
Total
  ¥34,179   ¥203,244   ¥237,423 
  
 
 
   
 
 
   
 
 
 
Special Purpose Entities (“SPEs”)
Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of involvement with SPEs include guarantee agreements and derivative contracts.
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For further discussion on Nomura’s involvement with variable interest entities, see Note 6 “
Securitizations and Variable Interest Entities
” in our consolidated financial statements included in this annual report.
Accounting Developments
See Note 1“
Summary of accounting policies: New accounting pronouncements adopted during the current year
” in our consolidated financial statements included in this annual report.
Deferred Tax Assets
Details of deferred tax assets and liabilities
The following table presents details of deferred tax assets and liabilities reported within
Other assets
—
Other and Other liabilities
, respectively, in the consolidated balance sheets as of March 31, 2022.
Millions of yen
March 31, 2022
Deferred tax assets
Depreciation, amortization and valuation of fixed assets
¥30,441
Investments in subsidiaries and affiliates
21,390
Valuation of financial instruments
102,021
Accrued pension and severance costs
20,492
Other accrued expenses and provisions
79,061
Operating losses
370,481
Lease liabilities
49,060
Other
15,425
Gross deferred tax assets
688,371
Less
—
Valuation allowances
(466,145) 
Total deferred tax assets
222,226
Deferred tax liabilities
Investments in subsidiaries and affiliates
91,040
Valuation of financial instruments
85,301
Undistributed earnings of foreign subsidiaries
2,745
Valuation of fixed assets
23,962
Right-of-use
assets
48,519
Other
7,044
Total deferred tax liabilities
258,611
Net deferred tax assets (liabilities)
¥(36,385) 
Calculation method of deferred tax assets
In accordance with U.S. GAAP, we recognize deferred tax assets to the extent we believe that it is more likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to us, which are not deemed more likely than not to be realized.
B. Liquidity and Capital Resources.
Funding and Liquidity Management
Overview
We define liquidity risk as the risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s
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creditworthiness or deterioration in market conditions. This risk could arise from Nomura-specific or market-wide events such as inability to access the secured or unsecured debt markets, a deterioration in our credit ratings, a failure to manage unplanned changes in funding requirements, a failure to liquidate assets quickly and with minimal loss in value, or changes in regulatory capital restrictions which may prevent the free flow of funds between different group entities. Our global liquidity risk management policy is based on liquidity risk appetite formulated by the Executive Management Board (“EMB”). Nomura’s liquidity risk management, under market-wide stress and in addition, under Nomura-specific stress, seeks to ensure enough continuous liquidity to meet all funding requirements and unsecured debt obligations across one year and
30-day
periods, respectively, without raising funds through unsecured funding or through the liquidation of assets. We are required to meet regulatory notice on the liquidity coverage ratio issued by the FSA.
We have in place a number of liquidity risk management frameworks that enable us to achieve our primary liquidity objective. These frameworks include (1) Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio; (2) Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio; (3) Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets; (4) Management of Credit Lines to Nomura Group Entities; (5) Implementation of Liquidity Stress Tests; and (6) Contingency Funding Plan.
Our EMB has the authority to make decisions concerning group liquidity management. The Chief Financial Officer (“CFO”) has the operational authority and responsibility over our liquidity management based on decisions made by the EMB.
1.    Centralized Control of Residual Cash and Maintenance of Liquidity Portfolio.
We centrally control residual cash held at Nomura Group entities for effective liquidity utilization purposes. As for the usage of funds, the CFO decides the maximum amount of available funds, provided without posting any collateral, for allocation within Nomura and the EMB allocates the funds to each business division. Global Treasury monitors usage by businesses and reports to the EMB.
In order to enable us to transfer funds smoothly between group entities, we limit the issuance of securities by regulated broker-dealers or banking entities within the Nomura Group and seek to raise unsecured funding primarily through the Company or through unregulated subsidiaries. The primary benefits of this strategy include cost minimization, wider investor name recognition and greater flexibility in providing funding to various subsidiaries across the Nomura Group.
To meet any potential liquidity requirement, we maintain a liquidity portfolio, managed by Global Treasury apart from other assets, in the form of cash and highly liquid, unencumbered securities that may be sold or pledged to provide liquidity. As of March 31, 2022, our liquidity portfolio was ¥7,074.2 billion which sufficiently met liquidity requirements under the stress scenarios.
The following table presents a breakdown of our liquidity portfolio by type of financial assets as of March 31, 2021 and 2022 and averages maintained for the years ended March 31, 2021 and 2022. Yearly averages are calculated using
month-end
amounts.
   
Billions of yen
 
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Cash, cash equivalents and time deposits
(1)
  ¥2,775.9   ¥2,765.0   ¥3,151.6   ¥2,997.5 
Government debt securities
   3,082.8    2,641.2    3,629.8    3,674.2 
Others
(2)
   254.0    252.1    298.3    402.5 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total liquidity portfolio
  ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
 
   
 
 
   
 
 
   
 
 
 
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(1)
Cash, cash equivalents, and time deposits include nostro balances and deposits with both central banks and market counterparties that are readily available to support the liquidity position of Nomura.
(2)
Others include other liquid financial assets such as money market funds and U.S. agency securities.
The following table presents a breakdown of our liquidity portfolio by currency as of March 31, 2021 and 2022 and averages maintained for the years ended March 31, 2021 and 2022. Yearly averages are calculated using
month-end
amounts.
   
Billions of yen
 
   
Average for

year ended

March 31, 2021
   
March 31,

2021
   
Average for

year ended

March 31, 2022
   
March 31,

2022
 
Japanese Yen
  ��2,298.1   ¥966.5   ¥1,913.7   ¥1,409.8 
U.S. Dollar
   2,441.2    3,367.1    3,567.3    3,924.1 
Euro
   795.1    793.5    792.3    868.5 
British Pound
   405.4    333.8    578.3    597.5 
Others
(1)
   172.9    197.5    228.1    274.3 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total liquidity portfolio
  ¥6,112.7   ¥5,658.3   ¥7,079.7   ¥7,074.2 
  
 
 
   
 
 
   
 
 
   
 
 
 
(1)
Includes other currencies such as the Australian dollar, the Canadian dollar and the Swiss franc.
We assess our liquidity portfolio requirements globally as well as by each major operating entity in the Nomura Group. We primarily maintain our liquidity portfolio at Nomura Holdings, Inc. (“NHI”) and Nomura Securities Co. Ltd. (“NSC”), our other major broker-dealer subsidiaries, our bank subsidiaries, and other group entities. In determining the amounts and entities which hold this liquidity portfolio, we consider legal, regulatory and tax restrictions which may impact our ability to freely transfer liquidity across different entities in the Nomura Group. For more information regarding regulatory restrictions, see Note 18 “
Regulatory requirements
” in our consolidated financial statements included within this annual report.
The following table presents a breakdown of our liquidity portfolio by entity as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
NHI and NSC
(1)
  ¥981.8   ¥1,395.4 
Major broker-dealer subsidiaries
   2,632.6    3,118.5 
Bank subsidiaries
(2)
   752.6    1,008.5 
Other affiliates
   1,291.3    1,551.8 
  
 
 
   
 
 
 
Total liquidity portfolio
  ¥5,658.3   ¥7,074.2 
  
 
 
   
 
 
 
(1)
NSC, a broker-dealer located in Japan, holds an account with the Bank of Japan (“BOJ”) and has direct access to the BOJ Lombard facility through which same day funding is available for our securities pool. Any liquidity surplus at NHI is lent to NSC via short-term intercompany loans, which can be unwound immediately when needed.
(2)
Includes Nomura Bank International plc (“NBI”), Nomura Singapore Limited and Nomura Bank Luxembourg S.A.
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2.    Utilization of Unencumbered Assets as Part of Our Liquidity Portfolio.
In addition to our liquidity portfolio, we had ¥2,665.7 billion of other unencumbered assets comprising mainly of unpledged trading assets that can be used as an additional source of secured funding. Global Treasury monitors other unencumbered assets and can, under a liquidity stress event when the contingency funding plan has been invoked, monetize and utilize the cash generated as a result. The aggregate of our liquidity portfolio and other unencumbered assets as of March 31, 2022 was ¥9,739.9 billion, which represented 332.2
%
of our total unsecured debt maturing within one year.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Net liquidity value of other unencumbered assets
  ¥2,771.6   ¥2,665.7 
Liquidity portfolio
   5,658.3    7,074.2 
  
 
 
   
 
 
 
Total
  ¥8,429.9   ¥9,739.9 
  
 
 
   
 
 
 
3.    Appropriate Funding and Diversification of Funding Sources and Maturities Commensurate with the Composition of Assets
We seek to maintain a surplus of long-term debt and equity above the cash capital requirements of our assets. We also seek to achieve diversification of our funding by market, instrument type, investors, currency, and staggered maturities in order to reduce unsecured refinancing risk.
We diversify funding by issuing various types of debt instruments—these include both structured loans and structured notes with returns linked to interest rates, currencies, equities, commodities, or related indices. We issue structured loans and structured notes in order to increase the diversity of our debt instruments. We typically hedge the returns we are obliged to pay with derivatives and/or the underlying assets to obtain funding equivalent to our unsecured long-term debt. The proportion of our
non-Japanese
Yen denominated long-term debt increased to 51.4% of total long-term debt outstanding as of March 31, 2022 from 47.2% as of March 31, 2021.
3.1    Short-Term Unsecured Debt
Our short-term unsecured debt consists of short-term bank borrowings (including long-term bank borrowings maturing within one year), other loans, commercial paper, deposit at banking entities, certificates of deposit and debt securities maturing within one year. Deposits at banking entities and certificates of deposit comprise customer deposits and certificates of deposit of our banking subsidiaries. Short-term unsecured debt includes the current portion of long-term unsecured debt.
The following table presents an analysis of our short-term unsecured debt by type of financial liability as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Short-term bank borrowings
  ¥265.8   ¥148.0 
Other loans
   138.7    228.1 
Commercial paper
   460.0    131.9 
Deposits at banking entities
   1,149.9    1,520.7 
Certificates of deposit
   83.6    127.8 
Debt securities maturing within one year
   831.5    775.6 
  
 
 
   
 
 
 
Total short-term unsecured debt
  ¥2,929.5   ¥2,932.1 
  
 
 
   
 
 
 
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3.2    Long-Term Unsecured Debt
We meet our long-term capital requirements and also achieve both cost-effective funding and an appropriate maturity profile by routinely funding through long-term debt and diversifying across various maturities and currencies.
Our long-term unsecured debt includes senior and subordinated debt issued through U.S. registered shelf offerings and our U.S. registered medium-term note programs, our Euro medium-term note programs, registered shelf offerings in Japan and various other debt programs.
As a globally competitive financial services group in Japan, we have access to multiple global markets and major funding centers. The Company, NSC, Nomura Europe Finance N.V., NBI, Nomura International Funding Pte. Ltd. and Nomura Global Finance Co., LTD. are the main group entities that borrow externally, issue debt instruments and engage in other funding activities. By raising funds to match the currencies and liquidities of our assets or by using foreign exchange swaps as necessary, we pursue optimization of our funding structures.
We use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor types. Our unsecured senior debt is mostly issued without financial covenants, such as covenants related to adverse changes in our credit ratings, cash flows, results of operations or financial ratios, which could trigger an increase in our cost of financing or accelerate repayment of the debt.
The following table presents an analysis of our long-term unsecured debt by type of financial liability as of March 31, 2021 and 2022.
   
Billions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Long-term deposits at banking entities
  ¥109.0   ¥112.3 
Long-term bank borrowings
   2,635.2    2,820.5 
Other loans
   74.2    219.5 
Debt securities
(1)
   3,877.9    4,745.8 
  
 
 
   
 
 
 
Total long-term unsecured debt
  ¥6,696.3   ¥7,898.1 
  
 
 
   
 
 
 
(1)
Excludes long-term debt securities issued by consolidated special purpose entities and similar entities that meet the definition of variable interest entities under ASC 810 “
Consolidation
” and secured financing transactions recognized within
Long-term borrowings
as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860 “
Transfer and Servicing.
”
3.3    Maturity Profile
We also seek to maintain an average maturity for our plain vanilla debt securities and borrowings greater than or equal to three years. The average maturity for our plain vanilla debt securities and borrowings with maturities longer than one year was 4.4 years as of March 31, 2022. A significant amount of our structured loans and structured notes are linked to interest rates, currencies, equities, commodities, or related indices. These maturities are evaluated based on internal models and monitored by Global Treasury. Where there is a possibility that these may be called prior to their scheduled maturity date, maturities are based on our internal stress option adjusted model. The model values the embedded optionality under stress market conditions in order to determine when the debt securities or borrowing is likely to be called. The graph below shows the distribution of maturities of our outstanding long-term debt securities and borrowings by the model.
On this basis, the average maturity of our structured loans and structured notes with maturities longer than one year was 10.1 years as of March 31, 2022. The average maturity of our entire long-term debt with maturities longer than one year including plain vanilla debt securities and borrowings, was 7.2 years as of March 31, 2022.
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3.4    Secured Funding
We typically fund our trading activities through secured borrowings, repurchase agreements and Japanese “Gensaki Repo” transactions. We believe such funding activities in the secured markets are more cost-efficient and less credit-rating sensitive than financing in the unsecured market. Our secured funding capabilities depend on the quality of the underlying collateral and market conditions. While we have shorter term secured financing for highly liquid assets, we seek longer terms for less liquid assets. We also seek to lower the refinancing risks of secured funding by transacting with a diverse group of global counterparties and delivering various types of securities collateral. In addition, we reserve an appropriate level of liquidity portfolio for the refinancing risks of secured funding maturing in the short term for less liquid assets. For more detail of secured borrowings and repurchase agreements, see Note 5 “
Collateralized transactions
” in our consolidated financial statements.
4.    Compensation governanceManagement of Credit Lines to Nomura Group Entities
We maintain and expand credit lines to Nomura Group entities from other financial institutions to secure stable funding. We ensure that the maturity dates of borrowing agreements are distributed evenly throughout the year in order to prevent excessive maturities in any given period.
5.    Implementation of Liquidity Stress Tests
We maintain our liquidity portfolio and monitor the sufficiency of our liquidity based on an internal model which simulates changes in cash outflow under specified stress scenarios to comply with our above mentioned liquidity management policy.
We assess the liquidity requirements of the Nomura Group under various stress scenarios with differing levels of severity over multiple time horizons. We evaluate these requirements under Nomura-specific and broad market-wide events, including potential credit rating downgrades at the Company and subsidiary levels. We call this risk analysis our Maximum Cumulative Outflow (“MCO”) framework.
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The MCO framework is designed to incorporate the primary liquidity risks for Nomura and models the relevant future cash flows in the following two primary scenarios:
Stressed scenario—To maintain adequate liquidity during a severe market-wide liquidity event without raising funds through unsecured financing or through the liquidation of assets for a year; and
Acute stress scenario—To maintain adequate liquidity during a severe market-wide liquidity event coupled with credit concerns regarding Nomura’s liquidity position, without raising funds through unsecured funding or through the liquidation of assets for 30 days.
We assume that Nomura will not be able to liquidate assets or adjust its business model during the time horizons used in each of these scenarios. The MCO framework therefore defines the amount of liquidity required to be held in order to meet our expected liquidity needs in a stress event to a level we believe appropriate based on our liquidity risk appetite.
As of March 31, 2022, our liquidity portfolio exceeded net cash outflows under the stress scenarios described above.
We constantly evaluate and modify our liquidity risk assumptions based on regulatory and market changes. The model we use in order to simulate the impact of stress scenarios includes the following assumptions:
No liquidation of assets;
No ability to issue additional unsecured funding;
Upcoming maturities of unsecured debt (maturities less than one year);
Potential buybacks of our outstanding debt;
Loss of secured funding lines particularly for less liquid assets;
Fluctuation of funding needs under normal business circumstances;
Cash deposits and free collateral
roll-off
in a stress event;
Widening of haircuts on outstanding repo funding;
Additional collateralization requirements of clearing banks and depositories;
Drawdown on loan commitments;
Loss of liquidity from market losses;
Assuming a
two-notch
downgrade of our credit ratings, the aggregate fair value of assets that we would be required to post as additional collateral in connection with our derivative contracts; and
Legal and regulatory requirements that can restrict the flow of funds between entities in the Nomura Group.
6.    Contingency Funding Plan
We have developed a detailed contingency funding plan to integrate liquidity risk control into our comprehensive risk management strategy and to enhance the quantitative aspects of our liquidity risk control procedures. As a part of our Contingency Funding Plan (“CFP”), we have developed an approach for analyzing and quantifying the impact of any liquidity crisis. This allows us to estimate the likely impact of both Nomura-specific and market-wide events; and specifies the immediate action to be taken to mitigate any risk. The CFP lists details of key internal and external parties to be contacted and the processes by which information is to be disseminated. This has been developed at a legal entity level in order to capture specific cash requirements at the local level—it assumes that our parent company does not have access to cash that may be trapped at a subsidiary
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level due to regulatory, legal or tax constraints. We periodically test the effectiveness of our funding plans for different Nomura-specific and market-wide events. We also have access to central banks including, but not exclusively, the BOJ, which provide financing against various types of securities. These operations are accessed in the normal course of business and are an important tool in mitigating contingent risk from market disruptions.
Liquidity Regulatory Framework
In 2008, the Basel Committee published “Principles for Sound Liquidity Risk Management and Supervision”. To complement these principles, the Committee has further strengthened its liquidity framework by developing two minimum standards for funding liquidity. These standards have been developed to achieve two separate but complementary objectives.
The first objective is to promote short-term resilience of a financial institution’s liquidity risk profile by ensuring that it has sufficient high-quality liquid assets to survive a significant stress scenario lasting for 30 days. The Committee developed the Liquidity Coverage Ratio (“LCR”) to achieve this objective.
The second objective is to promote resilience over a longer time horizon by creating additional incentives for financial institutions to fund their activities with more stable sources of funding on an ongoing basis. The Net Stable Funding Ratio (“NSFR”) has a time horizon of one year and has been developed to provide a sustainable maturity structure of assets and liabilities.
These two standards are comprised mainly of specific parameters which are internationally “harmonized” with prescribed values. Certain parameters, however, contain elements of national discretion to reflect jurisdiction-specific conditions.
In Japan, the regulatory notice on the LCR, based on the international agreement issued by the Basel Committee with necessary national revisions, was published by Financial Services Agency (on October 31, 2014). The notices have been implemented since the end of March 2015 with
phased-in
minimum standards. Average of Nomura’s LCRs for the three months ended March 31, 2022 was 241.7%, and Nomura was compliant with requirements of the above notices. As for the NSFR, the revision of the liquidity regulatory notice was published by Financial Services Agency (on March 31, 2021) and it has been implemented from the end of September 2021. Nomura’s NSFR as of March 31, 2022 was compliant with the regulatory requirements.
Cash Flows
Nomura’s cash flows are primarily generated from operating activities undertaken in connection with our client flows and trading and from financing activities which are closely related to such activities. As a financial institution, growth in operations tends to result in cash outflows from operating activities as well as investing activities. For the year ended March 2021, we recorded net cash inflows from operating activities and net cash outflow from investing and financing activities. For the year ended March 2022, we recorded net cash outflows from operating activities and investing activities and net cash inflow from financing activities as discussed in the comparative analysis below.
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The following table presents the summary information on our consolidated cash flows for the years ended March 31, 2021 and 2022.
   
Billions of yen
 
   
Year Ended March 31
 
   
2021
  
2022
 
Net cash provided by (used in) operating activities
  ¥665.8  ¥(1,368.7) 
Net income
   160.4   146.5 
Trading assets and private equity and debt investments
   1,468.4   1,254.3 
Trading liabilities
   777.7   (284.7) 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
   (1,453.9)   (2,220.5) 
Securities borrowed, net of securities loaned
   (1,242.5)   595.1 
Other, net
   955.7   (859.4) 
Cash flows from investing activities:
   (139.0)   (45.3) 
Cash flows from financing activities:
   (269.9)   1,070.7 
Long-term borrowings, net
   (1.0)   1,225.0 
Decrease in short-term borrowings, net
   (325.2)   (475.5) 
Increase in deposits received at banks, net
   126.2   448.1 
Other, net
   (69.9)   (126.9) 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   60.8   149.7 
  
 
 
  
 
 
 
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
   317.7   (193.6) 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of the year
   3,192.3   3,510.0 
  
 
 
  
 
 
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of the year
  ¥3,510.0  ¥3,316.4 
  
 
 
  
 
 
 
See the consolidated statements of cash flows in our consolidated financial statements included within this annual report for more detailed information.
For the year ended March 31, 2022, our cash, cash equivalents, restricted cash and restricted cash equivalents decreased by ¥193.6 billion to ¥3,316.4 billion. Net cash of ¥1,070.7 billion was provided by financing activities due to net cash inflows of ¥1,225.0 billion from
Long-term borrowings
. As part of trading activities, while there were net cash inflows of ¥969.6 billion mainly due to a decrease in
Trading assets and private equity and debt investments,
they were offset by net cash outflows of ¥1,625.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥1,368.7 billion was used in operating activities.
For the year ended March 31, 2021, our cash, cash equivalents, restricted cash and restricted cash equivalents increased by ¥317.7 billion to ¥3,510.0 billion. Net cash of ¥269.9 billion was used in financing activities due to net cash outflows of ¥325.2 billion from
Short-term borrowings
. As part of trading activities, while there were net cash inflows of ¥2,246.1 billion mainly due to a decrease in
Trading assets and Private equity and debt investments,
they were offset by net cash outflows of ¥2,696.4 billion from repo transactions and securities borrowed and loaned transactions such as
Securities purchased under agreements to resell, Securities sold under agreements to repurchase
, and
Securities borrowed, net of Securities loaned.
As a result, net cash of ¥665.8 billion was provided by operating activities.
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Balance Sheet and Financial Leverage
Total assets as of March 31, 2022, were ¥43,412.2 billion, an increase of ¥895.7 billion compared with ¥42,516.5 billion as of March 31, 2021, reflecting primarily an increase in
Securities purchased under agreements to resell
.
Total liabilities as of March 31, 2022, were ¥40,439.4 billion, an increase of ¥679.3 billion compared with ¥39,760.0 billion as of March 31, 2021, reflecting primarily an increase in
Long-term borrowings
. NHI shareholders’ equity as of March 31, 2022 was ¥2,914.6 billion, an increase of ¥219.7 billion compared with ¥2,694.9 billion as of March 31, 2021, primarily due to an increase in
Accumulated other
comprehensive income.
We seek to maintain sufficient capital at all times to withstand losses due to extreme market movements. The EMB is responsible for implementing and enforcing capital policies. This includes the determination of our balance sheet size and required capital levels. We continuously review our equity capital base to ensure that it can support the economic risk inherent in our business. There are also regulatory requirements for minimum capital of entities that operate in regulated securities or banking businesses.
As leverage ratios are commonly used by other financial institutions similar to us, we voluntarily provide a leverage ratio and adjusted leverage ratio primarily for benchmarking purposes so that users of our annual report can compare our leverage against other financial institutions. Adjusted leverage ratio is a
non-GAAP
financial measure that Nomura considers to be a useful supplemental measure of leverage.
The following table presents NHI shareholders’ equity, total assets, adjusted assets and leverage ratios as of March 31, 2021 and 2022.
   
Billions of yen, except ratios
 
   
March 31
 
   
        2021        
   
        2022        
 
NHI shareholders’ equity
  ¥2,694.9   ¥2,914.6 
Total assets
   42,516.5    43,412.2 
Adjusted assets
(1)
   26,477.0    26,535.8 
Leverage ratio
(2)
   15.8 x    14.9 x 
Adjusted leverage ratio
(3)
   9.8 x    9.1 x 
(1)
Represents total assets less
Securities purchased under agreements to resell
and
Securities borrowed
. Adjusted assets is a
non-GAAP
financial measure and is calculated as follows:
(2)
Equals total assets divided by NHI shareholders’ equity.
(3)
Equals adjusted assets divided by NHI shareholders’ equity.
   
Billions of yen
 
   
March 31
 
   
        2021        
   
        2022        
 
Total assets
  ¥42,516.5   ¥43,412.2 
Less:
    
Securities purchased under agreements to resell
   10,775.1    11,879.3 
Securities borrowed
   5,264.4    4,997.1 
  
 
 
   
 
 
 
Adjusted assets
  ¥26,477.0   ¥26,535.8 
  
 
 
   
 
 
 
Total assets increased by 2.1% reflecting primarily an increase in
Securities purchased under agreements to resell.
Total NHI shareholders’ equity increased by 8.2% reflecting primarily an increase in
Accumulated other comprehensive income
. As a result, our leverage ratios were 15.8 times as of March 31, 2021 and 14.9 times as of March 31, 2022.
Adjusted assets increased primarily due to an increase in
Loans receivable
. As a result, our adjusted leverage ratios were 9.8 times as of March 31, 2021 and 9.1 times as of March 31, 2022.
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Capital Management
Capital Management Policy
We seek to enhance shareholder value and to capture growing business opportunities by maintaining sufficient levels of capital. We will continue to review our levels of capital as appropriate, taking into consideration the economic risks inherent to operating our businesses, the regulatory requirements, and maintaining our ratings necessary to operate businesses globally.
Dividends
We believe that raising corporate value over the long term and paying dividends is essential to rewarding shareholders. We will strive to pay dividends using a consolidated
pay-out
ratio of 30 percent of each semi-annual consolidated earnings as a key indicator.
Dividend payments are determined taking into account a comprehensive range of factors such as the tightening of Basel regulations and other changes to the regulatory environment as well as the Company’s consolidated financial performance.
Dividends will in principle be paid on a semi-annual basis with record dates of September 30 and March 31.
Additionally we will aim for a total payout ratio, which includes dividends and share buybacks, of at least 50 percent.
With respect to retained earnings, in order to implement measures to adapt to regulatory changes and to increase shareholder value, we seek to efficiently invest in business areas where high profitability and growth may reasonably be expected, including the development and expansion of infrastructure.
Dividends for the Fiscal Year
Based on our Capital Management Policy described above, we paid a dividend of ¥8 per share to shareholders of record as of September 30, 2021 and have decided to pay a dividend of ¥14 per share to shareholders of record as of March 31, 2022. As a result, the total annual dividend will be ¥22 per share.
The following table presented the amounts of dividends per share paid by us in respect of the periods indicated:
Fiscal year ended or ending March 31,
  
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
   
Total
 
2017
  ¥—     ¥9.00   ¥—     ¥11.00   ¥20.00 
2018
   —      9.00    —      11.00    20.00 
2019
   —      3.00    —      3.00    6.00 
2020
   —      15.00    —      5.00    20.00 
2021
   —      20.00    —      15.00    35.00 
2022
   —      8.00    —      14.00    22.00 
Consolidated Regulatory Capital Requirements
The CompensationFSA established the “Guideline for Financial Conglomerates Supervision” (“Financial Conglomerates Guideline”) in June 2005 and set out the rules on consolidated regulatory capital. We started monitoring our consolidated capital adequacy ratio in accordance with the Financial Conglomerates Guideline from April 2005.
The Company has been assigned by the FSA as a Final Designated Parent Company who must calculate a consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent
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Company in April 2011. Since then, we have been calculating our consolidated capital adequacy ratio according to the Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised to be in line with Basel 2.5 and Basel III since then. We have calculated a Basel
III-based
consolidated capital adequacy ratio from the end of March 2013. Basel 2.5 includes significant change in calculation method of market risk and Basel III includes redefinition of capital items for the purpose of requiring higher quality of capital and expansion of the scope of credit risk-weighted assets calculation.
In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, our consolidated capital adequacy ratio is currently calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital (sum of common equity Tier 1 capital and additional Tier 1 capital), total capital (sum of Tier 1 capital and Tier 2 capital), credit risk-weighted assets, market risk and operational risk. As of March 31, 2022, our common equity Tier 1 capital ratio is 17.22%, Tier 1 capital ratio is 19.60% and consolidated capital adequacy ratio is 19.60% and we are in compliance with the requirement for each ratio set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. (required level including applicable minimum consolidated capital buffers as of March 31, 2022 is 7.51% for the common equity Tier 1 capital ratio, 9.01% for the Tier 1 capital ratio and 11.01% for the consolidated capital adequacy ratio).
In accordance with Article 2 of the “Notice of the Establishment of Standards that Indicate Soundness pertaining to Loss-absorbing and Recapitalisation Capacity, Established as Criteria by which the Highest Designated Parent Company is to Judge the Soundness in the Management of the Highest Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article 57
-17
of the Financial Instruments and Exchange Act” (the ”TLAC Notification”), we have started calculating our external TLAC ratio on a risk-weighted assets basis from March 2021. As of March 31, 2022, our external TLAC as a percentage of risk-weighted assets is 30.72% and we are in compliance with the requirement set out in the TLAC Notification.
The following table presents the Company’s consolidated capital adequacy ratios and External TLAC as a percentage of risk-weighted assets as of March 31, 2021 and March 31, 2022.
   
Billions of yen, except ratios
 
   
March 31
 
   
      2021      
  
      2022      
 
Common equity Tier 1 capital
  ¥2,522.1  ¥2,726.4 
Tier 1 capital
   2,840.5   3,103.0 
Total capital
   2,845.2   3,103.4 
Risk-Weighted Assets
   
Credit risk-weighted assets
   8,550.9   8,301.2 
Market risk equivalent assets
   4,951.6   4,899.0 
Operational risk equivalent assets
   2,448.5   2,629.7 
  
 
 
  
 
 
 
Total risk-weighted assets
  ¥15,951.0  ¥15,829.9 
  
 
 
  
 
 
 
Consolidated Capital Adequacy Ratios
   
Common equity Tier 1 capital ratio
   15.81%   17.22% 
Tier 1 capital ratio
   17.80%   19.60% 
Consolidated capital adequacy ratio
   17.83%   19.60% 
External TLAC as a percentage of risk-weighted assets
   23.06%   30.72% 
Since the end of March 2011, we have been calculating credit risk-weighted assets and operational risk equivalent assets by using the foundation Internal Ratings-Based Approach and the Standardized Approach, respectively, with the approval of the FSA. Furthermore, market risk equivalent assets are calculated using the Internal Models Approach.
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We provide consolidated capital adequacy ratios not only to demonstrate that we are in compliance with the requirements set out in the Capital Adequacy Notice on Final Designated Parent Company but also for benchmarking purposes so that users of this annual report can compare our capital position against those of other financial groups to which Basel III is applied. Our management receives and reviews these capital ratios on a regular basis.
Consolidated Leverage Ratio Requirements
In March 2019, the FSA set out requirements for the calculation and disclosure and minimum requirement of 3% of a consolidated leverage ratio, and the publication of “Notice of the Establishment of Standards for Determining Whether the Adequacy of Leverage, the Supplementary Measure to the Adequacy of Equity Capital of a Final Designated Parent Company and its Subsidiary Corporations, etc. is Appropriate Compared to the Assets Held by the Final Designated Parent Company and its Subsidiary Corporations, etc., under Paragraph 1, Article
57-17
of the Financial Instruments and Exchange Act” (2019 FSA Regulatory Notice No. 13; “Notice on Consolidated Leverage Ratio”), through amendments to revising “Specification of items which a final designated parent company should disclose on documents to show the status of its sound management” (2010 FSA Regulatory Notice No. 132; “Notice on Pillar 3 Disclosure”). We started calculating and disclosing a consolidated leverage ratio from March 31, 2015 in accordance with these Notices. We have also started calculating a consolidated leverage ratio from March 31, 2019 in accordance with the Notice on Pillar 3 Disclosure, Notice on Consolidated Leverage Ratio and other related Notices. In coordination with the monetary policy of the Bank of Japan in response to the impact of the
COVID-19
pandemic, the FSA published amendments to the Notice on Consolidated Leverage Ratio on June 2020 and March 2021. Under these amendments, deposits with the Bank of Japan have been excluded from the total exposure measure used to calculate the leverage ratio during the period from June 30, 2020 to March 31, 2022. In March 2022, the FSA announced this measure will be extended to March 31, 2024. As of March 31, 2022, our consolidated leverage ratio is 5.98%.
In accordance with Article 2 of the TLAC Notification we have started calculating our external TLAC ratio on a total exposure basis from March 2021. As of March 31, 2022, our external TLAC as a percentage of leverage ratio exposure measure is 10.30% and we are in compliance with the requirement set out in the TLAC Notification.
Regulatory changes which affect us
The Basel Committee has issued a series of announcements regarding a Basel III program designed to strengthen the regulatory capital framework in light of weaknesses revealed by the financial crises. The following is a summary of the proposals which are most relevant to us.
On December 16, 2010, in an effort to promote a more resilient banking sector, the Basel Committee issued Basel III, that is, “International framework for liquidity risk measurement, standards and monitoring” and “A global regulatory framework for more resilient banks and banking systems”. They include raising the quality, consistency and transparency of the capital base; strengthening the risk coverage of the capital framework such as the implementation of a credit value adjustment (“CVA”) charge for OTC derivative trades; introducing a leverage ratio requirement as a supplemental measure to the risk-based framework; introducing a series of measures to address concerns over the “procyclicality” of the current framework; and introducing a liquidity standard including a
30-day
liquidity coverage ratio as well as the net stable funding ratio to measure stability of financing structure. These standards were implemented from 2013, which includes transitional treatment, (i.e., they are phased in gradually from 2013). In addition, the Basel Committee has issued interim rules for the capitalization of bank exposures to central counterparties (“CCPs”) on July 25, 2012, which came into effect in 2013 as part of Basel III. Moreover, in addition to Basel III leverage ratio framework under which we started the calculation and disclosure of consolidated leverage ratio as above, a series of final standards on the regulatory frameworks such as capital requirements for banks’ equity investments in funds, the standardized approach for
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measuring counterparty credit risk exposures, capital requirements for bank exposures to CCPs, supervisory framework for measuring and controlling large exposures, and revisions to the securitization framework, and revised framework for market risk capital requirements have been published by the Basel Committee.
At the
G-20
summit in November 2011, the Financial Stability Board (“FSB”) and the Basel Committee announced the list of global systemically important banks
(“G-SIBs”)
and the additional requirements to the
G-SIBs
including the recovery and resolution plan. The group of
G-SIBs
have been updated annually and published by the FSB each November. Since November 2011, we have not been designated as a
G-SIBs.
On the other hand, the FSB and the Basel Committee were asked to work on extending the framework for
G-SIBs
to domestic systemically important financial institutions
(“D-SIBs”)
and the Basel Committee developed and published a set of principles on the assessment methodology and the higher loss absorbency requirement for
D-SIBs.
In December 2015, the FSA identified us as a
D-SIB
and required additional capital charge of 0.5% after March 2016, with
3-year
transitional arrangement.
In November 2015, the FSB issued the final TLAC standard for
G-SIBs.
The TLAC standard has been designed so that failing
G-SIBs
will have sufficient loss-absorbing and recapitalization capacity available in resolution for authorities to implement an orderly resolution. In response to the FSB’s publication of the TLAC standard, in April 2016, the FSA published its policy to develop the TLAC framework in Japan applicable to Japanese
G-SIBs
and, in April 2018, revised such policy to apply the TLAC requirements in Japan not only to Japanese
G-SIBs
but also to Japanese
D-SIBs
that are deemed (i) of particular need for a cross-border resolution arrangement and (ii) of particular systemic significance to Japanese financial system if they fail. In the revised policy, the Japanese
G-SIBs
and Nomura (“TLAC Covered SIBs”) would be subject to the TLAC requirements in Japan. On March 2019, the FSA published the notices and revised the guidelines of TLAC regulations. Although Nomura is not identified as a
G-SIB
as of the date of this annual report, the TLAC Covered SIBs, including Nomura, will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, Nomura will be required to meet a minimum TLAC requirement of holding TLAC in an amount at least 16% of our consolidated risk-weighted assets as from March 31, 2021 and at least 18% as from March 31, 2024 as well as at least 6% of the applicable Basel III leverage ratio denominator from March 31, 2021 and at least 6.75% from March 31, 2024.
Furthermore, according to the FSA’s revised policy published in April 2018, which is subject to change based on future international discussions, the preferred resolution strategy for the TLAC Covered SIBs is Single Point of Entry (“SPE”) resolution, in which resolution powers are applied to the top of a statutory committee,group by a single national resolution authority (i.e., the FSA), although the actual measures to be taken will be determined on a
case-by-case
basis considering the actual condition of the relevant the TLAC Covered SIBs in crisis.
To implement this SPE resolution strategy effectively, the FSA requires holding companies of the TLAC Covered SIBs (“Domestic Resolution Entities”) to (i) meet the minimum external TLAC requirements and (ii) cause their material subsidiaries that are designated as systemically important by the FSA, including but not limited to certain material
sub-groups
as provided in the FSB’s TLAC standard, to maintain a certain level of capital and debt recognized by the FSA as having loss-absorbing and recapitalization capacity, or Internal TLAC.
In addition, the TLAC Covered SIBs’ Domestic Resolution Entities will be allowed to count the amount equivalent to 2.5% of their consolidated risk-weighted assets from the implementation date of the TLAC requirements in Japan (March 31, 2021 for Nomura) and 3.5% of their consolidated risk-weighted assets from 3 years after the implementation date (March 31, 2024 for Nomura) as our external TLAC, considering the Japanese Deposit Insurance Fund Reserves.
It is responsible for approving our overall compensation policy and for ensuringlikely that the FSA’s regulation and notice will be revised further to be in line with a series of rules and standards proposed by the Basel Committee, FSB or International Organization of Securities Commissions.
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Credit Ratings
The cost and availability of unsecured funding are generally dependent on credit ratings. Our long-term and short-term debt is rated by several recognized credit rating agencies. We believe that our credit ratings include the credit ratings agencies’ assessment of the general operating environment, our positions in the markets in which we operate, reputation, earnings structure, trend and volatility of our earnings, risk management framework, liquidity and capital management. An adverse change in any of these factors could result in a downgrade of our credit ratings, and that could, in turn, increase our borrowing costs and limit our access to the capital markets or require us to post additional collateral and permit counterparties to terminate transactions pursuant to certain contractual obligations. In addition, our credit ratings can have a significant impact on certain of our trading revenues, particularly in those businesses where longer term counterparty performance is critical, such as OTC derivative transactions.
On September 2, 2021, Fitch Ratings removed the negative watch on the bbb+ viability ratings of the Company and NSC.
As of May 20, 2022, the credit ratings of the Company and NSC were as follows.
Nomura Holdings, Inc.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2BBB+ (Stable)
Moody’s Investors Service
—  
Baa1 (Negative)
Fitch Ratings
F1
A-
(Stable)
Rating and Investment Information, Inc.
a-1A (Stable)
Japan Credit Rating Agency, Ltd.
—  
AA-
(Stable)
Nomura Securities Co., Ltd.
Short-term Debt
Long-term Debt
S&P Global Ratings
A-2
A-
(Stable)
Moody’s Investors Service
P-2A3 (Negative)
Fitch Ratings
F1
A-
(Stable)
Rating and Investment Information, Inc.
a-1A+ (Stable)
Japan Credit Rating Agency, Ltd.
—  
AA-
(Stable)
Both Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd. are credit rating agencies nationally recognized in Japan. We rely on, or utilize, credit ratings on our long-term and short-term debt provided by these Japanese credit rating agencies, as well as S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings for unsecured funding and other financing purposes and also for our trading and other business activities. Within the rating classification system of Rating and Investment Information, Inc.,
“a-1”
is the highest of five categories for short-term debt and indicates “a strong degree of certainty regarding debt repayment”; and “A” is the third highest of nine categories for long-term debt and indicates “a high degree of certainty regarding debt repayment with excellence in specific component factors”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category. Within the rating classification system of Japan Credit Rating Agency, Ltd., “AA” is the second highest of eleven categories for long-term debt and indicates “a very high level of capacity to honor the financial commitment on the obligation”, with a plus (+) or minus (-) sign added to a rating in that category to indicate its relative standing within that category.
There has been no change to the ratings in the above table since the date indicated.
Off-Balance
Sheet Arrangements.
Off-balance
sheet entities
In the normal course of business, we engage in a variety of
off-balance
sheet arrangements with
off-balance
sheet entities which may have an impact on Nomura’s future financial position and performance.
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Off-balance
sheet arrangements with
off-balance
sheet entities include where Nomura Group’s compensation framework supportshas:
an obligation under a guarantee contract;
a retained or contingent interest in assets transferred to an
off-balance
sheet entity or similar arrangement that serves to provide credit, liquidity or market risk support to such entity;
any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
any obligation, including a contingent obligation, arising out of a variable interest in an
off-balance
sheet entity that is held by, and material to, us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, us.
Off-balance
sheet entities may take the form of a corporation, partnership, fund, trust or other legal vehicle which is designed to fulfill a limited, specific purpose by its sponsor. We both create or sponsor these entities and also enter into arrangements with entities created or sponsored by others.
Our involvement with these entities includes structuring, underwriting, distributing and selling debt instruments and beneficial interests issued by these entities, subject to prevailing market conditions. In connection with our securitization and equity derivative activities, we also act as a transferor of financial assets to these entities, as well as, underwriter, distributor and seller of asset-repackaged financial instruments issued by these entities. We retain, purchase and sell variable interests in SPEs in connection with our market-making, investing and structuring activities. Our other types of
off-balance
sheet arrangements include guarantee agreements and derivative contracts. Significant involvement is assessed based on all of our arrangements with these entities, even if the probability of loss, as assessed at the balance sheet date, is remote.
For further information about transactions with VIEs, see Note 6 “
Securitizations and Variable Interest Entities
” in our consolidated financial statements included in this annual report.
Tabular Disclosure of Contractual Obligations.
In the ordinary course of our business, strategy.we enter into a variety of contractual obligations and contingent commitments, which may require future payments. These arrangements include:
Standby letters of credit and other guarantees:
In connection with our banking and financing activities, we enter into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have fixed expiration dates.
Long-term borrowings and contractual interest payments:
In connection with our operating activities, we issue Japanese Yen and
non-Japanese
Yen denominated long-term borrowings which incur variable and fixed interest payments in accordance with our funding policy.
Operating lease commitments:
We lease office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary course of business both in Japan and overseas as lessee. These arrangements predominantly consist of operating leases.
Separately we sublease certain real estate and equipment through operating lease arrangements.
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Finance lease commitments:
We lease certain equipments and facilities in Japan and overseas which are classified as finance lease agreements.
Purchase obligations:
We have purchase obligations for goods and services which include payments for construction, advertising, and computer and telecommunications maintenance agreements.
Commitments to extend credit:
In connection with our banking and financing activities, we enter into contractual commitments to extend credit, which generally have fixed expiration dates.
In connection with our investment banking activities, we enter into agreements with clients under which we commit to underwrite securities that may be issued by clients.
As a member of certain central clearing counterparties, Nomura is committed to provide liquidity facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in a situation where a default of another clearing member occurs.
Commitments to invest in partnerships:
We have commitments to invest in interests in various partnerships and other entities and commitments to provide financing for investments related to those partnerships.
Note 8 “
Leases
” in our consolidated financial statements contains further detail on our operating leases and finance leases. Note 11 “
Borrowings
” in our consolidated financial statements contains further detail on our short-term and long-term borrowing obligations and Note 20 “
Commitments, contingencies and guarantees
” in our consolidated financial statements included in this annual report contains further detail on our other commitments, contingencies and guarantees.
The contractual amounts of commitments to extend credit represent the maximum amounts at risk should the contracts be fully drawn upon, should the counterparties default, and assuming the value of any existing collateral becomes worthless. The total contractual amount of these commitments may not represent future cash requirements since the commitments may expire without being drawn upon. The credit risk associated with these commitments varies depending on our clients’ creditworthiness and the value of collateral held. We evaluate each client’s creditworthiness on a
case-by-case
basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on management’s credit evaluation of the counterparty.
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The following table presents information regarding amounts and timing of our future contractual obligations and contingent commitments as of March 31, 2022.
   
Millions of yen
 
   
Total

contractual

amount
   
Years to maturity
 
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Standby letters of credit and other guarantees
  ¥1,698,193   ¥1,684,360   ¥7,705   ¥4,519   ¥1,609 
Long-term borrowings
(1)
   8,988,356    456,663    2,085,430    2,273,072    4,173,191 
Contractual interest payments
(2)
   1,032,515    134,019    220,913    152,920    524,663 
Operating lease commitments
(3)
   209,040    44,493    57,884    42,761    63,902 
Purchase obligations
(4)
   98,214    14,012    18,652    65,397    153 
Commitments to extend credit
(5)
   2,012,851    1,354,834    269,828    163,515    224,674 
Commitments to invest
   32,286    149    4,102    6,175    21,860 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥14,071,455   ¥3,688,530   ¥2,664,514   ¥2,708,359   ¥5,010,052 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
(1)
The amounts disclosed within long-term borrowings exclude financial liabilities recognized within long-term borrowings as a result of transfers of financial assets that are accounted for as financings rather than sales in accordance with ASC 860. These are not borrowings issued for our own funding purposes and therefore do not represent actual contractual obligations by us to deliver cash.
(2)
The amounts represent estimated future interest payments related to long-time borrowings based on the period through to their maturity and applicable interest rates as of March 31, 2022.
(3)
The amounts of operating lease commitments are undiscounted future minimum lease payments. The amounts of finance lease contracts were immaterial.
(4)
The minimum contractual obligations under enforceable and legally binding contracts that specify all significant terms. Amounts exclude obligations that are already reflected on our consolidated balance sheets as liabilities or payables. Includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment association.
(5)
Contingent liquidity facilities to central clearing counterparties are included.
Excluded from the above table are obligations that are generally short-term in nature, including short-term borrowings, deposits received at banks and other payables, collateralized agreements and financing transactions (such as reverse repurchase and repurchase agreements), and trading liabilities.
In addition to amounts presented above, we have commitments under reverse repurchase and repurchase agreements including amounts in connection with collateralized agreements and collateralized financing. These commitments amount to ¥1,565 billion for reverse repurchase agreements and ¥2,673 billion for repurchase agreements as of March 31, 2022.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information.
The information required by this item is set forth in Item 5.A of this annual report.
E. Critical Accounting Policies and Estimates
Critical accounting policies are the accounting policies which have the most significant impact on the preparation of our consolidated financial statements included within this annual report and which require the
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most difficult, subjective and complex judgments by our management to develop estimates used in the application of these policies. Such estimates determined by management include estimates regarding the fair value of financial instruments and the outcome of litigations that affect the reported amounts of assets and liabilities related footnote as the disclosures in our consolidated financial statements. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of available information. Actual results in future reporting periods may differ from current estimates, which could have a material impact on our consolidated financial statements.
The Compensation Committee was held 8 timesfollowing table summarizes the critical accounting policies within our consolidated financial statements which have had the most significant impact on our financial condition and financial performance during the fiscalyear ended March 31, 2022. For each such critical accounting policy, the following table also identifies the critical accounting estimates inherent within application of those policies, the nature of the estimates, the underlying assumptions made by our management during the year to reviewderive those estimates and determinethe financial impact had we used different estimates or assumptions during the year. See Note 1
“Summary of Accounting Policies”
in our consolidated financial statements included in this annual report for more information on the critical accounting policies framework,we apply for all of these areas and individual compensationthe relevant additional footnote disclosures referred to in the table for more information around how these critical accounting policies and critical accounting estimates have been applied.
Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2022 (including impact of the COVID-19

pandemic)
Fair value of financial instruments
Note 2
“Fair value
measurements”
Estimating fair value for financial instruments
A significant portion of our financial instruments is carried at fair value. The fair values of these financial instruments may not only measured at quoted prices but also impacted by other factors including selection of valuation techniques/ models and other assumptions that require judgment.
Selection of appropriate valuation techniques
•  For financial instruments measured at fair value where quoted prices are available in active markets, Nomura generally uses quoted prices as level 1 inputs for determining the fair value of these financial instruments.
•  For financial instruments where such quoted prices are not available, fair value of the financial instruments are measured by level 2 or level 3 input(s). Significant judgment is involved in selection of appropriate valuation techniques and validation of
See Note 2
“Fair value measurements”
in our consolidated financial statements included in this annual report for valuation methodologies including active/ inactive principal market, as well as our policy in fair value hierarchy.
Level 3 fair value hierarchy (assets net of derivative liabilities) during the year increased from ¥566 billion as of March 2021 to ¥792 billion as of March 2022. Level 3 financial assets as a proportion of total financial assets carried at fair value on a recurring basis was 6% as of March 31, 2022 (5% as of March 31, 2021.)
See Note 2,
“Fair Value measurement”
for further quantitative and qualitative information regarding level 3 inputs, including the sensitivity of fair value
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2022 (including impact of the COVID-19

pandemic)
assumptions applied in models because the fair value measured could be varied by the selection of those models and assumptions. When selecting valuation techniques, various factors such as the particular circumstances where these financial instruments are traded, availability of reliable inputs, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs are considered.
Significance of level 3 inputs
•  Fair value measurement is more judgmental in respect of level 3 inputs, which are valued based on significant
non-market
based unobservable inputs.
of the underlying financial instruments to changes in level 3 inputs.
Litigation provisions
Note 20
“Commitments, contingencies and guarantees”
Determination of whether a loss is probable and measurement of provisions and reasonably possible loss
In the normal course of business, Nomura may be involved in investigations, lawsuits and other legal proceedings and, as a result, may suffer losses from any fines, penalties or settlements where Nomura chooses to make to resolve the matters and these could be significant to Nomura’s results of operations.
Determination if a loss is probable
•  Recognition of litigation provisions are only required if a loss is probable and can be reasonably estimated.
•  Significant judgment required in deciding whether loss from litigation, investigations, claims or other actions is probable or just reasonably possible.
•  Such judgment usually involves consideration of external legal counsel opinion, our own historical experiences in court and similar matters, the progress of regulatory
See Note 20
“Commitments, contingencies and guarantees”
in our consolidated financial statements included in this annual report for details of the various legal matters Nomura is currently involved with, including those where provisions have been recognized or where loss is considered reasonably possible.
If we concluded as of June 24, 2022 that for cases where an estimate of a range of reasonably possible losses can be made, such loss was actually now probable, we would recognize additional legal provisions through earnings of approximately ¥61 billion. However, this estimate does not include the impact of probable losses where we
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Critical
accounting
policy
Critical accounting
estimates
Underlying subjective key
assumptions by management
Effect of changes in estimates and
assumptions during year ended March 31,
2022 (including impact of the COVID-19

pandemic)
investigation or litigation proceedings and management or our counterparty’s appetite to settle the matter.
•  If a loss is only considered to be reasonably possible, no provision is required.
Measurement of a probable / reasonably possible loss
•  Once a loss has been determined as being probable of occurring, a provision is recognized when a loss is probable and the amount of such loss or range of loss can be reasonably estimated.
•  Where a loss is not probable but still reasonably possible and an estimate of the range of reasonably possible losses can be made based on current information available as of the date of our consolidated financial statements, the reasonably possible maximum loss in excess of amounts recognized as a provision is disclosed.
•  All of the above determination is often inherently difficult, especially for legal claims or regulatory investigations that are indeterminate or still at an early stage.
•  For certain exceptional matters, given the inherent complexities where we believe a loss is probable or reasonably possible, we may be unable to reasonably estimate the amount of loss and therefore are unable to recognize a provision or disclose the reasonably possible maximum loss in excess of amounts recognized as a provision for the matter. In these situations, we disclose this fact.
cannot reasonably estimate such loss. See Note.20 “
Commitments, contingencies and guarantees
”.
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Item 6. Directors, Senior Management and executive officers. To ensure effective discussion and determination at the Compensation Committee, executive officers are invited. Regarding the members of the Compensation Committee, please refer to Item 6.A. “Employees
A. Directors and Senior Management.
”
Directors
The following table presents information about our Directors as of June 24, 2022.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Koji Nagai
(Jan. 25, 1959)
Director
Chairman of the Board Directors
Member of the Nomination Committee
Member of the Compensation Committee
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 1981Joined the Company
Apr. 2003Director of Nomura Securities Co., Ltd.
Jun. 2003Executive Officer of Nomura Securities Co., Ltd.
Apr. 2007Executive Officer (Executive Managing Director) of Nomura Securities Co., Ltd.
Oct. 2008Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2009Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2011
Co-COO
and Deputy President of Nomura Securities Co., Ltd.
Apr. 2012
Senior Managing Director of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Aug. 2012
Representative Executive Officer & Group CEO of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Jun. 2013
Director, Representative Executive Officer & Group CEO of the Company
Director, Representative Executive Officer and President of Nomura Securities Co., Ltd.
Apr. 2017
Director, Representative Executive Officer, President & Group CEO of the Company
Director and Chairman of Nomura Securities Co., Ltd.
Apr. 2020
Director and Chairman of the Company (Current)
Director and Chairman of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
Director, Representative Executive Officer, President and Group CEO
Representative Director and President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2010Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2012Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Aug. 2012
Senior Corporate Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2013
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Executive Officer and Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2017
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2018
Executive Officer and Group
Co-COO
of the Company
Director, Executive Officer and Deputy President of Nomura Securities Co., Ltd.
Apr. 2019Executive Officer, Deputy President and Group
Co-COO
of the Company
Apr. 2020
Representative Executive Officer, President & Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2020
Director, Representative Executive Officer, President & Group CEO of the Company
Representative Director of Nomura Securities Co., Ltd.
Jun. 2021
Director, Representative Executive Officer, President & Group CEO of the Company (Current)
Representative Director and President of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Tomoyuki Teraguchi
(Aug. 4, 1962)
Director, Representative Executive Officer and Deputy President
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 1986Joined the Company
Apr. 2009Senior Managing Director and Global Equity Strategy Office of Nomura Securities Co., Ltd.
Apr. 2011Senior Managing Director and Global Markets Joint COO of Nomura Securities Co., Ltd.
Feb. 2013Senior Managing Director and Global Markets COO of Nomura Securities Co., Ltd.
Apr. 2013Senior Managing Director, Global Markets COO and Global Research of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director, Group Compliance Head and Operations of the Company
Representative Executive Officer,
Compliance Division and Operations of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2017
Senior Managing Director, Group Compliance Head and Operations of the Company
Representative Executive Officer, Senior Corporate Managing Director, Compliance Division and Operations of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
May. 2019
Executive Officer and Chief Compliance Officer of the Company
Representative Director, Executive Vice President, Compliance and Legal of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
Apr. 2020
Executive Officer, Chief of Staff and Chief Compliance Officer of the Company
Representative Director and Deputy President, Compliance and Legal of Nomura Securities Co., Ltd., Internal Control Supervisory Manager
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2021
Representative Executive Officer, Deputy President, Chief of Staff and Chief Compliance Officer of the Company
Representative Director and Deputy President and Chief of Staff of Nomura Securities Co., Ltd.
Jun. 2021
Director, Representative Executive Officer, Deputy President, Chief of Staff and Chief Compliance Officer of the Company
Representative Director, Deputy President and Chief of Staff of Nomura Securities Co., Ltd.
Apr. 2022
Director, Representative Executive Officer and Deputy President of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
Shoji Ogawa
(Aug. 9, 1964)
Director
Member of the Audit Committee (full-time)
Member of the Board Risk Committee
Corporate Auditor of Nomura Asia Pacific Holdings Co., Ltd
Non-Executive
Director of Nomura Holding America Inc.
Non-Executive
Director of Instinet Incorporated
Apr. 1987Joined the Company
Apr. 2007Head of Investment Banking Strategic Planning Dept of Nomura Securities Co., Ltd.
Oct. 2008Head of Capital Markets Dept. and Capital Solutions Dept. of Nomura Securities Co., Ltd.
Jul. 2009Head of Capital Markets Dept. of Nomura Securities Co., Ltd.
Apr. 2012Head of Investment Banking Strategic Planning Dept. of Nomura Securities Co., Ltd.
Jul. 2013
Head of Office of Audit Committee of the Company
Head of Office of Audit Committee of Nomura Securities Co., Ltd.
Aug. 2016
Head of Office of
Non-Executive
Directors and Audit Committee of the
Company
Head of Office of
Non-Executive
Directors and Audit Committee of Nomura Securities Co., Ltd.
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2017
Senior Managing Director and Group Internal Audit of the Company
Senior Managing Director and Internal Audit of Nomura Securities Co., Ltd.
Apr. 2021Advisor of the Company
Jun. 2021Director of the Company (Current)
Kazuhiko Ishimura
(Sep. 18, 1954)
Outside Director
Chairman of the Nomination Committee
Chairman of the Compensation Committee
President of the National Institute of Advanced Industrial Science and Technology
Outside Director of Ricoh Company, Ltd.
Apr. 1979Joined Asahi Glass Co., Ltd. (currently, AGC Inc.) (“AGC”)
Jan. 2006Executive Officer and GM of Kansai Plant of AGC
Jan. 2007Senior Executive Officer and GM of Electronics & Energy General Division of AGC
Mar. 2008Representative Director and President & COO of AGC
Jan. 2010Representative Director and President & CEO of AGC
Jan. 2015Representative Director & Chairman of AGC
Jan. 2018Director & Chairman of AGC
Jun. 2018Outside Director of the Company (Current)
Mar. 2020Director of AGC
Apr. 2020
President of the National Institute of Advanced Industrial Science and
Technology (Current)
Takahisa Takahara
(Jul. 12, 1961)
Outside Director
Member of the Nomination Committee
Member of the Compensation Committee
Representative Director, President & CEO of Unicharm Corporation
Outside Director of Calbee, Inc.
Apr. 1991Joined Unicharm Corporation
Jun. 1995Director of Unicharm Corporation
Apr. 1996Director, General Manager of Procurement Division and Deputy General Manager of International Division of Unicharm Corporation
Jun. 1997Senior Director of Unicharm Corporation
Apr. 1998Senior Director, General Manager of Feminine Hygiene Business Division of Unicharm Corporation
Oct. 2000Senior Director, Responsible for Management Strategy of Unicharm Corporation
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jun. 2001Representative Director, President of Unicharm Corporation
Jun. 2004Representative Director, President & CEO of Unicharm Corporation (Current)
Jun. 2021Outside Director of the Company (Current)
Noriaki Shimazaki
(Aug. 19, 1946)
Outside Director
Chairman of the Audit Committee
Member of the Board Risk Committee
Director of Nomura Securities Co., Ltd.
Outside Director of Loginet Japan Co., Ltd.
Apr. 1969Joined Sumitomo Corporation
Jun. 1998Director of Sumitomo Corporation
Apr. 2002Representative Director and Managing Director of Sumitomo Corporation
Jan. 2003Member of the Business Accounting Council of the Financial Services Agency
Apr. 2004Representative Director and Senior Managing Executive Officer of Sumitomo Corporation
Apr. 2005Representative Director and Executive Vice President of Sumitomo Corporation
Jan. 2009Trustee of the IASC Foundation (currently, IFRS Foundation)
Jul. 2009Special Advisor of Sumitomo Corporation
Jun. 2011
Director of the Financial Accounting Standards Foundation
Chairman of Self-regulation Board and Public Governor of the Japan Securities Dealers Association
Sep. 2013
Advisor of the IFRS Foundation Asia-Oceania Office
Advisor of the Japanese Institute of Certified Public Accountants (Current)
Jun. 2016
Outside Director of the Company (Current)
Director of Nomura Securities Co., Ltd. (Current)
Aug.2019Senior Advisor of the IFRS Foundation Asia-Oceania Office (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Mari Sono
(Feb. 20, 1952)
Outside Director
Member of the Audit Committee
Auditor of WASEDA University
Oct. 1976Joined NISSHIN Audit Corporation (*)
Mar. 1979Registered as Certified Public Accountant
Nov. 1988Partner of CENTURY Audit Corporation (*)
Nov. 1990Member of “Certified Public Accountant Examination System Subcommittee”, Certified Public Accountant Examination and Investigation Board, Ministry of Finance
Apr. 1992Member of “Business Accounting Council”, Ministry of Finance
Dec. 1994Senior Partner, CENTURY Audit Corporation (*)
Oct. 2002Member of Secretariat of the Information Disclosure, Cabinet Office (currently, Secretariat of the Information Disclosure and Personal Information Protection Review Board, Ministry of Internal Affairs and Communications)
Apr. 2005External Comprehensive Auditor, Tokyo
Jul. 2008Senior Partner of Ernst & Young ShinNihon LLC
Aug. 2012Retired from Ernst & Young ShinNihon LLC
Dec. 2013Commissioner of the Securities and Exchange Surveillance Commission
Jun. 2017
Outside Director of the Company (Current)
*Each of the corporation is currently Ernst & Young ShinNihon LLC
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Laura Simone Unger
(Jan. 8, 1961)
Outside Director
Chairperson of the Board Risk Committee
Independent Director of Navient Corporation
Independent Director of Nomura Holding America Inc.
Independent Director of Nomura Securities International, Inc.
Independent Director of Nomura Global Financial Products Inc.
Independent Director of Instinet Holdings Incorporated
Jan. 1988Enforcement Attorney of the U.S. Securities and Exchange Commission (SEC)
Oct. 1990Counsel of the U.S. Senate Committee on Banking, Housing, and Urban Affairs
Nov. 1997Commissioner of the SEC
Feb. 2001Acting Chairperson of the SEC
Jul. 2002Regulatory Expert of CNBC
May 2003Independent Consultant of JPMorgan Chase & Co.
Aug. 2004Independent Director of CA Inc.
Jan. 2010Special Advisor of Promontory Financial Group
Dec. 2010Independent Director of CIT Group Inc.
Nov. 2014Independent Director of Navient Corporation (Current)
Jun. 2018Outside Director of the Company (Current)
Victor Chu
(Jun. 20, 1957)
Outside Director
Member of the Audit Committee
Member of the Board Risk Committee
Chairman and Chief Executive Officer of First Eastern Investment Group
Chair of Council, University College London
Co-Chair,
International Business Council of the World Economic Forum
Independent Director of Airbus SE
Dec. 1982Solicitor of the Supreme Court, Hong Kong
Jan. 1988Chairman and Chief Executive Officer of First Eastern Investment Group (Current)
Oct. 1988Director and Council Member of the Hong Kong Stock Exchange
Jun. 1992Advisory Committee Member of the Securities and Futures Commission, Hong Kong
Aug. 2003Foundation Board Member of the World Economic Forum
Apr 2018Independent Director of Airbus SE (Current)
Jun. 2021Outside Director of the Company (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
J.Christopher Giancarlo
(May 12, 1959)
Outside Director
Member of the Board Risk Committee
Senior Counsel of Willkie Farr & Gallagher LLP
Independent Director of the American Financial Exchange
Principal of Digital Dollar Project
Independent Director of Nomura Securities International, Inc.
Independent Director of Nomura Global Financial Products Inc.
Sep. 1984Associate Attorney of Mudge Rose Guthrie Alexander & Ferdon
Oct. 1985Associate Attorney of Curtis, Mallet-Prevost, Colt & Mosle
Jan. 1992Attorney, Founding Partner of Giancarlo & Gleiberman
Sep. 1997Attorney, (Equity) Partner of Thelen Reid Brown Raysman & Steiner
Apr. 2000Vice President and Legal Counsel of Fenics Software
Apr. 2001Executive Vice President of GFI Group Inc.
Jun. 2014Commissioner of the U.S. Commodity Futures Trading Commission
Jan. 2017Chairman of the U.S. Commodity Futures Trading Commission
Oct. 2019Independent Director of the American Financial Exchange (Current)
Jan. 2020Senior Counsel of Willkie Farr & Gallagher LLP (Current)
Jun. 2021Outside Director of the Company (Current)
Patricia Mosser
(Feb. 14, 1956)
Outside Director
Member of the Board Risk Committee
Senior Research Scholar*
Director of the MPA Program in Economic Policy Management*
Director of Central Banking and Financial Policy*
*Positions at Columbia University, School of International and Public Affairs
Independent Director of Nomura Holding America Inc.
Jul. 1986Assistant Professor, Economics Department, Columbia University
Jan. 1991Economist and Vice President of the Federal Reserve Bank of New York (FRBNY)
Nov. 2006Senior Vice President, FRBNY, Member of the FX Forum, Executive Meeting of East Asia and Pacific (EMEAP) Central Banks, Bank for International Settlements
Jan. 2007Board Member of the American Economic Association’s Committee on the Status of Women in the Economics Profession
Jun. 2007Member of the Markets Committee, Bank for International Settlements
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Jan 2009Acting Systemic Open Market Account Manager for the Federal Open Market Committee (FOMC)
Oct. 2013Deputy Director of the Office of Financial Research (OFR), U.S. Treasury Department
Oct. 2013Member of the Deputies Committee of the Financial Stability Oversight Council (FSOC)
Jun. 2015Senior Research Scholar and Director of Central Banking and Financial Policy at Columbia University’s School of International and Public Affairs (Current)
Jun. 2021Outside Director of the Company (Current)
Among the Directors listed above Kazuhiko Ishimura, Takahisa Takahara, Noriaki Shimazaki, Mari Sono, Laura Simone Unger, Victor Chu, J.Christopher Giancarlo and Patricia Mosser satisfy the requirements for an “Outside Director” under the Companies Act.
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Executive Officers
The following table presents information about our Executive Officers as of June 24, 2022.
Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Kentaro Okuda
(Nov. 7, 1963)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Tomoyuki Teraguchi
(Aug. 4, 1962)
See “
Directors
” under this Item 6.A.
See “
Directors
” under this Item 6.A.
Toshiyasu Iiyama
(Feb. 24, 1965)
Executive Officer
Head of China Committee
Chief Health Officer
Representative Director and Deputy
President of Nomura Securities Co., Ltd.
Apr. 1987Joined the Company
Apr. 2012Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2015
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2016
Senior Managing Director of the Company
Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2018
Senior Managing Director of the Company
Executive Officer and Executive Vice
President of Nomura Securities
Co., Ltd.
Apr. 2019
Senior Managing Director of the Company
Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2020
Senior Managing Director of the Company
Representative Director and Deputy President of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Health Officer of the Company (Current)
Representative Director and Deputy President of Nomura Securities Co., Ltd. (Current)
Takumi Kitamura
(Nov. 26, 1966)
Executive Officer
Chief Financial Officer
Director, Executive Vice President of Nomura Securities Co., Ltd.
Apr. 1990Joined the Company
Apr. 2016
Executive Officer and Chief Financial Officer of the Company
Executive Officer and Financial Officer of Nomura Securities Co., Ltd.
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Apr. 2019
Executive Officer and Chief Financial Officer of the Company
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Financial Officer of the Company
Director, Executive Vice President of Nomura Securities Co., Ltd.
Oct. 2021
Executive Officer, Chief Financial Officer and Chief Administrative Officer of the Company
Director, Executive Vice President of Nomura Securities Co., Ltd.
Apr. 2022
Executive Officer and Chief Financial Officer of the Company
(Current)
Director, Executive Vice President of Nomura Securities Co., Ltd. (Current)
Sotaro Kato
(Oct. 9, 1969)
Executive Officer
Chief Risk Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Sep. 2002Joined the Company
Apr. 2020
Executive Officer and Chief Risk Officer of the Company (based in New York) (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
Yosuke Inaida
(Oct. 6, 1967)
Executive Officer
Chief Compliance Officer
Apr. 1991Joined the Company
Apr. 2015Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2020Senior Corporate Managing Director of Nomura Securities Co., Ltd.
Apr. 2022
Executive Officer and Chief Compliance Officer of the Company (Current)
Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
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Name
(Date of Birth)
Responsibilities and Status within Nomura/
Other Principal Business Activities
Business Experience
Toru Otsuka
(Jun. 5, 1967)
Executive Officer
Chief Strategy Officer
Director and Senior Corporate Managing
Director of Nomura Securities Co., Ltd.
Apr. 1991Joined the Company
Apr. 2018
Senior Managing Director of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
May. 2019
Senior Managing Director and Chief Strategy Officer of the Company
Senior Managing Director of Nomura Securities Co., Ltd.
Apr. 2021
Executive Officer and Chief Strategy Officer of the Company (Current)
Director and Senior Corporate Managing Director of Nomura Securities Co., Ltd. (Current)
B. Compensation Committee’s activities duringof Statutory Officers
Our compensation program for our statutory officers is outlined as following.
1.    Compensation Program of Statutory Officers
Items
Overview of our Compensation Program of Statutory Officers
Key performance indicator (KPI) regarding Performance-Linked CompensationReturn on Equity (ROE)
Determination method for amounts of Performance-Linked Compensation
Determined by considering qualitative evaluation etc. by the Compensation Committee, based on the level of achievement in actual value against the target value regarding KPI.
Determination method for compensation of each Statutory OfficersDetermined by reflecting individual roles and responsibilities, respective jurisdiction’s regulations and compensation level etc. in addition to other qualitative elements.
Nominating Committee and Compensation Committee
Chairman: Kazuhiko Ishimura (outside director)
Member: Takahisa Takahara (outside director)
Member: Koji Nagai (chairman of board of directors,
non-executive
director)
2.    Compensation Policy and Compensation Scheme
(1) Compensation policy
We have developed Nomura Group compensation policy for all the employees and statutory officers (“Basic Policy”) and Compensation Policy for Directors and Executive Officers of Nomura Holdings, Inc. (“NHI”) (“Policy for Statutory Officers”) to enable us to achieve sustainable growth, realize a long-term increase in
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shareholder value, deliver client excellence, compete in a global market and enhance our reputation. The Compensation Committee has been setting those policies with discussion for its appropriateness on every fiscal yearyear. 
Separately, we have established compensation policy for Nomura Group officers and employees, including senior managing directors of NHI and directors of subsidiaries of NHI but excluding Directors and Executive officers of NHI. This policy is referred to as the “Employee Policy”.
< Overview of Nomura’s Compensation Policy Structure >
<a> ”Basic Policy” is as follows:
Nomura Group has established compensation policy for Nomura Group officers and employees, including directors and executive officers of NHI. This policy is referred to as the “Basic Policy” and is as follows.
Compensation Governance
As a company with three Board Committees structure, pursuant to Japanese corporate law, NHI has established an independent statutory Compensation Committee. Majority the Committee members are following, variableoutside directors. The Committee has established both the Basic Policy and a Compensation Policy for Directors and Executive Officers of NHI, on the basis of which it considers and determines the details of individual compensation were discussedfor Directors and determined on April 25, 2019.Executive Officers of NHI.
With respect to the relevant policies and total compensation funding for Nomura Group officers and employees other than the Company’s directors and executive officers, certain decisions regarding employment and remuneration matters are delegated to the “Human Resources Committee” (“HRC”) by Executive Management Board of NHI. The HRC is chaired by the Group CEO and at a minimum is composed of the Chief Finance Officer and Chief Risk Management Officer. The HRC considers and determine the above mentioned matters by cooperating with the remuneration committees in each region.
Compensation Policies and Practices
Nomura Group recognizes that its employees are key in contributing to society in line with its mission of “We help to enrich society through our expertise in capital markets”.
Compensation for Nomura Group employees is designed to support achieving sustainable corporate growth, increasing enterprise value over the medium and long-term and maintaining sound and effective risk management, while at the same time positively contributing to the interest of all Nomura shareholders. In addition, voluntary salary cut was reportedin order to ensure that Numara Group attracts, retains, motivates and develops talent, the level and structure of remuneration takes into account the roles and responsibilities of individuals as well as the market pay levels in Japan and overseas, doing so in line with any relevant laws and regulatory expectations.
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1) Sustainable corporate growth and increasing enterprise value over the medium and long-term
Compensation for Nomura Group employees aims to realize Nomura Group corporate philosophy, to promote healthy corporate culture and behaviour in line with Nomura Group “Code of Conduct” and to facilitate a greater alignment with the environmental, social and governance (“ESG”) considerations.
Based on May 24, 2019. On June 24, 2019, afterthe
pay-for-performance
principle, compensation supports Nomura Group business strategy, objectives and the appointmentaim of directorssustainable growth and increasing enterprise value over the medium and long-term, while at the annual shareholder meeting,same time it ensures the maintenance of sound and market-competitive remuneration practices.
2) Sound and effective risk management
Nomura Group maintains a sound and effective risk management with an appropriate risk appetite. The Company adjusts the performance measurement standards and indicators when determining compensation by considering both financial and
non-financial
risks in each business. The qualitative factors such as conduct, compliance, professional ethics and corporate philosophy are considered in determining the final amount of remuneration, which may include a reduction resulting from a disciplinary action.
3) Alignment of interests with shareholders
For Nomura Group employees who receive a certain amount of remuneration, a portion of the remuneration is stock-related remuneration linked to shares of NHI with an appropriate deferral period applicable, in order to ensure an alignment with the shareholders’ interests.
In addition, when granting stock-related compensation, in the event of a material revision of Nomura Group financial statements or a material violation of Nomura Group rules and policies, employees’ compensation may be subject to suspension, reduction, forfeiture of rights, or for some employees even
re-payment
(so-called
“clawback”).
Approval and Revision of the Basic Policy
The approval, amendment or repeal of the Basic Policy can be made by the Compensation Committee reviewedof NHI.
<b> ”Policy for Statutory Officers” is as follows:
Compensation of Directors and confirmed ourExecutive Officers is composed of base salary, cash bonus and long-term incentive plans.
1) Base Salary
Base salary is determined based on factors such as professional background, career history, responsibilities and compensation policystandards of related business fields.
With respect to Executive Officers, a portion of base salary may be paid in equity-linked awards with appropriate vesting periods to ensure that medium to long-term interests of Executive Officers are closely aligned with those of shareholders.
2) Annual Bonus
Annual bonuses of Directors and Executive Officers are determined fixed compensation for new directors. Also, checkedby taking into account both quantitative and confirmed a partial amendmentqualitative factors. Quantitative factors include performance of the Group and the division. Qualitative factors include achievement of individual goals and subjective assessment of individual contribution.
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In principle, certain portion of annual bonus payment should be deferred.
With respect to the Group CEO, given the overall responsibility of business execution of the Nomura Group, Compensation Policy. Furthermore, held 3 consequtive meetings since August 26, 2019,the basic amount of the annual bonus is calculated based on the level of achievement in actual value(s) against the target value(s) of key performance indicator(s). In addition, qualitative evaluation should be reflected when determining final annual bonus amount.
With respect to Directors and other Executive Officers, amount of annual bonus is determined with the annual bonus of Group CEO as standard baseline, taking into consideration the roles and responsibilities, local remuneration regulations and compensation levels in each jurisdiction etc., in addition to the qualitative evaluation of the individual.
Audit Committee members and Outside Directors are not bonus-eligible in order to maintain and ensure their independence from business execution.
Mid-term
Incentive Plan
In principle, certain portion of annual bonus should be deferred and paid in an equity-linked awards with appropriate vesting periods in lieu of cash to ensure that medium-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
Clawback
In specific circumstances, unvested bonus may be required to be forfeited. Any voluntary resignation, material modification of Nomura’s financial statements, material breach of Nomura’s internal policies and regulations, amongst others, may render such forfeiture. Additionally, in certain jurisdictions, clawback provisions may apply to already paid and/or vested bonus.
3) Long-term Incentive Plan
Long-term incentive plans may be awarded to Directors and Executive Officers, depending on their individual responsibilities, performance etc.
Payments under long-term incentive plans are made when a certain degree of achievements are accomplished. Payments are made in equity-linked awards with appropriate vesting periods to ensure that long-term interests of Directors and Executive Officers are closely aligned with those of shareholders.
<c> ”Employee Policy” is as follows:
Based on the “Basic Policy”, Nomura Group has established compensation policy for discussing compensation controlNomura Group officers and employees, including senior managing directors of NHI and directors of subsidiaries of NHI but excluding directors and executive officers of NHI. This policy is referred to as the “Employee Policy” and is as follows.
Matters not provided for in the Employee Policy shall be governed by the provisions of the Basic Policy.
Compensation Governance
Supervised by NHI Human Resources Committee (“HRC”), the regional committees governing employee compensation are composed of representatives of Finance, Risk Management, Compliance, Human Resources, and other departments as appropriate. These committees implement Nomura Group global compensation governance rules.
The proposed compensation of Control Function staff (Risk Management, Compliance, Internal Audit) shall not be determined by the front office business and the performance evaluation of such staff shall not be determined solely by the financial performance of the business for which resultedsuch staff are responsible.
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Compensation Policies and Practices
Nomura Group recognizes that its employees are key in contributing to society in line with its mission of “We help to enrich society through our expertise in capital markets”.
Compensation for Nomura Group employees is designed to support achieving sustainable corporate growth, increasing enterprise value over the medium and long-term and maintaining sound and effective risk management, while at the same time positively contributing to the interest of all NHI shareholders. In addition, in order to ensure that Nomura Group attracts, retains, motivates and develops talent, the level and structure of remuneration takes into account the roles and responsibilities of individuals as well as the market pay levels in Japan and overseas, doing so in line with any relevant laws and regulatory expectations.
1) Sustainable corporate growth and increasing enterprise value over the medium and long-term
Compensation for Nomura Group employees aims to realize Nomura Group corporate philosophy which underpins its Mission of Contributing to Society and its Vision of being a resolutionTrusted Partner, being based on the Values of Entrepreneurial Leadership, Teamwork and Integrity, to promote healthy, diverse corporate culture and the right behaviour in line with Nomura Group “Code of Conduct” and to facilitate a greater alignment with the environmental, social and governance (“ESG”) considerations.
Based on the
pay-for-performance
principle, compensation supports Nomura Group business strategy, objectives and the aim of sustainable growth and increasing enterprise value over the medium and long-term, while at the same time it ensures the maintenance of sound and market-competitive remuneration practices.
Compensation at Nomura reflects and aligns with the performance of Nomura Group as a whole, its divisions, as well as individual employees, taking into account both the business strategy and market considerations.
2) Sound and effective risk management
Nomura Group maintains a sound and effective risk management with an appropriate risk appetite. It adjusts the performance measurement standards and indicators when determining compensation by considering both financial and
non-financial
risks in each business, taking a holistic approach. The qualitative factors such as conduct, compliance, professional ethics and corporate philosophy are considered in determining the final amount of remuneration, which may include a reduction resulting from a disciplinary action. Risk Management, Compliance and Finance divisions provide key inputs into the overall risk and performance assessment to ensure appropriate consideration of these factors.
The compensation package offered to Nomura Group employees comprises two key elements:
Fixed compensation—reflects the role, responsibilities and experience of the employee; and
Variable compensation—intends to incentivise performance, promote the right behaviours, drive employee growth and development. For higher paid employees, a portion of the variable compensation may be deferred, balancing short-term with medium and long-term interests of Nomura Group.
Nomura Group seeks to balance the components of compensation between fixed and variable according to the employee’ role and seniority. In principle, the percentage of deferral increases as an employee’s compensation increases. Guaranteed compensation is allowed only in limited circumstances such as new hire or, where allowed, strategic business needs. Multi-year guarantees are typically prohibited.
3) Alignment of interests with shareholders
Deferred variable compensation is intended to align the interests of employees and NHI shareholders, and to encourage a long-term, sustainable approach to the management of the Company by senior management and
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more highly paid employees. For Nomura Group employees who receive a certain amount of remuneration, a portion of the remuneration is stock-related remuneration linked to shares of NHI with an appropriate deferral period applicable, in order to ensure an alignment with the shareholders’ interests.
In addition, when granting stock-related compensation, in the event of a material revision of Nomura Group financial statements or a material violation of Nomura Group rules and policies, employees’ compensation may be subject to suspension, reduction, forfeiture of rights, or for some employees located in specific jurisdictions/regions even
re-payment
(so-called
“clawback”).
Approval and Revision of the Employee Policy
The approval, amendment or repeal of the Employee Policy can be made by the HRC.
(2) Scheme and details of Compensation for Directors and Executive Officers
1) Scheme of Compensation and Directors and Executive Officers and calculation method.
The result of TC for the President and the Group CEO regarding the fiscal year ended as of March 31, 2022 is as follows.
   
(Millions of yen, except percentages)
 
Base Salary (Fixed Compensation)
  
Annual Bonus (Variable Compensation)
  
Total
Compensation
(TC)
 
Base cash
salary
  
Equity-linked
compensation
  
Subtotal
  
Cash

Bonus
  
Deferred
Compensation
  
Subtotal
 
 102.0   17.4   119.4   116.5   116.5   233.0   352.4 
 28.9%   4.9%   33.9%   33.1
%
 		  33.1
%
 		  66.1
%
 		  100.0
%
 
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The percentage of Base Salary (Fixed Compensation) and Annual Bonus (Variable Compensation) in TC is approximately 35% : 65%. Also, Base Salary (Fixed Compensation) includes equity-linked compensation, which is delivered by Nomura’ shares after the relevant fiscal year, same as deferred compensation. To be in line with overall responsibility of business execution of the Nomura Group, approximately 40% (equity-linked compensation, which is a few sectionspart of Base Salary (Fixed Compensation), and deferred compensation) of TC are paid as equity-linked compensation, which leads to the alignment of interest with shareholders and appropriate medium-term incentives.
2) Calculation method of the Annual Bonus
<Outline of calculation method>
In calculating the Annual Bonus for the Directors and the Executive Officers, a different calculation method is applied depending on March 3, 2020, aimingthe position.
<Specific calculation method by position>
With respect to applythe President and the Group CEO, given the overall responsibility of business execution of the Nomura Group, the basic amount of the Annual Bonus is calculated based on the level of achievement in actual value against the target value regarding ROE. In addition, Total Compensation (hereafter “TC”) , including the Base Salary and the Annual Bonus, is determined by considering, as needed, qualitative evaluation etc. by the Compensation Committee.
With respect to the Directors and Executive Officers other than the Group CEO, their Annual Bonus and TC are determined based on the ones of the Group CEO, reflecting individual roles and responsibilities, respective jurisdiction’s regulations and compensation level etc. in addition to other qualitative elements.
With respect to the Director of the audit committee member and Outside Directors are out of scope of the Annual Bonus in order to keep independency from business execution.
<Actual value regarding the performance indicator used for the calculation of the Annual Bonus >
Performance Indicator
  
Target value
  
Actual value for the Fiscal Year
 
ROE
   8.0%   5.1% 
3)
Matters relating to
Non-Monetary
Compensation
(1) Deferred Compensation (equity-linked compensation)
The Company sets half of the amount of the Annual Bonus of the Directors and Executive Officers. In principle, equity-linked compensation (Restricted Stock Unit (“RSU”), Notional Stock Unit (“NSU”) ) that falls under the
Non-Monetary
Compensation is used for payment of the amount.
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(2) Outline of current Deferred Compensation Awards.
The outline of current Deferred Compensation Awards is as follows.
Type of award
Key features
RSU awards
•  Settled in Nomura’s common stock.
•  Graded vesting period is set as three years in principle.
•  It is introduced as the Deferred Compensation since the fiscal year ended March 31, 2018.
•  In principle, it has been granted in May every year.
NSU awards
•  Linked to the price of Nomura’s common stock and cash-settled.
•  Same as RSU awards, graded vesting period is set as three years in principle.
•  Following the introduction of RSU as a principle vehicle in 2,018 NSU awards are less commonly used in Nomura.
•  Same as RSU awards, in principle, it has been granted in May every year.
As stated above, RSU awards have been introduced as a principle vehicle from the performance period endingfiscal year ended as of March 31, 2021. On2018 and replaced with stock acquisition rights and other awards.
(3) Effect of payment of deferred compensation as equity-related compensation
By providing deferred compensation as equity-linked compensation, the economic value of the compensation is linked to the stock price of Nomura, and a certain vesting period is set.
Alignment of interests with shareholders.
Medium-term incentives (*) and retention by providing an opportunity for the economic value of Deferred Compensation at the time of grant to be increased by a rise in shares during a period of time from grant to vesting.
*
In line with the introduction of RSU, among the equity-linked compensation, as the principal vehicle for Deferred Compensation, in principle, Nomura’s common stock will be paid instead of cash over the three year deferral period from the fiscal year following the fiscal year in which the deferred compensation was granted. Since the number of shares to be paid is determined based on the Nomura’s share price at the time of grant, the increase in Nomura’s share price will increase the economic value of Deferred Compensation at the time of vest. Since the increase in share prices reflects the increase in corporate value, alignment of interest with that of shareholders, in addition to medium-term incentive effects for the Directors and Executive Officers, will be achieved.
Promotion of cross-divisional collaboration and cooperation by providing a common goal of increasing corporate value over the medium to long term.
As a result of these benefits, deferred compensation awards are also recommended by regulators in the key jurisdictions in which we operate.
The deferral period over which our deferred compensation awards vest is generally three or more years. This is in line with the “Principles for Sound Compensation Practices” issued by the Financial Stability Board which recommends, among other things, a deferral period of three or more years.
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(4) Clawback prescribed in Deferred Compensation
Any voluntary resignation, material modification of the financial statements, material breach of Nomura’s internal policies and regulations etc. are subject to forfeiture, reduction or clawback (Conclusion of individual contracts including “clawback clause”).
3.    Compensation for Directors and Executive Officers
Pursuant to the fundamental approach and framework of compensation as described above, and as a company which adopts a committee-based corporate governance system, a Compensation Committee of Nomura determines compensation of its Directors and Executive Officers in accordance with our applicable compensation policies.
3-1. Aggregate compensation
1) Aggregate Compensation for Directors and Officers
Millions of yen
Officer Category
  
Headcount

(Note 1)
  
Base Salary
etc. (Note 2, 3)
  
Performance-
linked
Compensation
(Note 4)
  
Non-monetary

Compensation
(Note 5)
  
Total
 
Directors
   13  ¥323  ¥70  ¥63  ¥456 
(Outside Directors included in above)
   (10)   (166)   (  —  )   (  —  )   (166) 
Executive Officers
   7  ¥430  ¥301  ¥258  ¥989 
Total
   20  ¥753  ¥371  ¥321  ¥1,445 
(1)
The number of people includes 3 Directors and 1 Executive Officer who retired in June 2021. There were 10 Directors and 6 Executive Officers as of March 31, 2022. Compensation to Directors who were concurrently serving as Executive Officers is included in that of Executive Officers.
(2)
Base Salary of ¥753 million includes other compensation (commuter pass allowance) of ¥60 thousand.
(3)
In addition to base salary of Executive Officers, ¥16 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
(4)
Out of the Annual Bonus, amounts to be paid in cash after the Fiscal Year close are shown.
(5)
Deferred compensation (such as RSU and stock options) granted during and prior to the fiscal year ended March 31, 2022 is recognized as expense in the financial statements for the fiscal year ended March 31, 2022.
(6)
Subsidiaries of the Company paid ¥56 million to Outside Directors as compensation, etc. for their directorship at those subsidiaries for the fiscal year ended March 31, 2022.
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2) Individual compensation of Directors and Executive Officers receiving ¥100 million or more
      
Millions of yen
 
      
Fixed Remuneration

(Basic Compensation)
  
Variable Compensation
(1)
    
Name
 
Company
 
Category
 
Base Salary
  
Equity

Compensation

(RSUs)
  
Total
  
Cash

Bonus
  
Deferred

Compensation

(RSUs, etc.)
  
Total
  
Total
 
Koji Nagai
 Nomura Chairman of the Board of Directors ¥91.2  ¥0  ¥91.2  ¥69.9  ¥69.9  ¥139.8  ¥231.0 
Kentaro Okuda
(2)
 Nomura 
Director,
Representative
Executive
Officer
(Group CEO)
 ¥102.0  ¥17.4  ¥119.4  ¥116.5  ¥116.5  ¥233.0  ¥352.4 
Tomoyuki Teraguchi
 Nomura 
Director,
Representative
Executive
Officer
 ¥75.6  ¥14.4  ¥90.0  ¥65.0  ¥65.0  ¥130.0  ¥220.0 
Toshiyasu Iiyama
 Nomura 
Executive
Officer
 ¥66.0  ¥13.2  ¥79.2  ¥45.4  ¥45.4  ¥90.8  ¥170.0 
Takumi Kitamura
 Nomura 
Executive
Officer
 ¥60.0  ¥13.2  ¥73.2  ¥28.4  ¥28.4  ¥56.8  ¥130.0 
Sotaro Kato
 Nomura 
Executive
Officer
 ¥51.3  ¥9.6  ¥60.9  ¥23.3  ¥23.3  ¥46.6  ¥107.5 
Toru Otsuka
 Nomura 
Executive
Officer
 ¥54.0  ¥9.6  ¥63.6  ¥22.7  ¥22.7  ¥45.4  ¥109.0 
(1)
Variable Compensation indicates the amount determined as remuneration based on the performance during the fiscal year ended March 31, 2022.
(2)
In addition to basic compensation, ¥16 million of corporate housing costs, such as housing allowance and related tax adjustments, were provided.
The following table presents a summary of the meetings held by our Compensation Committee during the year ended March 30, 2020,31, 2022, a summary of key matters discussed and also whether all members of the fixed remuneration was determinedCommittee attended the meeting.
Date
Summary of the discussion and the resolution
Attendance records
of the member
April 15, 2021
Discussion: Annual bonus for the year ended Mar 31, 2021
All members attended
April 27, 2021
Resolution: Annual bonus for the year ended Mar 31, 2021
All members attended
May 14, 2021
Resolution: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
Discussion: Updating disclosure material to meet a revised Japan Corporate Law requirement.
Discussion: Revision of the Compensation Policy for Directors and Executive Officers of NHI.
All members attended
June 20, 2021
Resolution: Reduction in base salary for certain Executive Officers
All members attended
July 1, 2021
Resolution: The appointment of the Director with the right to convoke the board of directors meetings and the Director who reports the executions of the committee’s duties to the board of the directors meetings.
Resolution: The compensation policies
All members attended
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Date
Summary of the discussion and the resolution
Attendance records
of the member
Resolution: Individual base salary of the Directors and Executive Officers
Discussion: Transformation of the determination process of the Directors and Executive Officers compensation (bonus).
August 30, 2021
Resolution: Granting RSUs to the Directors and Executive Officers.
All members attended
September 24, 2021
Resolution: Individual base salary of the Directors.
Discussion: Revision of the Compensation Policy of Nomura Group
Resolution: Revision of the Compensation Policy for Directors and Executive Officers of NHI.
Discussion: Establishment of the Nomura Group Compensation Policy for Employees
All members attended
December 6, 2021
Resolution: Revision of the Compensation Policy of Nomura Group
All members attended
March 24, 2022
Resolution: Individual base salary of the Directors and Executive Officers.
All members attended
Through discussion and resolution of the above topics, our Compensation Committee confirmed that compensation for newly appointed executive officers asour Directors and Executive Officers in respect of April 1, 2020.the year ended March 31, 2022 are appropriate and consistent with our relevant compensation policies. Outlines of the above meetings have been reported to our Board of Directors.
Stock Acquisition Rights (“SARs”)
The following table presents information regarding unexercised Stock Acquisition Rights as of March 31, 2021.2022.
 
 
March 31, 2021
  
March 31, 2022
 
Series of SARs
 
Allotment Date
 
Number of

Shares under

SARs
 
Exercise Period
of SARs
 
Exercise

Price per

Share under

SARs
 
Paid-in

Amount for

SARs
  
Allotment Date
 
Number of

Shares under

SARs
 
Exercise Period
of SARs
 
Exercise

Price per

Share under

SARs
 
Paid-in

Amount for

SARs
 
Stock Acquisition Rights No.47
 June 5, 2012  29,200  
From April 20, 2016
to April 19, 2021
 ¥1  ¥    0 
Stock Acquisition Rights No.48
 June 5, 2012  411,900  
From April 20, 2017
to April 19, 2022
  1   0  June 5, 2012  34,300  
From April 20, 2017
to April 19, 2022
 ¥1  ¥    0 
Stock Acquisition Rights No.49
 June 5, 2012  36,500  
From October 20, 2015
to April 19, 2021
  1   0 
Stock Acquisition Rights No.50
 June 5, 2012  39,700  
From October 20, 2016
to April 19, 2022
  1   0  June 5, 2012  36,400  
From October 20, 2016
to April 19, 2022
 ¥1  ¥0 
Stock Acquisition Rights No.54
 June 5, 2013  79,100  
From April 20, 2016
to April 19, 2021
  1   0 
Stock Acquisition Rights No.58
 June 5, 2014  124,800  
From April 20, 2017
to April 19, 2022
 ¥1  ¥0 
Stock Acquisition Rights No.64
 June 5, 2015  133,900  
From April 20, 2017
to April 19, 2022
 ¥1  ¥0 
Stock Acquisition Rights No.65
 June 5, 2015  799,300  
From April 20, 2018
to April 19, 2023
 ¥1  ¥0 
Stock Acquisition Rights No.68
 November 18, 2015  2,565,800  
From November 18, 2017
to November 17, 2022
 ¥801  ¥0 
Stock Acquisition Rights No.69
 June 7, 2016  138,200  
From April 20, 2017
to April 19, 2022
 ¥1  ¥0 
Stock Acquisition Rights No.70
 June 7, 2016  883,400  
From April 20, 2018
to April 19, 2023
 ¥1  ¥0 
Stock Acquisition Rights No.71
 June 7, 2016  1,162,400  
From April 20, 2019
to April 19, 2024
 ¥1  ¥0 
 
106110
Table of Contents
  
March 31, 2021
 
Series of SARs
 
Allotment Date
 
Number of

Shares under

SARs
  
Exercise Period
of SARs
 
Exercise

Price per

Share under

SARs
  
Paid-in

Amount for

SARs
 
Stock Acquisition Rights No.57
 June 5, 2014  87,200  
From April 20, 2016
to April 19, 2021
  1   0 
Stock Acquisition Rights No.58
 June 5, 2014  720,900  
From April 20, 2017
to April 19, 2022
  1   0 
Stock Acquisition Rights No.61
 June 5, 2014  840,600  
From March 31, 2017
to March 30, 2022
  1   0 
Stock Acquisition Rights No.62
 November 18, 2014  2,670,700  
From November 18, 2016
to November 17, 2021
  738   0 
Stock Acquisition Rights No.63
 June 5, 2015  80,500  
From April 20, 2016
to April 19, 2021
  1   0 
Stock Acquisition Rights No.64
 June 5, 2015  659,500  
From April 20, 2017
to April 19, 2022
  1   0 
Stock Acquisition Rights No.65
 June 5, 2015  1,029,200  
From April 20, 2018
to April 19, 2023
  1   0 
Stock Acquisition Rights No.68
 November 18, 2015  2,565,800  
From November 18, 2017
to November 17, 2022
  802   0 
Stock Acquisition Rights No.69
 June 7, 2016  686,600  
From April 20, 2017
to April 19, 2022
  1   0 
Stock Acquisition Rights No.70
 June 7, 2016  1,100,400  
From April 20, 2018
to April 19, 2023
  1   0 
Stock Acquisition Rights No.71
 June 7, 2016  1,330,000  
From April 20, 2019
to April 19, 2024
  1   0 
Stock Acquisition Rights No.72
 June 7, 2016  203,200  
From October 30, 2016
to October 29, 2021
  1   0 
Stock Acquisition Rights No.74
 November 11, 2016  2,370,400  
From November 11, 2018
to November 10, 2023
  593   0 
Stock Acquisition Rights No.75
 June 9, 2017  852,600  
From April 20, 2018
to April 19, 2023
  1   0 
Stock Acquisition Rights No.76
 June 9, 2017  1,003,900  
From April 20, 2019
to April 19, 2024
  1   0 
Stock Acquisition Rights No.77
 June 9, 2017  1,541,400  
From April 20, 2020
to April 19, 2025
  1   0 
Stock Acquisition Rights No.78
 June 9, 2017  811,800  
From April 20, 2021
to April 19, 2026
 ¥1  ¥0 
Stock Acquisition Rights No.79
 June 9, 2017  809,900  
From April 20, 2022
to April 19, 2027
  1   0 
Stock Acquisition Rights No.80
 June 9, 2017  136,200  
From April 20, 2023
to April 19, 2028
  1   0 
Stock Acquisition Rights No.81
 June 9, 2017  136,200  
From April 20, 2024
to April 19, 2029
  1   0 
Stock Acquisition Rights No.82
 June 9, 2017  276,700  
From October 30, 2017
to October 29, 2022
  1   0 
Stock Acquisition Rights No.83
 June 9, 2017  63,900  
From April 30, 2018
to April 29, 2023
  1   0 
Stock Acquisition Rights No.84
 November 17, 2017  2,475,300  
From November 17, 2019
to November 16, 2024
  684   0 
Stock Acquisition Rights No.85
 November 20, 2018  2,316,300  
From November 20, 2020
to November 19, 2025
  573       0 
  
March 31, 2022
 
Series of SARs
 
Allotment Date
 
Number of

Shares under

SARs
  
Exercise Period
of SARs
 
Exercise

Price per

Share under

SARs
  
Paid-in

Amount for

SARs
 
Stock Acquisition Rights No.74
 November 11, 2016  2,365,400  
From November 11, 2018
to November 10, 2023
 ¥593  ¥0 
Stock Acquisition Rights No.75
 June 9, 2017  729,700  
From April 20, 2018
to April 19, 2023
 ¥1  ¥0 
Stock Acquisition Rights No.76
 June 9, 2017  908,400  
From April 20, 2019
to April 19, 2024
 ¥1  ¥0 
Stock Acquisition Rights No.77
 June 9, 2017  1,280,000  
From April 20, 2020
to April 19, 2025
 ¥1  ¥0 
Stock Acquisition Rights No.78
 June 9, 2017  398,600  
From April 20, 2021
to April 19, 2026
 ¥1  ¥0 
Stock Acquisition Rights No.79
 June 9, 2017  809,900  
From April 20, 2022
to April 19, 2027
 ¥1  ¥0 
Stock Acquisition Rights No.80
 June 9, 2017  136,200  
From April 20, 2023
to April 19, 2028
 ¥1  ¥0 
Stock Acquisition Rights No.81
 June 9, 2017  136,200  
From April 20, 2024
to April 19, 2029
 ¥1  ¥0 
Stock Acquisition Rights No.82
 June 9, 2017  202,100  
From October 30, 2017
to October 29, 2022
 ¥1  ¥0 
Stock Acquisition Rights No.84
 November 17, 2017  2,475,300  
From November 17, 2019
to November 16, 2024
 ¥684  ¥0 
Stock Acquisition Rights No.85
 November 20, 2018  2,310,300  
From November 20, 2020
to November 19, 2025
 ¥573  ¥0 
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Table of Contents
 
(1)
SARs (including those granted to Directors and Executive Officers of Nomura which are stated in the table below) are issued in conjunction with deferred compensation plan.
(2)
The number of shares issuable under SARs is subject to adjustments under certain circumstances including stock splits.
SARs Held by Directors and Executive Officers of Nomura
The following table presents details of Stock Acquisition Rights held by Directors and Executive Officers as of March 31, 2021.2022.
 
  
March 31, 2021
   
March 31, 2022
 
      
Numbers of Holders
       
Numbers of Holders
 
Series of SARs
  
Number of

Shares under

SARs
   
Directors and

Executive Officers

(excluding

Outside Directors)
   
Number of

Shares under

SARs
   
Directors and

Executive Officers

(excluding

Outside Directors)
 
Stock Acquisition Rights No.58
   91    1 
Stock Acquisition Rights No.61
   126    1 
Stock Acquisition Rights No.64
   69    1 
Stock Acquisition Rights No.65
   438    2    438    2 
Stock Acquisition Rights No.69
   145    1 
Stock Acquisition Rights No.70
   635    3    635    3 
Stock Acquisition Rights No.71
   634    3    634    3 
Stock Acquisition Rights No.75
   687    3    687    3 
Stock Acquisition Rights No.76
   687    3    687    3 
Stock Acquisition Rights No.77
   860    4    684    3 
Pension, Retirement or Similar Benefits
See Note 13 “
Employee benefit plans
” in our consolidated financial statements included in this annual report.
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Table of Contents
C. Board Practices.
Information Concerning Directors
The Companies Act states that a Company with Three Board Committees (as defined below) must establish three committees; a nomination committee, an audit committee and a compensation committee. The members of each committee are chosen from the company’s directors, and the majority of the members of each committee must be outside directors. At a Company with Three Board Committees, the board of directors is entitled to establish the basic management policy for the company, has decision-making authority over certain prescribed matters, and supervises the execution by the executive officers of their duties. Executive officers and representative executive officers appointed by a resolution adopted by the board of directors manage the business affairs of the company, based on a delegation of authority by the board of directors.
Since June 2003, theThe Company has adopted a corporate governance structure that separates management oversight functions from business execution functions (“Company with Three Board Committees”). Through this governance structure, the Company aims to strengthen management oversight, increase the transparency of the Company’s management and expedite the decision-making process within the Nomura Group. An outline of the Company’s Board of Directors, Nomination Committee, Audit Committee and Compensation Committee is provided below.
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Table of Contents
Board of Directors
The Company’s Board of Directors consists of Directors who are elected at a general meeting of shareholders and the Company’s Articles of Incorporation provide that the number of Directors shall not exceed twenty. The term of office of each Director expires upon the conclusion of the ordinary general meeting of shareholders with respect to the last fiscal year ending within one year after their appointment. Directors may serve any number of consecutive terms. From among its members, the Company’s Board of Directors elects the Chairman. The Company’s Board of Directors met eleventwelve times during the fiscal year ended March 31, 2021.2022. As a group, the Directors attended 99%100% of the total number of meetings of the Board of Directors during the year. The Board of Directors has the authority to determine the Company’s basic management policy and supervise the execution by the Executive Officers of their duties. Although the Board of Directors also has the authority to make decisions with regard to the Company’s business, most of this authority has been delegated to the Executive Officers by a resolution adopted by the Board of Directors. There are no Directors’ service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. As of June 20, 2022, the members of the Board of Directors are Koji Nagai, Kentaro Okuda, Tomoyuki Teraguchi, Shoji Ogawa, Kazuhiko Ishimura, Takahisa Takahara, Noriaki Shimazaki, Mari Sono, Laura Simone Unger, Victor Chu, J. Christopher Giancarlo, Patricia Mosser. Koji Nagai is the Chairman of the Board.
Nomination Committee
The Nomination Committee, in accordance with the Company’s Regulations of the Nomination Committee, determines the details of any proposals concerning the election and dismissal of Directors to be submitted to general meetings of shareholders by the Board of Directors. The Nomination Committee met eightseven times during the fiscal year ended March 31, 2021.2022. As a group, the member Directors attended all of the meetings of the Nomination Committee during the year. As of June 21, 2021,20, 2022, the members of the Nomination Committee are Koji Nagai, a Director not concurrently serving as an Executive Officer, and Outside Directors Kazuhiko Ishimura and Takahisa Takahara. Kazuhiko Ishimura is the Chairman of this Committee.
Audit Committee
The Audit Committee, in accordance with the Company’s Regulations of the Audit Committee, (i) audits the execution by the Directors and the Executive Officers of their duties and the preparation of audit reports and (ii) determines the details of proposals concerning the election, dismissal or
non-reappointment
of the accounting auditor to be submitted to general meetings of shareholders by the Board of Directors. With respect to financial
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reporting, the Audit Committee has the statutory duty to examine financial statements and business reports to be prepared by Executive Officers designated by the Board of Directors and is authorized to report its opinion to the ordinary general meeting of shareholders.
The Audit Committee met fifteentwenty-four times during the fiscal year ended March 31, 2021.2022. As a group, the member Directors attended all of the meetings of the Audit Committee during the year. As of June 21, 2021,20, 2022, the members of the Audit Committee are Shoji Ogawa (a full-time member of the Audit Committee) and Outside Directors, Noriaki Shimazaki, Mari Sono and Mari Sono.Victor Chu. Noriaki Shimazaki is the Chairman of this Committee.
Compensation Committee
The Compensation Committee, in accordance with the Company’s Regulations of the Compensation Committee, determines the Company’s policy with respect to the determination of the details of each Director and Executive Officer’s compensation. The Compensation Committee also determines the details of each Director and Executive Officer’s actual compensation. The Compensation Committee met sevennine times during the fiscal year ended March 31, 2021.2022. As a group, the member Directors attended all of the meetings of the Compensation Committee during the year. As of June 21, 2021,20, 2022, the members of the Compensation Committee are Koji Nagai, a Director not concurrently serving as an Executive Officer, and Outside Directors Kazuhiko Ishimura and Takahisa Takahara. Kazuhiko Ishimura is the Chairman of this Committee.
109
Board Risk Committee
The Board Risk Committee is a
non-statutory
Tableorgan, in accordance with the Company’s Regulations of Contentsthe Board Risk Committee, of which purpose is to assist the Board of Directors in supervising Nomura Group’s risk management and to contribute to sophistication of the risk management. At meetings of the Board Risk Committee, to further strengthen the risk management of Nomura Group, consent to the Risk Appetite Statement and the main design of the risk management framework, analysis of risk environment/verification results and future projections, supervision of overall execution of risk management and medium- to long-term risk strategies are mainly deliberated. The status of execution of the function in the Board Risk Committee is reported to the Board of Directors. The Board Risk Committee met four times during the fiscal year ended March 31, 2022. As a group, the member Directors attended all of the meetings of the Board Risk Committee during the year. As of June 20, 2022, the members of the Board Risk Committee are Outside Directors Laura Simone Unger, Noriaki Shimazaki, Victor Chu, J. Christopher Giancarlo and Patricia Mosser, and Shoji Ogawa, a Director not concurrently serving as an Executive Officer. Laura Simone Unger is the Chairperson of this Committee.
Limitation of Director Liability
In accordance with Article 33, Paragraph 2 of the Company’s Articles of Incorporation and Article 426, Paragraph 1 of the Companies Act, the Company may execute agreements with Directors (excluding a person who serves as an executive director, etc.) that limit their liability to the Company for damages suffered by the Company if they acted in good faith and without gross negligence. Accordingly, the Company has entered into agreements to limit Companies Act Article 423 Paragraph 1 liability for damages (“Limitation of Liability Agreements”) with each of the following Directors: Shoji Ogawa, Kazuhiko Ishimura, Takahisa Takahara, Noriaki Shimazaki, Mari Sono, Laura Simone Unger, Victor Chu, J. Christopher Giancarlo and Patricia Mosser. Liability under each such agreement is limited to either ¥20 million or the amount prescribed by laws and regulations, whichever is greater.
Directors and Officers Liability Insurance Contracts
The Company has entered into directors and officers liability insurance contracts set forth in Article
430-3,
Paragraph 1 of the Companies Act with insurance companies, which have persons such as directors, executive officers, senior managing directors, auditors, and senior employees of the Company and its subsidiaries as
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insured persons. Under such insurance contracts, there will be an indemnification of losses, such as compensation for damages and litigation costs, incurred by an insured person due to a claim for loss or damage caused by an act (including an omission) carried out on the basis of the position, such as director or officer, held by the insured at the Company, and all insurance premiums of insureds have been entirely borne by the Company. However, there are certain exclusions applicable to such insurance contracts such as losses caused by a deliberately fraudulent or dishonest act of individuals such as directors/officers.
Information Concerning Executive Officers
Executive Officers of the Company are appointed by the Board of Directors, and the Company’s Articles of Incorporation provide that the number of Executive Officers shall not exceed forty-five. The term of office of each Executive Officer expires upon the conclusion of the first meeting of the Board of Directors convened after the ordinary general meeting of shareholders for the last fiscal year ending within one year after each Executive Officer’s assumption of office. Executive Officers may serve any number of consecutive terms. Executive Officers have the authority to determine matters delegated to them by resolutions adopted by the Board of Directors and to execute business activities.
D. Employees.
The following table shows the number of our employees as of the dates indicated:
 
  
March 31,
   
March 31,
 
  
2019
   
2020
   
2021
   
2020
   
2021
   
2022
 
Japan
   15,852    15,748    15,330    15,748    15,330    15,213 
Europe
   2,909    2,691    2,769    2,691    2,769    2,820 
Americas
   2,357    2,120    2,152    2,120    2,152    2,257 
Asia and Oceania
   6,746    6,070    6,151    6,070    6,151    6,295 
  
 
   
 
   
 
   
 
   
 
   
 
 
Total
   27,864    26,629    26,402    26,629    26,402    26,585 
  
 
   
 
   
 
   
 
   
 
   
 
 
As of March 31, 2021,2022, we had 15,33015,213 employees in Japan, including 8,6598,265 in our Retail Division, 1,7071,013 in our WholesaleInvestment Management Division and 8521,701 in our Asset ManagementWholesale Division. In overseas, we had 11,07211,372 employees, of which 2,7692,820 were located in Europe, 2,1522,257 in the Americas, and 6,1516,295 in Asia and Oceania.
As of March 31, 2021, 8,8412022, 8,371 of Nomura Securities’ employees in Japan were members of the Nomura employees’ union, with which we have a labor contract. The Company and labor union communicate frequently in order to resolve labor-related matters.
We have not experienced any strikes or other labor disputes in Japan or overseas and consider our employee relations to be excellent.
 
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E. Share Ownership.
The following table shows the number of shares owned by our Directors and Executive Officers as of May 31, 2021.2022. As of that date, none of them owned 1% or more of our issued and outstanding shares. None of the shares referred to below have different voting rights.
Directors
 
Name
  
Number of

Shareholdings
 
Koji Nagai
   328,228393,142 
Kentaro Okuda
   189,416264,038 
Tomoyuki Teraguchi
   171,128248,877 
Shoji Ogawa
   31,78438,618 
Kazuhiko Ishimura
   
—  
 
Takahisa Takahara
   881 
Noriaki Shimazaki
   21,17525,630 
Mari Sono
   
—  
 
Laura Simone Unger
   (1,000ADR)
(1)
 
Victor Chu
   
—  
 
J.Christopher Giancarlo
   
—  
 
Patricia Mosser
   
—  
 
  
 
 
 
Total
         742,612971,186 
  
 
 
 
 
(1)
(1)   ADRs are not included in the total.
Executive Officers
 
Name
  
Number of

Shareholdings
 
Kentaro Okuda
   See above 
Tomoyuki Teraguchi
   See above 
Toshiyasu Iiyama
   80,70795,194 
Takumi Kitamura
   55,74164,294 
Sotaro Kato
   5,7148,290
Yosuke Inaida
84,293 
Toru Otsuka
   20,93827,732 
  
 
 
 
Total
         163,100279,803 
  
 
 
 
For information regarding stock options granted to our Directors and Executive Officers, see Item 6.B “
Compensation
” of this annual report.
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders.
According to a statement on Schedule 13G (Amendment No.6)No.7) filed by BlackRock, Inc. with the SEC on January 29, 2021,February 3, 2022, BlackRock, Inc. owned 184,193,537206,811,679 shares, representing 5.70%6.40% of the issued shares of the Company’s common stock. However, the Company has not confirmed the status of these shareholdings as of March 31, 2021.2022.
According to a statement on Schedule 13G (Amendment No.1)No.2) filed by Sumitomo Mitsui Trust Holdings, Inc. with the SEC on February 5, 2021,4, 2022, Sumitomo Mitsui Trust Holdings, Inc. owned 217,569,400176,175,500 shares, representing 6.70%5.40% of the issued shares of the Company’s common stock. However, the Company has not confirmed the status of these shareholdings as of March 31, 2021.2022.
 
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To our knowledge, we are not directly or indirectly owned or controlled by another corporation, by any government or by any other natural or legal person severally or jointly. We know of no arrangements the operation of which may at a later time result in a change of control of Nomura. Also as of March 31, 2021,2022, there were 291281 Nomura shareholders of record with addresses in the U.S., and those U.S. holders held 397,971,009373,610,477 shares of the Company’s common stock, representing 12.3%11.6% of Nomura’s then issued common stock. As of March 31, 2021,2022, there were 34,687,33536,833,403 ADSs outstanding, representing 34,687,33536,833,403 shares of the Company’s common stock or 1.1% of Nomura’s then issued common stock. Our major shareholders above do not have different voting rights.
B. Related Party Transactions.
Nomura Research Institute, Ltd.
NRI develops and manages computer systems and provides research services and management consulting services. We are one of the major clients of NRI.
We held 28.8%24.5% of NRI’s outstanding share capital as of March 31, 2021.2022.
For the year ended March 31, 2021,2022, we purchased ¥14,407¥12,760 million worth of software and computer equipment and paid ¥47,005¥45,103 million for other services to NRI, while received ¥548¥847 million from NRI.
Nomura has sold 14,105,000 ordinary shares it held at ¥50,002 million to NRI in response to its own share repurchase through off-floor trading
(ToSTNeT-3)
on June 22, 2021. As a result of the transaction, a gain of ¥36,249 million was recognized in earnings within
Revenue—Other
during the year ended March 31, 2022.
See also Note 2019 “
Affiliated companies and other equity-method investees
” in the consolidated financial statements included in this annual report.
Directors
ThereDuring the fiscal year ended March 31, 2022, no loans that were outstanding were made to our directors other than in the normal course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers, involving no significant transactions.more than the normal risk of collectability and presenting no other unfavorable features.
C. Interests of Experts and Counsel.
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information.
Financial Statements
The information required by this item is set forth in our consolidated financial statements included elsewhere in this annual report.
Legal Proceedings
For a discussion of our litigation and related matters, see Note 2120 “
Commitments, contingencies and guarantees
” in the consolidated financial statements included in this annual report.
Dividend Policy
For our dividend policy, see Item 5.B
“Liquidity and Capital Resources—Resources
—
Capital Management—Management
—
Dividends” in
this annual report.
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Table of Contents
B. Significant Changes.
Except as disclosed in this annual report, there have been no significant changes since March 31, 2021.2022.
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Item 9. The Offer and Listing
A. Offer and Listing Details.
See Item 9. C. “The9.C. “
The Offer and Listing—Markets”Markets
”.
B. Plan of Distribution.
Not applicable.
C. Markets.
The principal trading market for the Company’s common stock is the Tokyo Stock Exchange. The Company’s common stock has been listed on the Tokyo Stock Exchange and the Nagoya Stock Exchange since 1961. The trading symbol on those trading markets is “8604.”
Since December 2001, the Company’s common stock has been listed on the New York Stock Exchange in the form of ADSs evidenced by ADRs. Each ADS represents one share of common stock. The trading symbol is “NMR.” The Company’s common stock has been listed on the Singapore Stock Exchange since 1994. The trading symbol is “N33.”
D. Selling Shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses of the Issue.
Not applicable.
Item 10. Additional Information
A. Share Capital.
Not applicable.
B. Memorandum and Articles of Association.
Register, Objects and Purposes in the Company’s Articles of Incorporation
Nomura Holdings, Inc. is incorporated in Japan and is registered in the Commercial Register (
Shogyo Tokibo
in Japanese) maintained by the Tokyo Legal Affairs Bureau.
Article 2 of the Company’s Articles of Incorporation, which is an exhibit to this annual report, states that the Company’s purpose is, by means of holding shares, to control and manage the business activities of domestic companies which engage in the following businesses and the business activities of foreign companies which engage in the businesses equivalent to the following businesses:
 
 (1)
Financial instruments business prescribed in the Financial Instruments and Exchange Law;
 
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 (2)
Banking business prescribed in the Banking Law and trust business prescribed in the Trust Business Law; and
 
 (3)
Any other financial services and any business incidental or related to such financial services.
 
 (4)
Other than as prescribed in the items above, any other business ancillary or related to survey and research in connection with the economy, financial or capital markets, or infrastructure or undertaking the outsourcing thereof.
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Provisions Regarding the Company’s Directors
Although there is no provision in the Company’s Articles of Incorporation as to a Director’s power to vote on a proposal or arrangement in which the Director is materially interested, under the Companies Act and the Company’s Regulations of the Board of Directors, a Director must abstain from voting on such matters at meetings of the Board of Directors.
As a Company with Three Board Committees, the compensation of the Company’s Directors and Executive Officers is determined by the Compensation Committee (see Item 6.C.
“Board Practices-Information Concerning Directors-Compensation Committee”
in this annual report). The Compensation Committee establishes the policy with respect to the determination of the individual compensation (including variable compensation) of each of the Company’s Directors and Executive Officers and makes determinations in accordance with that compensation policy.
With respect to borrowing powers, these as well as other powers relating to the management of the business (with the exception of certain exclusions specified under the Companies Act) have been delegated to the Executive Officers by the Board of Directors as a Company with Three Board Committees.
There is no mandatory retirement age for the Company’s Directors under the Companies Act or the Company’s Articles of Incorporation.
There is no requirement concerning the number of shares an individual must hold in order to qualify him or her to serve as a Director of the Company under the Companies Act or the Company’s Articles of Incorporation.
Pursuant to the Companies Act and the Company’s Articles of Incorporation, the Company may, by a resolution adopted by the Company’s Board of Directors, release the liabilities of any Directors or Executive Officers to the Company for damages suffered by the Company due to their acts taken in good faith and without gross negligence, to the extent permitted by the Companies Act and the Company’s Articles of Incorporation. In addition, the Company may execute with Directors (excluding a person who serves as an executive director, etc.) agreements that limit their liabilities to the Company for damages suffered by the Company if they acted in good faith and without gross negligence, to the extent permitted by the Companies Act and the Company’s Articles of Incorporation. See Item 6.C.
“Board Practices-Limitation of Director Liability”
in this annual report.
Other Matters
For disclosures under the following items, see
“Description of rights of each class of securities registered under Section
 12 of the Securities Exchange Act of 1934”
which is an exhibit to this annual report: Item 10.B.3, B.4, B.5, B.6, B.7, B.8, B.9 and B.10.
C. Material Contracts.
In addition to the items disclosed in Item 6.C “Board Practices”Not applicable.
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Table of this annual report, Nomura tendered to the self-tender offer made by Nomura Research Institute, Ltd. (“NRI”) conducted between July 1, 2019 and July 29, 2019. Upon the settlement on August 21, 2019, Nomura sold 101,889,300 ordinary shares it held at ¥159,966,201,000 (¥1,570 per share) to NRI. NRI remains an equity method affiliate of NHI.Contents
D. Exchange Controls.
Acquisition of Shares
The following summary is not intended to be a complete analysis of the prior notification or reporting requirements under Japanese foreign exchange regulations as a result of the acquisition by investors of shares of the Company. Potential investors should consult their own legal advisors on the consequences of the acquisition of shares of the Company, including specifically the applicable notification, reporting and other procedures and any available exemption therefrom under Japanese foreign exchange regulations.
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The Foreign Exchange and Foreign Trade Law of Japan and its related cabinet orders and ministerial ordinances (“Foreign Exchange Regulations”) governs certain aspects relating to the acquisition and holding of shares of the Company by “foreign investors,” as defined below.
If a foreign investor acquires shares of the Company and as a result of this acquisition directly or indirectly holds 1% or more of the issued shares of the Company, together with its existing holdings and those of other parties who have a close relationship with that foreign investor (the “closely-related person”), the foreign investor is, in general, required to report the acquisition to the Minister of Finance and any other competent ministers via the Bank of Japan within 45 days from the date of acquisition. If (i) the foreign investor or its closely-related person will not become a board member of the Company, (ii) the foreign investor will not propose, at a general shareholders meeting of the Company, a transfer or disposition of its business, and (iii) the foreign investor will not have access to any
non-public
information regarding the Company’s technologies in relation to its business, in general, a prior notification is exempted.
“Foreign investors” are generally defined as (i) individuals who are not residents in Japan, (ii) corporations which are organized under the laws of foreign countries or whose principal offices are located outside Japan, (iii) corporations of which (a) 50% or more of the voting rights are held directly or indirectly by (i) and/or (ii) above, (b) a majority of officers consists of
non-residents
of Japan or (c) a majority of officers having the power of representation consists of
non-residents
of Japan, and (iv) partnerships or limited partnerships engaging in investment business, in which (a) 50% or more of the total amount of contributions are made directly or indirectly by (i) and/or (ii) above or (b) a majority of the managing partners are (i) and/or (ii) above.
Dividends and Proceeds of Sale
Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares held by
non-residents
of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which ADSs of the Company will be issued, the depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars to the U.S., to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holders of ADSs.
“Non-residents
of Japan” are generally defined as individuals who are not resident in Japan and corporations whose principal offices are located outside Japan. Branches and other offices of Japanese corporations located outside Japan are considered
non-residents
of Japan, and branches and other offices located within Japan of
non-resident
corporations are considered residents of Japan.
E. Taxation.
U.S. Federal Income Taxation
This section describes the material U.S. federal income tax consequences of owning shares or ADSs. It applies to you only if you are a U.S. holder (as defined below), you acquire your shares or ADSs in an offering
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and you hold your shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:
 
a dealer in securities,
 
a trader in securities that elects to use a
mark-to-market
method of accounting for your securities holdings,
 
a
tax-exempt
organization,
 
a life insurance company,
 
a person liable for alternative minimum tax,
 
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a person that actually or constructively owns 10% or more of the combined voting power of our voting stock or of the total value of our stock,
 
a person that holds shares or ADSs as part of a straddle or a hedging, conversion, integrated or constructive sale transaction,
 
a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes, or
 
a person whose functional currency is not the U.S. dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the Income Tax Convention Between the U.S. and Japan
(“Japan-U.S.
Tax Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of The Bank of New York Mellon (“depositary”) and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
If a partnership holds the shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares or ADSs should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the shares or ADSs.
You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:
 
a citizen or resident of the U.S.,
 
a corporation created or organized in or under the laws of the U.S. or any political subdivision thereof,
 
an estate whose income is subject to U.S. federal income tax regardless of its source, or
 
a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.
You should consult your own tax advisor regarding the U.S. federal, state, local and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.
This discussion addresses only U.S. federal income taxation.
In general, and taking into account the earlier assumptions, for U.S. federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADSs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to U.S. federal income tax.
Taxation of Dividends
Under the U.S. federal income tax laws, and subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any dividend we pay out of our current or accumulated earnings and
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profits (as determined for U.S. federal income tax purposes) is subject to U.S. federal income taxation. If you are a
non-corporate
U.S. holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the shares or ADSs for more than 60 days during the
121-day
period beginning 60 days before the
ex-dividend
date and meet other holding period requirements. Dividends we pay with respect to the shares or ADSs generally will be qualified dividend income.
You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it.
The dividend is taxable when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the “dividends-received deduction”
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generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date the dividend distributionis distributed is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in incomeis distributed to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the U.S. for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a
non-taxable
return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect generally to treat distributions we make as dividends.
Subject to certain limitations, the Japanese tax withheld in accordance with the
Japan-U.S.
Tax Treaty and paid over to Japan will be creditable against your U.S. federal income tax liability. However, under recently issued United States Treasury regulations, it is possible that such withholding tax will not be creditable unless you are eligible to claim the benefits of the Japan-U.S. Tax Treaty and elect to apply the Japan-U.S. Tax Treaty. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld is available under Japanese law or the
Japan-U.S.
Tax Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your U.S. federal income tax liability.
For foreign tax credit purposes, dividends will generally be income from sources outside the U.S. and will generally be “passive income” for purposes of computing the foreign tax credit allowable to you.
Taxation of Capital Gains
Subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares or ADSs. Capital gain of a
non-corporate
U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the U.S. for foreign tax credit limitation purposes.
PFIC Rules
We do not expect our shares and ADSs to be treated as stock of a PFIC for U.S. federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. Moreover, the application of the PFIC rules to a corporation, such as Nomura, that is primarily engaged in an active business as a securities dealer is not entirely clear.
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In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held our ADSs or shares:
 
at least 75% of our gross income for the taxable year is passive income, or
 
at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income.
Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.
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If we are treated as a PFIC, and you are a U.S. holder that did not make a
mark-to-market
election, as described below, you will be subject to special rules with respect to:
 
any gain you realize on the sale or other disposition of your shares or ADSs, and
 
any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the shares or ADSs during the three preceding taxable years or, if shorter, your holding period for the shares or ADSs).
Under these rules:
 
the gain or excess distribution will be allocated ratably over your holding period for the shares or ADSs,
 
the amount allocated to the taxable year in which you realized the gain or excess distribution, or to prior years before the first year in which we were a PFIC with respect to you, will be taxed as ordinary income,
 
the amount allocated to each other previous year will be taxed at the highest tax rate in effect for that year, and
 
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
If you own shares or ADSs in a PFIC that are regularly traded on a qualified exchange, they will be treated as marketable stock, and you may elect to mark your shares or ADSs to market. If you make this election, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the excess, if any, of the fair market value of your shares or ADSs at the end of the taxable year over your adjusted basis in your shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. You will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the
mark-to-market
election). Your basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts.
Your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your shares or ADSs, even if we are not currently a PFIC. For purposes of this rule, if you make a
mark-to-market
election with respect to your shares or ADSs, you will be treated as having a new holding period in your shares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the
mark-to-market
election applies.
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In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC (or treated as a PFIC with respect to you) either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for U.S. federal income tax purposes) in your gross income, and it will be subject to tax at rates applicable to ordinary income.
If you own shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file Internal Revenue Service Form 8621.
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Japanese Taxation
The following is a summary of the principal Japanese tax consequences to owners of shares of the Company who are
non-resident
individuals or
non-Japanese
corporations
(“non-resident
shareholders”) without a permanent establishment in Japan to which the relevant income is attributable. As tax laws are frequently revised, the tax treatments described in this summary are also subject to changes in the applicable Japanese laws and/or double taxation conventions occurring in the future, if any. This summary is not exhaustive of all possible tax considerations which may apply to specific investors under particular circumstances. Potential investors should, by consulting with their own tax advisers, satisfy themselves as to
 
the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law,
 
the laws of the jurisdiction of which they are resident, and
 
any tax treaty between Japan and their country of residence.
Generally, a
non-resident
shareholder is subject to Japanese withholding tax on dividends on the shares paid by the Company. A stock split is not subject to Japanese income or corporation tax, as it is characterized merely as an increase of number of shares (as opposed to an increase of value of shares) from Japanese tax perspectives. Conversion of retained earnings or legal reserve (but other than additional
paid-in
capital, in general) into stated capital on a
non-consolidated
basis is not characterized as a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger Japanese withholding taxation (Article 2(16) of the Japanese Corporation Tax Law and Article 8(1)(xiii) of the Japanese Corporation Tax Law Enforcement Order).
Unless an applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax applies, the rate of Japanese withholding tax applicable to dividends on listed shares such as those paid by the Company to
non-resident
shareholders is currently 15%, except for dividends paid to any individual shareholder who holds 3% or more of the issued shares for which the applicable rate is 20% (please refer to Article 170 and Article 213(1)(i) of the Japanese Income Tax Law and Article
9-3(1)(i)
of the Japanese Special Tax Measures Law).
On December 2, 2011, the “Special measures act to secure the financial resources required to implement policy on restoration after the East Japan Earthquake” (Act No. 117 of 2011) was promulgated and special surtax measures on income tax were introduced to fund the restoration effort from the earthquake. Income tax and withholding tax payers will need to pay a surtax, calculated by multiplying the base income tax with 2.1% for 25 years starting from January 1, 2013. As a result of the fractional tax rate increase, 15.315% is applicable until December 31, 2037. If a
non-resident
taxpayer is a resident of a country that Japan has tax treaty with, as described below, such
non-residents
will not be subject to the surtax to the extent that the applicable rate agreed in the tax treaty is lower than the aggregate domestic rate.
Japan has income tax treaties, conventions or agreements whereby the above-mentioned withholding tax rate is reduced, generally to 15% for portfolio investors, with, among others, Canada, Denmark, Finland,
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Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore, and Spain (in the case of Spain, the rate will change to 5% as of January 1, 2022).Singapore. Under the
Japan-U.S.
Tax Treaty, the withholding tax rate on dividends is 10% for portfolio investors, provided that they do not have a permanent establishment in Japan, or if there is a permanent establishment, the shares with respect to which such dividends are paid are not effectively connected with such permanent establishment, and that they are qualified U.S. residents eligible to enjoy treaty benefits. It shall be noted that, under the
Japan-U.S.
Tax Treaty, withholding tax on dividends to be paid is exempt from Japanese taxation by way of withholding or otherwise for pension funds which are qualified U.S. residents eligible to enjoy treaty benefits unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds (please refer to Article 10(3)(b) of the
Japan-U.S.
Tax Treaty). In addition to the
Japan-U.S.
Tax Treaty, Japan currently has income tax treaties with, among others, the U.K., France, Australia, the Netherlands, Switzerland, Sweden and Belgium whereby the withholding tax rate on dividends is also reduced from 15% to 10% for portfolio investors.
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Non-resident
shareholders who are entitled to a reduced treaty rate of Japanese withholding tax on payment of dividends on the shares by the Company are required to submit the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends” or the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends with respect to Foreign Depositary Receipt”, as the case may be, in advance through the Company, which is the case for ADS holders, or (in cases where the relevant withholding taxpayer for the dividend payment is not the Company but a financial institution in Japan) through the financial institution, to the relevant tax authority before payment of dividends.
Non-resident
shareholders who receive dividends through a financial institution may select a simplified procedure with respect to dividends payable on or after January 1, 2014. Under such procedure,
non-resident
shareholders who submit the “Special Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends of Listed Stocks” to the relevant tax authority through a financial institution are deemed to have submitted the “Application Form for Income Tax Convention regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends” mentioned above with respect to any dividend which will be paid by the Company to
non-resident
shareholders through the financial institution thereafter, provided that such
non-resident
shareholders shall notify the financial institution of certain information regarding the dividends before the payment of such dividends.
Non-resident
shareholders who do not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate of an applicable tax treaty from the relevant Japanese tax authority. For Japanese tax purpose, the treaty rate normally applies superseding the tax rate under the domestic law. However, due to the
so-called
“preservation doctrine” under Article
3-2
of the Special Measures Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable. Consequently, if the domestic tax rate still applies, no treaty application is required to be filed.
Gains derived from the sale of shares outside Japan by a
non-resident
shareholder without a permanent establishment in Japan as a portfolio investor, are, in general, not subject to Japanese income or corporation taxes.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired shares as a legatee, heir or donee, even if the individual is not a Japanese resident.
You should consult your own tax advisers regarding the Japanese tax consequences of the acquisition, ownership and disposition of the shares and ADSs in your particular circumstances.
F. Dividends and Paying Agents.
Not applicable.
G. Statement by Experts.
Not applicable.
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H. Documents on Display.
The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, the Company will file with the Securities and Exchange Commission annual reports on Form
20-F
within four months of the Company’s fiscal
year-end
and other reports and information on Form
6-K.
You can access the documents filed via the Electronic Data Gathering, Analysis, and Retrieval system on the SEC’s website (http://www.sec.gov).
I. Subsidiary Information.
Not applicable.
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Item 11. Quantitative and Qualitative Disclosures about Market, Credit and Other Risk
Risk Management
Nomura defines risks as (i) the potential erosion of Nomura’s capital base due to unexpected losses arising from risks to which its business operations are exposed, such as market risk, credit risk, operational risk and model risk, (ii) liquidity risk, the potential lack of access to funds or higher cost of funding than normal levels due to a deterioration in Nomura’s creditworthiness or deterioration in market conditions, and (iii) strategic risk, the potential failure of revenues to cover costs due to a deterioration in the earnings environment or a deterioration in the efficiency or effectiveness of its business operations.
A fundamental principle established by Nomura is that all employees shall regard themselves as principals of risk management and appropriately manage these risks. Nomura seeks to promote a culture of proactive risk management throughout all levels of the organization and to limit risks to the confines of its risk appetite. The risk management framework that Nomura uses to manage these risks consists of its risk appetite, risk management governance and oversight, the management of financial resources, the management of all risk classes, and processes to measure and control risks. Each of these key components is explained in further detail in this Item 11.
In addition to the matters discussed herein,Furthermore, in response to the U.S. Prime Brokerage Event, we are in the process of reviewing our risk management framework for considering improvements thereto. SeeEach of these key components is explained in further detail in this Item 4. “11.
Business—Management Challenges and Strategies— Issues RelatingAs a part of the efforts to enhance the risk management governance, the Board Risk Committee (the “BRC”) was formally established on October 29, 2021 to discuss important risks independently of the execution side within the high-level governance structure. The BRC assists the Board of Directors (the “BoD”) in supervising such matters as (i) providing consent to Risk Appetite Statement, (ii) providing consent to the U.S. Prime Brokerage Event
” for a description of these initiatives, and Item 5 “
Operating and Financial Review—Executive Summary—U.S. Prime Brokerage Event
” for a discussionmain design of the U.S. Prime Brokerage Eventrisk management framework, (iii) results of analysis and verification or future forecasts of risk environment, and (iv) supervision over execution state of the overall risk management and medium- to long-term risk strategies for contributing to the sophistication of the Group’s risk management. Besides, the Group Integrated Risk Management Committee (the “GIRMC”) was formally changed its name to the Group Risk Management Committee (the “GRMC”), further ensuring global representatives and efficiency in general.
the operations, with an intention to increase the senior management’s involvement in risk management, stimulate dialog and analysis further, and effectively coordinate with the BRC of supervisory side.
Nomura engages in the risk management through the Three Lines of Defense framework.
First Line of Defense: All executives and employees of the front office for Financial Risk and all executives and employees for
Non-Financial
Risk are primarily responsible for risk management and assume the consequences associated with business execution and to provide evidence and justify that the risk arising from their business activities is in line with risk appetite.
Second Line of Defense: The department responsible for risk management supports and monitors management activities on the First Line of Defense and reports to boards and the senior management. In addition, the Second Line independently evaluates risk management governance established by the First Line.
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Third Line of Defense: The Internal Audit function examines and evaluates the risk management from an independent standpoint, provides advice for improvement, and reports the examination and evaluation are reported to the Audit Committee.
Risk Appetite
Nomura has determined the types and levels of risk that it will assume in pursuit of its strategic objectives and business plan and has articulated this in its Risk Appetite Statement. This document is jointly submitted by the Chief Risk Officer (“CRO”(the “CRO”), the Chief Financial Officer (“CFO”(the “CFO”) and the Chief Compliance Officer (“CCO”(the “CCO”) to the Executive Management Board (“EMB”(the “EMB”) for approval. It will then be further reviewed at the BRC through the authority to consent to the relevant proposal raised by the executive side.
The Risk Appetite Statement provides an aggregated view of risk and includes capital adequacy, liquidity, financial risk and
non-financial
risk. It is subject to regular monitoring and breach escalation as appropriate by the owner of the relevant risk appetite statement.
Nomura’s Risk Appetite Statement is required to be reviewed at least annually by the EMB but it is reviewed on an ad hoc basis if necessary, and must specifically be reviewed following any significant changes in Nomura’s strategy. Risk appetite underpins all additional aspects of Nomura’s risk management framework.
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Risk Management Governance and Oversight
Committee Governance
Nomura has established a committee structure to facilitate effective business operations and management of Nomura’s risks. The formal governance structure for risk management within Nomura is as follows:
 

Board of Directors (“BoD”)
The BoD determines the policy for the execution of the business of Nomura and other matters prescribed in laws and regulations, supervises the execution of Directors’ and Executive Officers’ duties and has the authority to adopt, alter or abolish the regulations of the EMB.
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Board Risk Committee
The BRC provides specialized oversight to deepen the oversight functions of the BoD. To ensure a high degree of independence, the BRC is chaired by an outside director. The BRC contributes to more sophisticated Group risk management mainly in the areas outlined below:
Amendment and abolition of the Risk Appetite Statement
Change in risk management framework
Results of analysis and verification or future forecasts of risk environment
Execution state of the overall risk management and medium- to long-term risk strategies
Executive Management Board (“EMB”)
The EMB deliberates on and determines management strategy, the allocation of management resources and important management matters of Nomura, and seeks to increase shareholder value by promoting effective use of management resources and unified decision-making with regard to the execution of business. The EMB delegates responsibility for deliberation of matters concerning risk management to the Group Integrated Risk Management Committee (“GIRMC”).GRMC. Key responsibilities of the EMB include the following:
 
Resource Allocation—At the beginning of each financial year, the EMB determines the allocation of management resources and financial resources such as risk-weighted asset and unsecured funding to business units and establishes usage limits for these resources;
 
Business Plan—At the beginning of each financial year, the EMB approves the business plan and budget of Nomura. Introduction of significant new businesses, changes to business plans, the budget and the allocation of management resources during the year are also approved by the EMB; and
 
Reporting—The EMB reports the status of its deliberations to the BoD.
Group Integrated Risk Management Committee (“GIRMC”)
Upon delegation from the EMB, the GIRMCGRMC deliberates on or determines important matters concerning integrated risk management of Nomura to assure the sound and effective management of its businesses. The GIRMCGRMC establishes a framework of integrated risk management consistent with Nomura’s risk appetite. The GIRMCGRMC supervises Nomura’s risk management by establishing and operating its risk management framework. The GIRMCGRMC reports the status of key risk management issues and any other matters deemed necessary by the committee chairman to the BoD and the EMB.
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In addition, the GIRMC,GRMC, upon delegation from the EMB, has established the Risk Management Policy, describing Nomura’s overall risk management framework including the fundamental risk management principles followed by Nomura.
Nomura Group Conduct Committee
Upon delegation from the EMB, the Nomura Group Conduct Committee deliberates on the matters necessary for compliance and conduct risk management to assure the sound and effective management of its businesses
.
Global Portfolio Committee (“GPC”(the “GPC”)
Upon delegation from the GIRMC,GRMC, the GPC deliberates on or determines matters in relation to the management of Financial Risks of the Wholesale Division, in addition to global portfolio concentration risk in addition to a specific portfolio, for the purposerisk.
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Table of achieving a risk profile consistent with the risk allocation and risk appetite of Nomura. The portfolio consists of businesses and products that fall within at least one of the three following categories: event financing, term financing and asset-based financingContents
.
Asset Liability Committee (“ALCO”(the “ALCO”)
Upon delegation from the EMB and the GIRMC,GRMC, the ALCO deliberates on, based on Nomura’s risk appetite determined by the EMB, balance sheet management, financial resource allocation, liquidity management and related matters. The ALCO reports to the GIRMCGRMC the status of discussions at its meetings and any other matters as deemed necessary by the committee chairman.
Global Transaction Committee (“GTC”(the “GTC”)
Upon delegation from the GPC, the GTC deliberates on or determines individual transactions in line with Nomura’s risk appetite determined by the EMB and thereby seeks to assure the sound and effective management of Nomura’s businesses.
Transaction Profile Review Committee (the “TPC”)
Upon delegation from the GRMC, the TPC deliberates on and makes decisions on matters relating to transactions and/or clients/counterparties that require consideration of the Nomura Group’s reputational risk in view of the Nomura Group’s Code of Conduct and Risk Appetite Statement, thereby ensuring the sound and effective management of the businesses.
Other Committees
Model Risk Management Committees such as the Global Risk Analytics Committee and the Model Risk Analytics Committee deliberate on or determine matters concerning the development, management and strategy of models upon delegation from the CRO. The primary responsibility of these committees is to govern and provide oversight of model management, including the approval of new models and significant model changes. Both committees report significant matters and material decisions taken to the CRO on a regular basis. The Global Collateral Steering Committee deliberates on or determines Nomura’s collateral risk management, including concentrations, liquidity, collateral
re-use,
limits and stress tests, provides direction on Nomura’s collateral strategy and ensures compliance with regulatory collateral requirements upon delegation from the CRO.
Chief Risk Officer (“CRO”)
The CRO is responsible for setting the overall strategy and direction of the Risk Management Division. The CRO is responsible for supervising the Risk Management Division and maintaining the effectiveness of the risk management framework independently from the business units within Nomura. The CRO regularly reports on the status of Nomura’s risk management to the GIRMC,GRMC, and reports to and seeks the approval of the GIRMCGRMC on measures required for risk management.
Chief Financial Officer (“CFO”)
The CFO is responsible for overall financial strategy of Nomura, and has operational authority and responsibility over Nomura’s liquidity management based on decisions made by the EMB.
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Chief Compliance Officer (“CCO”)
The CCO is responsible for supervising the Legal, Compliance and Controls Division (“LCC(the “LCC Division”) and maintaining the effectiveness of the
non-financial
risk management framework (operational risk and reputational risk).
Risk Management Division, Finance Division and LCC Division
The Risk Management Division, the Finance Division and the LCC Division comprise various departments or units established independently from Nomura’s business units. These three divisions are responsible for
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establishing and operating risk management processes, establishing and enforcing risk management policies and regulations, verifying the effectiveness of risk management methods, gathering reports from Nomura Group entities, reporting to Executive Officers/Senior Managing Directors and the GIRMCGRMC and others, as well as reporting to regulatory bodies and handling regulatory applications concerning risk management methods and other items as necessary. Important risk management issues are closely communicated between these three divisions and the CRO, CFO and CCO. The CRO, CFO and CCO regularly attend the EMB and GIRMCthe GRMC meetings to report specific risk issues.
Risk Policy Framework
Policies and procedures are essential tools of governance and define principles, rules and standards, and the specific processes that must be adhered to in order to effectively manage risk at Nomura. Risk management operations are designed to function in accordance with these policies and procedures.
Monitoring, Reporting and Data Integrity
Development, consolidation, monitoring and reporting of risk management information (“risk MI”) are fundamental to the appropriate management of risk. The aim of all risk MI is to provide a basis for sound decision-making, action and escalation as required. The Risk Management Division, the Finance Division and the LCC Division are responsible for producing regular risk MI, which reflects the position of Nomura relative to stated risk appetite. Risk MI includes information from across the risk classes defined in the risk management framework and reflect the use of the various risk tools used to identify and assess those risks. These three divisions are responsible for implementing appropriate controls over data integrity for risk MI.
Risk Management Enhancement Program
U.S. Prime Brokerage Event
In March 2021, following the default of one of our prime brokerage clients in the United States on its obligations to post additional margin in respect of its positions with us, we issued a closeout notice to the client following which we began to wind down the positions held by us and liquidate hedges held against those positions. Due to fluctuations in the market values of the hedges against the positions and our expectation that we will not be able to recover those losses from the client, we recognized significant losses during the fourth quarter and fiscal year ended March 31, 2021, and recognized additional losses in the fiscal year ended March 31, 2022.
Our transactions with the client comprised (i) total return swaps (the “TRS transactions”), which are transactions that allow the client to obtain synthetic (i.e., derivative) long or short exposure to underlying individual equities or indices, as well as (ii) providing financing against a portfolio of securities in the client’s cash prime brokerage account. To manage credit risk in relation to prime brokerage clients, we require that prime brokerage clients deposit collateral (referred to as “margin”) in respect of their positions with us in accordance with the margin ratios applied to them. These margin ratios are determined based on the results of an internal risk assessment of the specific client and the composition of the client’s positions and may require that they post additional margin based on the effect of market movements on these ratios. TRS transactions are hedged from a market risk perspective by holding long or short positions in individual equities or indices and through derivative transactions, depending on the positions taken by the relevant client. For long equity positions taken by the client, we hold cash equity long positions in the underlying equities as well as derivative transactions. For short equity positions taken by the client, we hold cash equity short positions and derivative transactions. Lending transactions against cash prime brokerage portfolios are generally overcollateralized, and therefore not separately hedged, and we may enter into separate hedges if the value of the collateral falls.
Particularly between January and March 2021, transaction amounts and volumes with the client increased significantly as a result of changes in market prices as well as new positions entered into by the client. However,
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in March 2021, the market value of certain securities in which the client held a large synthetic position experienced a sharp decline, after which we requested that the client deposit additional margin with us pursuant to our contractual agreements with the client. The client defaulted on its obligation to post additional margin, and we issued a closeout notice to the client. It became clear that the client had similar large positions with other financial institutions, and that the client had also defaulted on margin calls with these financial institutions. Although we endeavored to take a disciplined approach to unwind the positions and liquidate the hedges for the TRS transactions, taking into account both market impact and our own trading losses, due to the significant volume of positions being closed by both us and the other affected financial institutions and the effect on market prices, we recognized ¥204.2 billion of losses in earnings reported within Net gain (loss) on trading in the quarter and fiscal year ended March 31, 2021. We also recognized additional provisions for current expected credit losses of ¥41.6 billion in earnings reported within other expenses during the same period against loans extended to the client collateralized by a cash portfolio of securities, reflecting the reduced likelihood of recovery on these lending transactions. All of the positions with the client were closed out and hedges liquidated by May 17, 2021, as a result of which we recognized losses of approximately ¥65.4 billion during the quarter ended June 30, 2021, of which ¥56.1 billion booked in Equities revenues as trading loss and ¥9.3 billion booked as loan loss provision in expenses.
Immediately following the incident, we conducted an internal investigation of the underlying facts, and our Audit Committee hired an external law firm to conduct a comprehensive review. In addition, we reviewed our risk management framework, centered on the prime brokerage business, and conducted a comprehensive review by third-party risk management experts on our risk management framework for the Wholesale division and our Risk Management function. Based on those, we have determined various measures to enhance risk management and its governance structure to drive it forward. We took measures to strengthen the functions of our risk management committees, including expanding the scope of our Wholesale division’s risk monitoring beyond our financing businesses to include other businesses in the Wholesale division. In addition, we established the BRC, effective October 29, 2021, which is chaired by an independent director and constituted of
non-executive
directors, to discuss important risk matters from a standpoint independent of execution. At the same time, the existing committee to discuss risk management on execution side is partially reformed, from the GIRMC to the GRMC, in order to effectively coordinate with the BRC of supervisory side. For detail of the BRC and the GRMC, see ‘Risk Management Governance and Oversight’.
Moreover, to build out our platform to provide value-added products and services to our clients as a global financial services company, we have appointed Mr. Christopher Willcox, who has extensive experience with the U.S. financial services business, as the CEO & President of our U.S. subsidiaries Nomura Securities International, Inc. (our registered broker-dealer subsidiary in the U.S.) and Nomura Global Financial Products Inc. (our registered swap dealer subsidiary in the U.S.), as well as
Co-CEO
of Nomura Holding America, Inc. (the intermediate holding company for our U.S. subsidiaries), effective May 3, 2021.
Programme Governance Structure
Given our strong commitment to timely remediation of weaknesses across the firm, we have already taken several important steps to launch remediation actions and align resources to ensure successful implementation. Importantly, we have set up a robust governance process in 2021, including the Steering Committee for Enhancement of Risk Management (the “Steering Committee”) which is chaired by Group CEO, and Deputy President as vice chair. The Steering Committee deliberates on matters such as formulating and overseeing the execution of enhancement measures, securing necessary resources, and developing a global cooperation structure to ensure enhancements are achieved. Further, a Chief Transformation Officer (the “CTO”) and members of the Steering Committee will lead efforts to advance group-wide initiatives, and foster collaboration and consistency across regions. To ensure supervision of the enhancement plan at the highest level, the Steering Committee updates the EMB on a regular basis as well as reports progress of the plan directly to the BoD.
Under the leadership of the Steering Committee, detailed measures to enhance risk management have already been discussed and implementation has begun. These measures have been categorized into four areas:
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business strategy, oversight, risk management, and risk culture. We have assigned an executive officer or executive-level person to each area and have prioritized the resources necessary for implementation.
Business Strategy
By clarifying our Global Markets business strategy and conducting regular reviews of the business portfolio using various methods, we continue our efforts to maintain consistency between the risk profile, and other areas such as the firm’s strategic direction, risk appetite and allocation of resources. In particular, we are committing the required resources and investments to ensure a risk management framework for safe and sound execution of the business thorough review of our businesses and strategic planning processes. For example, we have reviewed and significantly revised the strategy of the Prime Brokerage business to better align with its core capabilities, risk appetite and financial resources position.
Oversight
In order to build a more robust, global cross-border governance framework, we are reviewing the cross-border booking model and controls at local entities from front office to back office. To strengthen critical first-line risk management functions and enhance oversight of complex business activities carried out globally, we made critical hires including for newly created positions as part of efforts to strengthen business oversight, for example a Global Head of Wholesale Front Office & Risk Control and a Global Head of Wholesale Client Account Management.
Risk Management
To strengthen the risk control function in the first line and risk management function in the second line, we are in a process of significantly increasing the headcount in each line. We also plan to increase the number of employees in Internal Audit, which is the third line.
By the end of October 2021, we have already advanced expertise of our Risk Management function. To increase managers in the risk management function, strengthen our global cooperation and controls, and further enhance risk management, we assigned a new executive officer in charge of risk management at the Tokyo headquarters and implementing other initiatives. To supervise risk management enhancement initiatives and business management, and strengthen our implementation capabilities, we also newly established the Group Risk Management Head Office. The Group Risk Management Head Office monitors risk management operations globally, support the work of the CRO and bolster collaboration with relevant departments.
We are also working to improve processes related to risk appetite, by adding quantitative indicators to our Risk Appetite Statement, and by reviewing our limit framework as well as Management Information suite.
Risk Culture
We established a firm-wide programme to strengthen risk management and foster a shared sense of responsibility toward managing risks. To appropriately evaluate and embed the targeted actions, we have revised the Nomura Group Code of Conduct in March 2022, and will continue further efforts such as expanding conduct-related workshops and annual training programs to all regions, and systematically reviewing and changing policies and practices for providing incentives. To measure the progress of these initiatives, we plan to establish a framework to assess the effectiveness of the program, including risk culture surveys and other metrics.
Management of Financial Resources
Nomura has established a framework for management of financial resources in order to adequately manage utilization of these resources. The EMB allocates financial resources to business units at the beginning of each
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financial year. These allocations are used to set revenue forecasts for each business units.unit. Key components are set out below:
Risk-weighted assets
A key component used in the calculation of our consolidated capital adequacy ratios is risk-weighted assets. The EMB determines the risk appetite for our consolidated Tier 1 capital ratio on an annual basis and sets the limits for the usage of risk-weighted assets by each division and by additional lower levels of the division. In addition the EMB determines the risk appetite for the level of exposures under the leverage ratio framework which is a
non-risk
based measure to supplement risk-weighted assets. See Item 4.B. “
Business Overview—Regulatory Capital Rules
”, Item 5.B. of our annual report on Form
20-F
for the fiscal year ended March 31, 2022, and “
Consolidated Regulatory Capital Requirements
” and “
Consolidated Leverage Ratio Requirements
” in this annual report for further information on our consolidated capital adequacy ratios and risk-weighted assets.
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Available Funds
The CFO decides the maximum amount of available funds, provided without posting of any collateral, for allocation within Nomura and the EMB approves the allocation of the funds to each business division. Global Treasury monitors the usage by businesses and reports to the EMB.
Classification and Definition of Risk
Nomura classifies and defines risks as follows and has established departments or units to manage each risk type.
 
Risk Category
  
Definition
Financial Risk
   
  
Market risk
  Risk of loss arising from fluctuations in values of financial assets or debts (including
off-balance
sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of securities and others).
  
Credit risk
  Risk of loss arising from an obligor’s default, insolvency or administrative proceeding which results in the obligor’s failure to meet its contractual obligations in accordance with agreed terms. It is also the risk of loss arising through a credit valuation adjustment (“CVA”(the “CVA”) associated with deterioration in the creditworthiness of a counterparty.
  
Model risk
  Risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from model errors or incorrect or inappropriate model application.
  
Liquidity risk
  Risk of loss arising from difficulty in securing the necessary funding or from a significantly higher cost of funding than normal levels due to deterioration of the Nomura Group’s creditworthiness or deterioration in market conditions.
  
Non-financial
Risk
   
  
Operational risk
  Risk of financial loss or
non-financial
impact arising from inadequate or failed internal processes, people and systems, or from external events. Operational risk includes in its definition Compliance, Legal, IT and Cyber Security, Fraud, Third Party and other
non-financial
risks.
  
Reputational risk
  Possible damage to Nomura’s reputation and associated risk to earnings, capital or liquidity arising from any association, action or inaction which could be perceived by stakeholders to be inappropriate, unethical or inconsistent with Nomura Group’s values and corporate philosophy.
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Risk Category
Definition
  
Other Risks
   
  
ESG: Environmental,
Social and
Governance
(*)
  ESG is a collective term for Environmental (E), Social (S) and Governance (G) factors. “Environmental” includes issues related to impacts on the natural environment, including climate change. “Social” includes interactions with stakeholders and communities, for example the approach to human rights, workplace related issues and engagement on social issues. Governance includes issues related to corporate governance, corporate behaviour and the approach to transparent reporting.
  
Strategic risk
  Risk to current or anticipated earning, capital, liquidity, enterprise value, or the Nomura Group’s reputation arising from adverse business decisions, poor implementation of business decisions, or lack of responsiveness to change in the industry or external environment.
(*)
Added as of April 1, 2021
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Market Risk Management
Market risk is the risk of loss arising from fluctuations in values of financial assets and liabilities (including
off-balance
sheet items) due to fluctuations in market risk factors (interest rates, foreign exchange rates, prices of securities and others).
Market Risk Management Process
Effective management of market risk requires the ability to analyze a complex and evolving portfolio in a constantly changing global market environment, identify problematic trends and ensure that appropriate action is taken in a timely manner.
Nomura uses a variety of statistical risk measurement tools to assess and monitor market risk on an ongoing basis, including, but not limited to, Value at Risk (“VaR”), Stressed VaR (“SVaR”) and Incremental Risk Charge (“IRC”).Charge. In addition, Nomura uses sensitivity analysis and stress testing to measure and analyze its market risk. Sensitivities are measures used to show the potential changes to a portfolio due to standard moves in market risk factors. They are specific to each asset class and cannot usually be aggregated across risk factors. Stress testing enables the analysis of portfolio risks or tail risks, including
non-linear
behaviors and can be aggregated across risk factors at any level of the group hierarchy, from group level to business division, units or desk levels. Market risk is monitored against a set of approved limits, with daily reports and other management information provided to the business units and senior management.
Value at Risk
VaR is a measure of the potential loss due to adverse movements of market factors, such as equity prices, interest rates, credit, foreign exchange rates, and commodities with associated volatilities and correlations.
VaR Methodology Assumptions
Nomura uses a single VaR model which has been implemented globally in order to determine the total trading VaR. A historical simulation is implemented, where historical market moves over a
two-year
window are applied to current exposure in order to construct a profit and loss distribution. Potential losses can be estimated at required confidence levels or probabilities. For internal risk management purposes, VaR is calculated across Nomura using a
1-day
time horizon; this data is presented below. A scenario weighting scheme is employed to ensure that the VaR model responds to changing market volatility. For regulatory reporting purposes, Nomura uses a
10-day
time horizon, calculated using actual
10-day
historical market moves and employ an equal weight scheme to ensure VaR is not overly sensitive to changing market volatility. To complement VaR under Basel 2.5 regulations, Nomura also computes SVaR, which samples from a
one-year
window during a period of financial stress. The SVaR window is regularly calibrated and observations are equally weighted.
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Nomura’s VaR model uses exact time series for each individual risk factor. However, if good quality data is not available, a ‘proxy logic’ maps the exposure to an appropriate time series. The level of proxying taking place is carefully monitored through internal risk management processes and there is a continual effort to source new time series to use in the VaR calculation.
Nomura has decided to change the confidence level used to calculate its disclosed
one-day
VaR from 99% to 95% effective from the end of the fiscal year ended March 31, 2022, as Nomura believes based on its historical experience that the 95th percentile measure better reflects the
day-to-day
profit and loss volatility expected for the firm. In addition to data for the fiscal year ended March 31, 2022 calculated using the 95% confidence interval, pursuant to the requirements of Form
20-F,
Nomura is also providing data for the fiscal years ended March 31, 2021 and 2022 calculated using the previously-used 99% confidence interval.
VaR Backtesting
The performance of Nomura’s VaR model is closely monitored to help ensure that it remains fit for purpose. The main approach for validating VaR is to compare actual
1-day
trading losses with the corresponding VaR estimate. Nomura’s VaR model is back testedbacktested at different hierarchy levels. Backtesting results are reviewed on a monthly basis by Nomura’s Risk Management Division. No
One-dayone-day
trading losses exceeded the 99% VaR estimate (the currently required regulatory backtesting level) at the Nomura Group level once for the twelve months250 business days ended March 31, 2021.2022.
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Limitations and Advantages of VaR
VaR aggregates risks from different asset classes in a transparent and intuitive way. However, there are limitations. VaR is a backward-looking measure: it implicitly assumes that distributions and correlations of recent factor moves are adequate to represent moves in the near future. VaR is appropriate for liquid markets and is not appropriate for risk factors that exhibit sudden jumps. Therefore it may understate the impact of severe events. Given these limitations, Nomura uses VaR only as one component of a diverse market risk management process.
VaR metricsmetrics: 95% Confidence Interval
As described above, Nomura has decided to change the confidence level used to calculate its disclosed
one-day
VaR from 99% to 95%. See “—VaR Methodology Assumption.”
One-day
VaR data using the new confidence level of 95% for the fiscal year ended March 31, 2022 is presented below.
The following graph shows the daily VaR over the last four quarters for substantially all of Nomura’s trading positions:
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The following tables show the VaR as of each of the dates indicated for substantially all of Nomura’s trading positions:
Billions of yen
As of
March 31,

2022
Equity
¥1.4
Interest rate
2.3
Foreign exchange
0.9
Subtotal
4.6
Less: Diversification Benefit
(1.9) 
VaR
¥2.7
Billions of yen
For the fiscal
year ended
March 31,

2022
Maximum daily VaR
(1)
¥23.2
Average daily VaR
(1)
4.5
Minimum daily VaR
(1)
2.7
(1)
Represents the maximum, average and minimum VaR based on all daily calculations for the fiscal year ended March 31, 2022.
VaR metrics: 99% Confidence Interval
As described above, Nomura has decided to change the confidence level used to calculate its disclosed
one-day
VaR from 99% to 95%. See “—VaR Methodology Assumption.”
One-day
VaR data calculated using the previous confidence level of 99% for the fiscal year ended March 31, 2022, together with comparative data for the previous fiscal year, is presented below.
The following graph shows the daily VaR over the last six quarters for substantially all of Nomura’s trading positions:
 
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The following tables show the VaR as of each of the dates indicated for substantially all of Nomura’s trading positions:
 
  
Billions of yen
   
Billions of yen
 
  
As of
   
As of
 
  
March 31,

2019
 
March 31,

2020
 
March 31,

2021
   
March 31,

2021
 
March 31,

2022
 
Equity
  ¥1.07  ¥8.88  ¥93.43   ¥93.4  ¥1.7 
Interest rate
   2.85   22.35   8.56    8.6   3.5 
Foreign exchange
   1.88   5.08   4.17    4.2   1.3 
            
 
  
 
 
Subtotal
   5.79   36.31   106.16    106.2   6.5 
Less: Diversification Benefit
   (1.30)   (11.00)   (12.77)    (12.8)   (1.7) 
            
 
  
 
 
VaR
  ¥4.49  ¥25.31  ¥93.39   ¥93.4  ¥4.8 
            
 
  
 
 
 
  
Billions of yen
 
  
For the twelve months ended
 
  
March 31,

2019
 
March 31,

2020
 
March 31,

2021
 
Maximum daily VaR
(1)
  ¥10.61  ¥32.89  ¥93.39 
Average daily VaR
(1)
   4.58   6.67   13.58 
Minimum daily VaR
(1)
   3.05   3.62   7.14 
   
Billions of yen
 
   
For the twelve months ended
 
   
March 31,

2021
   
March 31,

2022
 
Maximum daily VaR
(1)
  ¥93.4   ¥89.7 
Average daily VaR
(1)
   13.6    8.2 
Minimum daily VaR
(1)
   7.1    4.0 
 
(1)
Represents the maximum, average and minimum VaR based on all daily calculations for the twelve monthsfiscal years ended March 31, 2019, March 31, 2020,2021 and March 31, 2021.31. 2022.
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Total VaR increased to ¥93.39 billion as of March 31, 2021 from ¥25.312022 was ¥2.7 billion, as of March 31, 2020.comprising VaR relating to equity risk increased to ¥93.43was ¥1.4 billion, as of March 31, 2021, compared to ¥8.88 billion as of March 31, 2020. VaR relating to interest rate risk decreased to ¥8.56was ¥2.3 billion, as of March 31, 2021, compared to ¥22.35 billion as of March 31, 2020.and VaR relating to foreign exchange risk decreased to ¥4.17was ¥0.9 billion as of March 31, 2021, compared to ¥5.08 billion as of March 31, 2020. The significant increases in total VaR and VaR relating to equity risk as of March 31, 2021 as compared to March 31, 2020 are a result of our wind-down activities of positions entered into as hedges andeach case using the value of collateral to be liquidated following the
close-out
notice delivered to our prime brokerage client following the U.S. Prime Brokerage Event. See Item 5. “
Operating and Financial Review—Executive Summary—U.S. Prime Brokerage Event
”.
Total VaR increased to ¥25.31 billion as of March 31, 2020 from ¥4.49 billion as of March 31, 2019. VaR relating to equity risk increased to ¥8.88 billion as of March 31, 2020, compared to ¥1.07 billion as of March 31, 2019. VaR relating to interest rate risk increased to ¥22.35 billion as of March 31, 2020, compared to ¥2.85 billion as of March 31, 2019. VaR relating to foreign exchange risk increased to ¥5.08 billion as of March 31, 2020, compared to ¥1.88 billion as of March 31, 2019.95% confidence interval.
Stress Testing
Nomura conducts market risk stress testing since VaR and sensitivity analysis have limited ability to capture all portfolio risks or tail risks. Stress testing for market risk is conducted regularly, using various scenarios based upon features of trading strategies. Nomura conducts stress testing not only at the desk level, but also at the Nomura Group level with a set of common global scenarios in order to reflect the impact of market fluctuations on the entire Nomura Group.
Non-Trading
Risk
A major market risk in Nomura’s
non-trading
portfolio relates to equity investments held for operating purposes and on a long-term basis. Equity investments held for operating purposes are minority stakes in the equity securities of unaffiliated Japanese financial institutions and corporations held in order to promote existing and potential business relationships. This
non-trading
portfolio is exposed mainly to volatility in the Japanese stock market. One method that can estimate the market risk in this portfolio is to analyze market sensitivity based on changes in the TOPIX, which is a leading index of prices of stocks on the First Section of the Tokyo Stock Exchange.
Nomura uses regression analysis covering the previous 90 days which tracks and compares fluctuations in the TOPIX and the fair value of Nomura’s equity investments held for operating purposes, which allows to determine a correlation factor. Based on this analysis for each 10% change in the TOPIX, the fair value of Nomura’s operating equity investments held for operating purposes can be expected to change by 7,658 million at the end of March 2020 and 9,800 million at the end of March 2021.2021 and 10,912 million at the end of March 2022. The TOPIX closed at 1,403.041,954.00 points at
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the end of March 2021 and at 1,946.40 points at the end of March 2020 and at 1,954.00 points at the end of March 2021.2022. This simulation analyzes data for the entire portfolio of equity investments held for operating purposes at Nomura and therefore actual results may differ from Nomura’s expectations because of price fluctuations of individual equities.
Credit Risk Management
Credit risk is the risk of loss arising from an obligor’s default, insolvency or administrative proceeding which results in the obligor’s failure to meet its contractual obligations in accordance with agreed terms. This includes both on and
off-balance
sheet exposures. It is also the risk of loss arising through a CVA associated with deterioration in the creditworthiness of a counterparty.
Nomura manages credit risk on a global basis and on an individual Nomura legal entity basis.
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Credit Risk Management Framework
The measurement, monitoring and management of credit risk at Nomura are governed by a set of global policies and procedures. Credit Risk Management (“CRM”), a global function within the Risk Management Division, is responsible for the implementation and maintenance of these policies and procedures. These policies are authorized by the GIRMCGRMC and/or Global Risk Strategic Committee, (“GRSC”), prescribe the basic principles of credit risk management and set delegated authority limits, which enables CRM personnel to set credit limits.
Credit risk is managed by CRM together with various global and regional risk committees. This helps to ensure transparency of material credit risks and compliance with established credit limits, the approval of material extensions of credit and the escalation of risk concentrations to appropriate senior management.
Credit Risk Management Process
CRM operates as a credit risk control function within the Risk Management Division, reporting to the CRO. The process for managing credit risk at Nomura includes:
 
Evaluation of likelihood that a counterparty defaults on its payments and obligations;
 
Assignment of internal ratings to all active counterparties;
 
Approval of extensions of credit and establishment of credit limits;
 
Measurement, monitoring and management of Nomura’s current and potential future credit exposures;
 
Setting credit terms in legal documentation; and
 
Use of appropriate credit risk mitigants including netting, collateral and hedging.
The scope of credit risk management includes counterparty trading and various debt or equity instruments including loans, private equity investments, fund investments, investment securities and any other as deemed necessary from a credit risk management perspective.
The evaluation of counterparties’ creditworthiness involves a thorough due diligence and analysis of the business environments in which they operate, their competitive positions, management and financial strength and flexibility. Credit analysts also take into account the corporate structure and any explicit or implicit credit support. CRM evaluates credit risk not only by counterparty, but also by counterparty group.
Following the credit analysis, CRM estimates the probability of default of a given counterparty or obligor through an alphanumeric ratings scale similar to that used by rating agencies and a corresponding numeric scale. Credit analysts are responsible for assigning and maintaining the internal ratings, ensuring that each rating is reviewed and approved at least annually.
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Nomura’s internal rating system employs a range of ratings models to achieve global consistency and accuracy. These models are developed and maintained by the Risk Methodology Group. Internal ratings represent a critical component of Nomura’s approach to managing counterparty credit risk. They are frequently used as key factors in:
 
Establishing the amount of counterparty credit risk that Nomura is willing to take to an individual counterparty or counterparty group (setting of credit limits);
 
Determining the level of delegated authority for setting credit limits (including tenor);
 
The frequency of credit reviews (renewal of credit limits);
 
Reporting counterparty credit risk to senior management within Nomura; and
 
Reporting counterparty credit risk to stakeholders outside of Nomura.
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The Credit Risk Control Unit is a function within the Risk Model Validation Group (“MVG”RMVG”) which is independent of CRM. It seeks to ensure that Nomura’s internal rating system is properly reviewed and validated, and that breaks or issues are reported to senior management for timely resolution. The unit is responsible for ensuring that the system remains accurate and predictive of risk and provides periodic reporting on the system to senior management.
For regulatory capital calculation purposes, Nomura has been applying the Foundation Internal Rating Based Approach in calculating credit risk-weighted assets since the end of March 2011. The Standardized Approach is applied to certain business units or asset types, which are considered immaterial to the calculation of credit risk-weighted assets.
Internal ratings are mapped to the probabilities of default (“PD”) which in turn are used for calculating credit risk-weighted assets. PDs are estimated annually by the Risk Methodology Group and validated by the Credit Risk Control Unit through testing of conservativeness and backtesting of PDs used in calculations.
Credit Limits and Risk Measures
Internal ratings form an integral part in the assignment of credit limits to counterparties. Nomura’s credit limit framework is designed to ensure that Nomura takes appropriate credit risk in a manner that is consistent with its overall risk appetite. Global Credit policies define the delegated authority matrices that establish the maximum aggregated limit amounts and tenors that may be set for any single counterparty group based on their internal rating.
Nomura’s main type of counterparty credit risk exposures arise from derivatives transactions or securities financing transactions. Credit exposures against counterparties are managed by means of setting credit limits based upon credit analysis of individual counterparty. Credit risk is managed daily through the monitoring of credit exposure against approved credit limits and the ongoing monitoring of the creditworthiness of Nomura’s counterparties. Changes in circumstances that alter Nomura’s risk appetite for any particular counterparty, sector, industry or country are reflected in changes to the internal rating and credit limit as appropriate.
Nomura’s global credit risk management systems record credit limits and capture credit exposures to Nomura’s counterparties allowing CRM to measure, monitor and manage utilization of credit limits, ensure appropriate reporting and escalation of limit breaches.
For derivatives and securities financing transactions, Nomura measures credit risk primarily by way of a Monte Carlo-based simulation model that determines a Potential Exposure profile at a specified confidence level. The exposure calculation model used for counterparty credit risk management has also been used for the Internal Model Method based exposure calculation for regulatory capital reporting purposes since the end of December 2012.
Loans and lending commitments are measured and monitored on both a funded and unfunded basis.
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Wrong Way Risk
Wrong Way Risk (“WWR”) occurs when exposure to a counterparty is highly correlated with the deterioration of creditworthiness of that counterparty. Nomura has established global policies that govern the management of WWR exposures. Stress testing is used to support the assessment of WWR embedded within existing portfolios and adjustments are made to credit exposures and regulatory capital, as appropriate.
Stress Testing
Stress Testing is an integral part of Nomura’s management of credit risk. Regular stress tests are used to support the assessment of credit risks by counterparties, sectors and regions. The stress tests include potential concentrations that are highlighted as a result of applying shocks to risk factors, probabilities of default or rating migrations.
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Risk Mitigation
Nomura utilizes financial instruments, agreements and practices to assist in the management of credit risk. Nomura enters into legal agreements, such as the International Swap and Derivatives Association, Inc. (“ISDA”) agreements or equivalent (referred to as “Master Netting Agreements”), with many of its counterparties. Master Netting Agreements allow netting of receivables and payables and reduce losses potentially incurred as a result of a counterparty default. Further reduction in credit risk is achieved through entering into collateral agreements that allow Nomura to obtain collateral from counterparties either upfront or contingent on exposure levels, changes in credit rating or other factors.
Credit Risk to Counterparties in Derivatives Transaction
The credit exposures arising from Nomura’s trading-related derivatives as of March 31, 20212022 are summarized in the table below, showing the positive fair value of derivative assets by counterparty credit rating and by remaining contractual maturity. The credit ratings are internally determined by Nomura’s CRM.
 
 
Billions of yen
  
Billions of yen
 
 
Years to Maturity
  
Cross-

Maturity

Netting
(1)
 
Total

Fair Value
 
Collateral

obtained
 
Replacement

cost
(3)
  
Years to Maturity
  
Cross-

Maturity

Netting
(1)
 
Total

Fair Value
 
Collateral

obtained
 
Replacement

cost
(3)
 
Credit Rating
 
Less than

1 year
 
1 to 3

years
 
3 to 5

years
 
5 to 7

years
 
More than

7 years
  
Less than

1 year
 
1 to 3

years
 
3 to 5

years
 
5 to 7

years
 
More
than

7 years
 
             
(a)
 
(b)
 
(a)-(b)
              
(a)
 
(b)
 
(a)-(b)
 
AAA
 ¥25  ¥32  ¥1  ¥3  ¥50  ¥(99)  ¥12  ¥0  ¥12  ¥50  ¥25  ¥5  ¥4  ¥39  ¥(107)  ¥16  ¥2  ¥14 
AA
  350   310   126   94   442   (1,034)   288   73   215   571   325   252   74   578   (1,454)   346   75   271 
A
  829   465   347   164   948   (2,433)   320   204   116   843   846   324   194   868   (2,658)   417   239   178 
BBB
  245   197   118   93   608   (961)   300   106   194   285   239   121   67   518   (838)   392   91   301 
BB and lower
  73   61   42   44   57   (117)   160   255   0   166   79   62   20   46   (170)   203   295   0 
Other
(2)
  50   73   169   90   594   (1,015)   (39)   94   0   33   51   90   50   363   (648)   (61)   46   0 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Sub-total
 ¥1,572  ¥1,138  ¥803  ¥488  ¥2,699  ¥(5,659)  ¥1,041  ¥732  ¥537  ¥1,948  ¥1,565  ¥854  ¥409  ¥2,412  ¥(5,875)  ¥1,313  ¥748  ¥764 
Listed
  453   74   7   —     —     (355)   179   187   0   352   46   1   0   0   (158)   241   234   7 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
 ¥2,025  ¥1,212  ¥810  ¥488  ¥2,699  ¥(6,014)  ¥1,220  ¥919  ¥537  ¥2,300  ¥1,611  ¥855  ¥409  ¥2,412  ¥(6,033)  ¥1,554  ¥982  ¥771 
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
(1)
Represents netting of derivative liabilities against derivatives assets entered into with the same counterparty across different maturity bands. Derivative assets and derivative liabilities with the same counterparty in the same maturity band are net within the relevant maturity band. Cash collateral netting against net derivative assets in accordance with ASC
210-20
“
Balance Sheet—Sheet
—
Offsetting
” and ASC 815 “
Derivatives and Hedging
” is also included.
(2)
“Other” comprises unrated counterparties and certain portfolio level valuation adjustments not allocated to specific counterparties.
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(3)
Zero balances represent instances where total collateral received is in excess of the total fair value; therefore, Nomura’s credit exposure is zero.
Country Risk
At Nomura, country risk is defined as the risk of loss arising from country-specific events (such as political, economic, legal and other events) that affect counterparties and/or issuers within that country, causing those counterparties and/or issuers to be unable to meet financial obligations. Nomura’s country risk framework acts as a complement to other risk management areas and encompasses a number of tools including, but not limited to, country limits, which restrict credit exposure concentration to any given country. Other tools to manage country risk include country ratings as well as country risk policies and procedures that describe responsibilities and delegation for decision-making.
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Nomura’s credit portfolio remains well-diversified by country and concentrated towards highly-rated countries. The breakdown of top 10 country exposures is as follows:
 
Top 10 Country Exposures
(1)
  
Billions of Yen
 
Top 10 Country Exposures
(1)
  
(As of March 31, 2021)2022)
 
United States
   3,4503,384 
Japan
   2,5982,971 
United Kingdom
   7471,130 
Germany
   394589
Singapore
231
India
186
China
171 
France
   252170 
ChinaSouth Korea
   250164 
SingaporeSwitxerland
   194
Canada
178
Luxembourg
171
India
153136 
 
(1)
The table represents the Top 10 country exposures as of March 31, 20212022 based on country of risk, combining counterparty and inventory exposures
 
 - 
Counterparty exposures include cash and cash equivalents held at banks; the outstanding default fund and initial margin balances posted by Nomura to central clearing counterparties as legally required under its direct and affiliate clearing memberships; the aggregate
marked-to-market
exposure by counterparty of derivative transactions and securities financing transactions (net of collateral where the collateral is held under a legally enforceable margin agreement); and the fair value of total commitment amount less any applicable reserves
 
 - 
Inventory exposures are the market value of debt and equity securities, and equity and credit derivatives, using the net of long versus short positions.
Russia and Ukraine war
Since the war in Ukraine began in February 2022, Nomura has been actively monitoring the impact of the conflict on the Ukraine and Russian economies, as well as on other financial markets. As of March 31, 2022, the total direct exposure of Nomura to Ukraine and Russia was not significant.
Operational Risk Management
Operational risk is the risk of financial loss or
non-financial
impact arising from inadequate or failed internal processes, people and systems, or from external events. Operational risk includes in its definition
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Compliance, Legal, IT and Cyber Security, Fraud, Third Party and other
non-financial
risks. Operational risk does not include strategic risk and reputational risk, however, some operational risks can lead to reputational issues and as such operational and reputational risks may be closely linked.
The Three Lines of Defense
Nomura adopts the industry standard “Three Lines of Defense” for the management of operational risk, comprising the following elements:
1)
1st Line of Defense: The business which owns and manages its risks
2)
2nd Line of Defense: The Operational Risk Management (“ORM”) function, which
co-ordinates
the Operational Risk Management Framework and its implementation
3)
3rd Line of Defense: Internal Audit, who provide independent assurance
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Operational Risk Management Framework
An Operational Risk Management Framework has been established in order to allow Nomura to identify, assess, manage, monitor and report on operational risk. The GIRMC,GRMC, with delegated authority from the EMB has formal oversight over the management of operational risk.
This framework is set out below:
Infrastructure of the framework
 
Policy framework: Sets standards for managing operational risk and details how to monitor adherence to these standards.
 
Training and awareness: Action taken by ORM to improve business understanding of operational risk.
Products and Services
 
Event Reporting: This process is used to identify and report any event which resulted in or had the potential to result in a loss or gain or other impact associated with inadequate or failed internal processes, people and systems, or from external events.
 
Risk and Control Self-Assessment (“RCSA”(the “RCSA”): This process is used to identify the inherent risks the business faces, the key controls associated with those risks and relevant actions to mitigate the residual risks. Global ORM are responsible for developing the RCSA process and supporting the business in its implementation.
 
Key Risk Indicators (“KRI”(the “KRI”): KRIs are metrics used to monitor the business’ exposure to operational risk and trigger appropriate responses as thresholds are breached.
 
Scenario Analysis: The process used to assess and quantify potential high impact, low likelihood operational risk events. During the process actions may be identified to enhance the control environment which are then tracked via the Operational Risk Management Framework.
Outputs
 
Analysis and reporting: A key aspect of ORM’s role is to analyze, report, and challenge operational risk information provided by business units, and work with business units to develop action plans to mitigate risks.
 
Operational risk capital calculation: Calculate operational risk capital as required under applicable Basel standards and local regulatory requirements.
Regulatory Capital Calculation for Operational Risk
Nomura uses the Standardized Approach for calculating regulatory capital for operational risk. This involves using a three-year average of gross income allocated to business lines, which is multiplied by a fixed percentage (“Beta(the “Beta Factor”) determined by the FSA, to establish the amount of required operational risk capital.
 
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Nomura uses consolidated net revenue as gross income, however for certain consolidated subsidiaries, gross operating profit is used as gross income. Gross income allocation is performed by mapping the net revenue of each business segment as defined in Nomura’s management accounting data to each business line defined in the Standardized Approach as follows:
 
Business Line
  
Description
  
Beta Factor
 
Retail Banking
  Retail deposit and loan-related services   12% 
Commercial Banking
  Deposit and loan-related services except for Retail Banking business   15% 
Payment and Settlement
  Payment and settlement services for clients’ transactions   18% 
Retail Brokerage
  Securities-related services mainly for individuals   12% 
Trading and Sales
  Market-related business   18% 
Corporate Finance
  M&A, underwriting, secondary and private offerings, and other funding services for clients   18% 
Agency Services
  Agency services for clients such as custody   15% 
Asset Management
  Fund management services for clients   12% 
Nomura calculates the required amount of operational risk capital for each business line by multiplying the allocated annual gross income amount by the appropriate Beta Factor defined above. The operational risk capital for any gross income amount not allocated to a specific business line is determined by multiplying such unallocated gross income amount by a fixed percentage of 18%.
The total operational risk capital for Nomura is calculated by aggregating the total amount of operational risk capital required for each business line and unallocated amount and by determining a three-year average. Where the aggregated amount for a given year is negative, then the total operational risk capital amount for that year will be calculated as zero.
In any given year, negative amounts in any business line are offset against positive amounts in other business lines. However, negative unallocated amounts are not offset against positive amounts in other business lines and are calculated as zero.
Operational risk capital is calculated at the end of September and March each year.
Model Risk Management
Model Risk is the risk of financial loss, incorrect decision making, or damage to the firm’s credibility arising from Model errors or incorrect or inappropriate Model application.
To effectively manage the Firm’s Model Risk, Nomura has established a Model Risk Management Framework to govern the development, ownership, validation, approval, usage, ongoing monitoring, and periodic review of the Firm’s Models. The framework is supported by a set of policies and procedures that articulate process requirements for the various elements of the model lifecycle, including monitoring of model risk with respect to the Firm’s appetite.
New models and material changes to approved models must be independently validated prior to official use. Thresholds to assess the materiality of model changes are defined in Model Risk Management’s procedures. During independent validation, validation teams analyze a number of factors to assess a model’s suitability, identify model limitations, and quantify the associated model risk, which is ultimately mitigated through the imposition of approval conditions, such as usage conditions, model reserves and capital adjustments. Approved models are subject to Model Risk Management’s periodic review process and ongoing performance monitoring to assess their continued suitability. Appropriately delegated Model Risk Management Committees provide oversight, challenge, governance, and ultimate approval of validated Models.
 
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Funding and Liquidity Risk Management
For further information on funding and liquidity risk management, see Item 5.B. “
Liquidity and Capital Resources—Funding and Liquidity Management
” in this annual report.
Risk Measures and Controls
Limit Frameworks
The establishment of robust limit monitoring and management is central to appropriate monitoring and management of risk. The limit management frameworks incorporate escalation policies to facilitate approval of limits at appropriate levels of seniority. The Risk Management Division, the Finance Division and the LCC Division are responsible for
day-to-day
operation of these limit frameworks including approval, monitoring, and reporting as required. Business units are responsible for complying with the agreed limits. Limits apply across a range of quantitative measures of risk and across market and credit risks.
New Business Risk Management
The new business approval process represents the starting point for new business in Nomura and exists to support management decision-making and ensure that risks associated with new products and transactions are identified and managed appropriately. The new business approval process consists of two components:
 
 1)(1)
Transaction committees are in place to provide formal governance over the review and decision-making process for individual transactions.
 
 2)(2)
The new product approval process allows business unit sponsors to submit applications for new products and obtain approval from relevant departments prior to execution of the new products. The process is designed to capture and assess risks across various risk classes as a result of the new product or business.
The new business approval process continues to seek assuring the sound and effective management to better meet the various changes observed in the market environment.
Stress Testing
Stress testing performed at the Nomura Group seeks to provide comprehensive coverage of risks across different hierarchical levels, and covers different time horizons, severities, plausibilities and stress testing methodologies. The results of stress tests are used in capital planning processes, capital adequacy assessments, liquidity adequacy assessments, recovery and resolution planning, assessments of whether risk appetite is appropriate, and in routine risk management.
Stress tests are run on a regular basis or on an ad hoc basis as needed, for example, in response to material changes in the external environment and/or in the Nomura Group risk profile. The results of stress tests with supporting detailed analysis are reported to senior management and other stakeholders as appropriate for the stress test being performed.
Stress testing is categorized either as sensitivity analysis or scenario analysis and may be performed on a Nomura Group-wide basis or at more granular levels.
 
Sensitivity analysis is used to quantify the impact of a market move in one or two associated risk factors (for example, equity prices, equity volatilities) in order primarily to capture those risks which may not be readily identified by other risk models;
 
Scenario analysis is used to quantify the impact of a specified event across multiple asset classes and risk classes. This is a primary approach used in performing stress testing at the different hierarchical levels of the Nomura Group;
 
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Scenario analysis includes following examples.
 
Nomura Group establishes several stress scenarios to validate risk appetite for capital and liquidity soundness, taking into account the business environment, business’s risk profile, economic environment and forecasts.
 
Group-wide stress to assess the capital adequacy of the Nomura Group under severe but plausible market scenarios is conducted on a quarterly basis at a minimum; and
 
Reverse stress testing, a process of considering the vulnerabilities of the firm and hence how it may react to situations where it becomes difficult to continue its business, and reviewing the results of that analysis, is conducted on an annual basis at a minimum.
Stress testing is an integral part of the Nomura Group’s overall governance and is used as a tool for forward-looking risk management, decision-making and enhancing communication amongst Corporate Functions, Business Divisions, and senior management.
Item 12. Description of Securities Other Than Equity Securities
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
 
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D. American Depositary Shares
Fees payable by ADR Holders
The following table shows the fees and charges that a holder of the Company’s ADR may have to pay, either directly or indirectly:
 
Type of Services:
  
Amount of Fee (U.S. Dollars)
Taxes and other governmental charges  As applicable. The depositary may offset any taxes or governmental charges it is obligated to withhold, if applicable, against the proceeds from sale of the property received.
Transfers of the Company’s shares to or from the name of the depositary (or its nominee) or the Custodian (or its nominee) in connection with deposits or withdrawals
  Such registration fees as may be in effect for the registration of transfers of the Company’s shares on the Company’s share register (or any entity that presently carries out the duties of registrar).
Cable, telex and facsimile transmission expenses  As applicable.
Expenses incurred by the depositary in the conversion of foreign currency
  As applicable.
Execution and delivery of Receipts in connection with deposits, stock splits or exercise of subscription rights
  $5.00 or less per 100 ADSs (or portion thereof).
Surrender of Receipts in connection with a withdrawal or termination of the Deposit Agreement
  $5.00 or less per 100 ADSs (or portion thereof).
Any cash distribution pursuant to the Deposit Agreement, including, but not limited to, cash distribution(s) made in connection with cash dividends; distributions in securities, property or subscription rights; and stock splits.
  $.02 or less per ADS (or portion thereof). Only the cash amounts net of this fee, if applicable, are distributed.
Distribution by the depositary of securities (other than common shares of the Company) that accrued on the underlying shares to owners of the Receipts
  Treating for the purpose of this fee all such securities as if they were common shares of the Company, $5.00 or less per 100 ADSs (or portion thereof).
General depositary services  $.02 or less per ADS (or portion thereof), accruing on the last day of each calendar year, except where the fee for cash distribution described above was assessed during that calendar year.
Any other charge payable by the depositary, any of the depositary’s agents, including the Custodian, or the agents of the depositary’s agents in connection with the servicing of the Company’s shares or other deposited securities
  As applicable.
Fees paid to Nomura by the depositary
The Bank of New York Mellon, as depositary, has agreed to pay all its standard
out-of-pocket
administration and maintenance expenses for providing services to the registered shareholders and up to 100,000
non-registered
shareholders of ADRs. From April 1, 20202021 to March 31, 2021,2022, the Bank of New York Mellon has waived a total of $165,585.85$180,935.37 in fees (including $35,012.77$50,288.75 in connection with the expenses related to the Annual General Meeting of Shareholders) associated with the administration of the ADR program and administrative fees for routine corporate actions and for providing investor relations information services.
 
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
Disclosure Controls and Procedures.
Our Disclosure Committee is responsible for the establishment and maintenance of our disclosure controls and procedures. As of March 31, 2021,2022, an evaluation was carried out under the supervision and with the participation of our management, including our Group Chief Executive Officer and Chief Financial Officer, and the Disclosure Committee, of the effectiveness of the disclosure controls and procedures (as defined in Rules
Rules 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934). Based on that evaluation, our Group Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2021,2022, our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules
13a-15(f)
and
15d-15(f)
under the Securities Exchange Act of 1934). Our management, with the participation of our Group Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting using the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2021.2022. Our independent registered public accounting firm, Ernst & Young ShinNihon LLC, has issued an attestation report on the effectiveness of our internal control over financial reporting, which appears on page
F-5
of this annual report.
Changes in Internal Control Over Financial Reporting.
Our management also carried out an evaluation, with the participation of our Group Chief Executive Officer and Chief Financial Officer, of changes in our internal control over financial reporting during the year ended March 31, 2021.2022. Based upon that evaluation, there was no change in our internal control over financial reporting during the year ended March 31, 20212022 that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.
We have continued remote work arrangements originally implemented in the fiscal year ended March 31, 2020 over a significant portion of our workforce in response to the
COVID-19
pandemic. Nevertheless, we do not believe that the shift to remote work has had or is likely to have a material effect on our internal control over financial reporting, although we are continually monitoring and assessing the impact of the pandemic on our internal control over financial reporting.
We have also reviewed internal controls, including internal controls over financial reporting, relevant to the U.S. Prime Brokerage Event which occurred in March 2021. As a result of that review, there has been no change in our internal control over financial reporting from such date to the date of this annual report that has materially affected, or is reasonably likely to affect, our internal control over financial reporting. See Item 5. “
Operating and Financial Review—Executive Summary—U.S. Prime Brokerage Event
” for more details on the U.S. Prime Brokerage Event.
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Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that Mr. Noriaki Shimazaki, a member of the Audit Committee, qualifies as an “audit committee financial expert” as such term is defined by the General Instructions for Item 16A of Form
20-F.
Additionally, Mr. Noriaki Shimazaki meets the independence requirements applicable to him under Section 303A.06 of the NYSE Listed Company Manual. For a description of his business experience, see Item 6.A
“Directors and Senior Management—Directors”
in this annual report.
Item 16B. Code of Ethics
In December 2019, we adopted a new code of ethics (as defined in Item 16B of Form
20-F)
consisting of the “Nomura Group Code of Conduct 2020”Conduct” and the “Nomura Group Code of Ethics for Financial Professionals,”Professionals”, which
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replaced theour prior code of ethics. The Code of Conduct is periodically reviewed to better respond to the changes in the social and economic conditions and to the expectations of our stakeholders. In March 2021,2022, we revised the previous version of “Nomura Group Code of Conduct 2020,”Conduct” and in additionadded a new section on managing risks appropriately, to renaming itinstill a robust risk culture within the “Nomura Group Code of Conduct 2021”, we revised the wording in accordance with the following points,Company, while maintaining the overall structure of the previous version: 1. Creating a psychologically safe work environment and enhancing client orientation by maximizing teamwork; 2. Further raising discipline and awareness to prevent violations; and 3. Encouraging proactive actions to strategically promote sustainability.version. A copy of the “Nomura Group Code of Conduct 2021”2022” is attached to this annual report as Exhibit 11.1 and a copy of the “Nomura Group Code of Ethics for Financial Professionals” is attached to this annual report as Exhibit 11.2.
Item 16C. Principal Accountant Fees and Services
Ernst & Young ShinNihon LLC has been our principal accountant for the last nineteentwenty fiscal years. The table set forth below contains the aggregate fees billed for each of the last two fiscal years by our principal accountant in each of the following categories: (i) Audit Fees, which are fees for professional services for the audit or review of our financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, (ii) Audit-Related Fees, which are fees for assurance and related services that are related to the performance of the audit or review of our financial statements and are not reported as Audit Fees, (iii) Tax Fees, which are fees for professional services provided for tax compliance, tax advice and tax planning, and (iv) All Other Fees, which are fees for products and services other than Audit Fees, Audit-Related Fees and Tax Fees, such as advisory services concerning risk management and regulatory matters.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2020
   
2021
   
2021
   
2022
 
Audit Fees
  ¥3,409   ¥3,532   ¥3,532   ¥3,915 
Audit-Related Fees
   136    144    144    103 
Tax Fees
   113    137    137    143 
All Other Fees
   7    26    26    106 
          
 
   
 
 
Total
  ¥3,665   ¥3,839   ¥3,839   ¥4,267 
          
 
   
 
 
Audit-Related Fees included fees for consultations on accounting issues relating to our business. Tax Fees included fees for services relating to tax planning and compliance. All Other Fees included fees for services relating to advice with respect to regulations and disclosures under the Financial Instruments and Exchange Act in connection with our underwriting business.
In accordance with the regulations of the Securities and Exchange Commission issued pursuant to Sections 202 and 208 of the Sarbanes-Oxley Act of 2002, our Audit Committee has adopted a
pre-approval
policy regarding the engagements of our principal accountant. Under the
pre-approval
policy, there are two types of
pre-approval
procedures, “General
Pre-Approval”
and “Specific
Pre-Approval.”
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Under “General
Pre-Approval,”
our CFO in conjunction with our principal accountant must make a proposal to our Audit Committee for the types of services and estimated fee levels of each category of services to be generally
pre-approved.
Such a proposal must be made at least annually. The Audit Committee will discuss the proposal and if necessary, consult with outside professionals as to whether the proposed services would impair the independence of our principal accountant. If such proposal is accepted, the Audit Committee will inform our CFO and principal accountant of the services that have been
pre-approved
and are included in a “General
Pre-Approved
List.” Our Audit Committee is informed of each such service that is provided.
Under “Specific
Pre-Approval,”
if any proposed services are not on the General
Pre-Approved
List, our CFO is required to submit an application to the Audit Committee for such services. After reviewing the details and estimated fee levels for each engagement and if necessary, consulting with outside professionals as to whether the proposed services would impair the independence of the principal accountant, the Audit Committee
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may make a specific
pre-approval
decision on these services. Also, if any approved services in the General
Pre-Approved
List exceed the fee levels prescribed on the List, our CFO is required to submit an application to the Audit Committee for new fee levels for such services. The Audit Committee may make a
pre-approval
decision after reviewing the details of the services and the estimated fee levels for each engagement.
None of the services described in the first paragraph under this Item 16C were waived from the
pre-approval
requirement pursuant to Rule
2-01(c)(7)(i)(C)
of Regulation
S-X.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the year ended March 31, 2021,2022, we acquired 20,12920,237 shares of the Company’s common stock by means of repurchase of shares constituting less than one unit upon the request of the holders of those shares.shares and 80,000,000 shares under a share buyback program in accordance with Article
459-1
of the Companies Act. For an explanation of the right of our shareholders to demand such repurchases by us, see “
Description of rights of each class of securities registered under Section
 12 of the Securities Exchange Act of 1934
” which is an exhibit to this annual report. As of March 31, 2021,2022, we had 3,063,505,4343,018,168,134 outstanding shares of our common stock excluding 170,057,167215,394,467 shares held as treasury stock.
We had not established share buyback programs nor purchased our common stock utilizing the programs during the year ended March 31, 2021.
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The following table sets forth certain information with respect to our purchases of shares of our common stock during the year ended March 31, 2021.2022.
 
Month
  
Total

Number of

Shares

Purchased
   
Average Price

Paid per

Share

(in yen)
   
Total

Number of

Shares

Purchased

as Part of

Publicly

Announced

Program
   
Maximum

Number of

Shares that

May Yet Be

Purchased

Under the

Program
 
April 1 to 30, 2020
   746   ¥424    —      —   
May 1 to 31, 2020
   403    428    —      —   
June 1 to 30, 2020
   1,292    488    —      —   
July 1 to 31, 2020
   1,847    488    —      —   
August 1 to 31, 2020
   1,628    517    —      —   
September 1 to 30, 2020
   1,147    537    —      —   
October 1 to 31, 2020
   2,065    487    —      —   
November 1 to 30, 2020
   1,114    500    —      —   
December 1 to 31, 2020
   3,644    540    —      —   
January 1 to 31, 2021
   2,418    566    —      —   
February 1 to 28, 2021
   1,896    593    —      —   
March 1 to 31, 2021
   1,929    660    —      —   
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
   20,129   ¥535    —      —   
  
 
 
   
 
 
   
 
 
   
 
 
 
Month
  
Total

Number of

Shares

Purchased
   
Average Price

Paid per

Share

(in yen)
   
Total

Number of

Shares

Purchased

as Part of

Publicly

Announced

Program
   
Maximum

Number of

Shares that

May Yet Be

Purchased

Under the

Program
 
April 1 to 30, 2021
   848   ¥582    —      —   
May 1 to 31, 2021
   1,400    585    —      —   
June 1 to 30, 2021
   2,856    588    —      —   
July 1 to 31, 2021
   1,801    558    —      —   
August 1 to 31, 2021
   1,500    538    —      —   
September 1 to 30, 2021
   1,844    559    —      —   
October 1 to 31, 2021
   1,794    554    —      —   
November 1 to 30, 2021
   27,876,415    490    27,875,100    52,124,900 
December 1 to 31, 2021
   52,127,248    498    52,124,900    —   
January 1 to 31, 2022
   1,555    516    —      —   
February 1 to 28, 2022
   1,655    532    —      —   
March 1 to 31, 2022
   1,321    513    —      —   
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
   80,020,237   ¥496    80,000,000    —   
   
 
 
   
 
 
   
 
 
   
 
 
 
On October 29, 2021, a resolution of the Board of Directors authorized the Company to purchase up to 80,000,000 shares of our common stock or to a maximum of ¥50 billion during the period from November 16, 2021 through March 31, 2022.
Nomura recognizes the need to set out flexible financial strategies that allow the Board of Directors to respond quickly to any changes in the business environment and is looking into implementing further share buybacks. Details will be announced when finalized.
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On April 26, 2022, we announced a resolution of the Board of Directors to establish a share buyback program in accordance with Article
459-1
of the Companies Act. The period of repurchase under the program is from May 17, 2022 to March 31, 2023, and we are authorized to purchase up to 50,000,000 shares of our common stock or to a maximum of ¥30 billion.
As of May 31, 2021, 3,093,947,6502022, 3,031,572,813 shares of common stock were outstanding, excluding 139,614,951201,989,788 shares held as treasury stock.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
Companies listed on the NYSE must comply with certain standards regarding corporate governance under Section 303A of the NYSE Listed Company Manual. However, listed companies that are foreign private issuers, such as the Company, are permitted to follow home country practice in lieu of certain provisions of Section 303A.
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The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies under Section 303A of the NYSE Listed Company Manual and those followed by the Company. The information set forth below is current as of the date of this annual report.
 
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
  
Corporate Governance Practices Followed by the Company
A NYSE-listed U.S. company must have a majority of Directors meeting the independence requirements under Section 303A of the NYSE Listed Company Manual.  
Under the Companies Act, a company which adopts the Company with Three Board Committees structure is not required to have a majority of outside directors, but is required to have a majority of outside directors on each of the audit, nomination and compensation committees.
 
The Company currently has eight outside directors among its twelve Directors.
A NYSE-listed U.S. company must have an audit committee that satisfies the requirements under Section 303A of the NYSE Listed Company Manual, including those imposed by Rule
10A-3
under the U.S. Securities Exchange Act of 1934. The audit committee must be composed entirely of independent directors and have at least three members.		  The Company has an Audit Committee consisting of threefour Directors, twothree of whom are outside directors in compliance with the requirements under the Companies Act. All threefour Audit Committee members are independent directors under Rule
10A-3
under the U.S. Securities Exchange Act of 1934 with one member qualified as audit committee financial expert.
A NYSE-listed U.S. company must have a nominating/corporate governance committee with responsibilities described under Section 303A of the NYSE Listed Company Manual. The nominating/corporate governance committee must be composed entirely of independent directors.  The Company has a Nomination Committee consisting of three Directors, two of whom are outside directors and the chairman is an outside director in compliance with the requirements under the Companies Act.
A NYSE-listed U.S. company must have a compensation committee composed entirely of independent directors. Compensation committeeThe Company has a Compensation Committee consisting of three Directors, two of whom are outside directors and the chairman is an outside
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Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
Corporate Governance Practices Followed by the Company
members must satisfy the additional independence requirements under Section 303A.02(a)(ii) of the NYSE Listed Company Manual. A compensation committee must also have authority to retain or obtain the advice of compensation and other advisers, subject to prescribed independence criteria that the committee must consider prior to engaging any such adviser.  The Company has a Compensation Committee consisting of three Directors, two of whom are outside directors and the chairman is an outside director in compliance with the requirements under the Companies Act.
A NYSE-listed U.S. company must generally obtain shareholder approval with respect to any equity compensation plan.  Under the Companies Act, Restricted Stock Unit (“RSU”) and Stock Acquisition Right (“SAR”) awards are deemed to be compensation for the services performed by the Company’s Directors and Executive Officers and do not require shareholders’ approval. The Compensation Committee establishes the policy with respect to the determination of the individual compensation of each of the Company’s Directors and Executive Officers (including RSU and SAR awards as equity compensation) and makes determinations in accordance with that compensation policy.
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Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
 
Corporate Governance Practices Followed by the Company
A NYSE-listed U.S. company must adopt and disclose corporate governance guidelines.  Under the Companies Act, the Company is not required to adopt and disclose corporate governance guidelines. However, in response to Japan’s Corporate Governance Code, which was incorporated into the Tokyo Stock Exchange’s Securities Listing Regulations, the Company has established and publicly disclosed the “Nomura Holdings Corporate Governance Guidelines.”
The
non-management
directors of a NYSE-listed U.S. company must meet at regularly scheduled executive sessions without management.		  Under the Companies Act, outside directors of the Company are not required to meet at regularly scheduled executive sessions without management. However, in accordance with the “Nomura Holdings Corporate Governance Guidelines,” outside directors hold meetings consisting solely of outside directors in order to discuss matters such as the business and corporate governance of the Company.
A NYSE-listed U.S. company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.  Under the Companies Act, the Company is not required to adopt and disclose a code of business conduct and ethics for directors, officers or employees. However, the Company has adopted the “Nomura Group Code of Conduct”. Please see Item 16B of this annual report for further information regarding the “Nomura Group Code of Conduct.”
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
143Not applicable.
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PART III
Item 17. Financial Statements
In lieu of responding to this item, we have responded to Item 18 of this annual report.
Item 18. Financial Statements
The information required by this item is set forth in our consolidated financial statements included in this annual report.
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Item 19. Exhibits
 
Exhibit
Number
  
Description
        1.1  
Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
        1.2  
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
        1.3  
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation)
        1.4  
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
        1.5  
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation)
        1.6  
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on June 27, 2012 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
        2.1  
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (filed on April 28, 2010 as an exhibit to the Registration Statement on Form
Form F-6
(File
No. 333-166346)
and incorporated herein by reference)
        2.2  
Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 (filed on June 25, 2019 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
        4.1  
Form of Limitation of Liability Agreement
(1)
        8.1  
Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “
Organizational Structure
” in this annual report.
      11.1  
Nomura Group Code of Conduct 20212022 (English translation)
      11.2  
Nomura Group Code of Ethics for Financial Professionals (English translation) (filed on June 30, 2020 as an exhibit to the Annual Report on Form
20-F
(File
No. 001-15270)
and incorporated herein by reference)
      12.1  
Certification of the principal executive officer required by 17 C.F.R. 240.
13a-14(a)
      12.2  
Certification of the principal financial officer required by 17 C.F.R. 240.
13a-14(a)
      13.1  
Certification of the chief executive officer required by 18 U.S.C. Section 1350
      13.2  
Certification of the chief financial officer required by 18 U.S.C. Section 1350
      15.1  
Consent of Ernst & Young ShinNihon LLC, with respect to its report on the audit of the financial statements included in this annual reportan independent registered public accounting firm
      17.1  
Subsidiary Issuer of Registered Guaranteed Securities
    101.INS  
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
    101.SCH  
Inline XBRL Taxonomy Extension Schema Document
    101.CAL  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
    101.DEF  
Inline XBRL Taxonomy Extension Definition Linkbase Document
    101.LAB  
Inline XBRL Taxonomy Extension Label Linkbase Document
151
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Exhibit
Number
Description
    101.PRE  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
        104  
The cover page for the Company’s Annual Report on Form
20-F
for the year ended March 31, 2021,2022, has been formatted in Inline XBRL
 
(1)
The Company has entered into Limitation of Liability Agreements substantially in the form of this exhibit with all of its outside directors and director Shoji Ogawa.
The Company has not included as exhibits certain instruments with respect to our long-term debt. The amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We will furnish a copy of any such instrument to the SEC upon request.
 
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NOMURA HOLDINGS, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
   
Page
 
Consolidated Financial Statements of Nomura Holdings, Inc.:
  
ReportReports of Independent Registered Public Accounting Firm (PCAOB ID: 789)
   F-2 
Consolidated Balance Sheets as of March 31, 20202021 and 20212022
   F-6 
Consolidated Statements of Income for the Years Ended March 31, 2019, 2020, 2021 and 20212022
   F-9 
Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2019, 2020, 2021 and 20212022
   F-10 
Consolidated Statements of Changes in Equity for the Years Ended March 31, 2019, 2020, 2021 and 20212022
   F-11 
Consolidated Statements of Cash Flows for the Years Ended March 31, 2019, 2020, 2021 and 20212022
   F-13 
Notes to the Consolidated Financial Statements
   F-15 
 
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Nomura Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Nomura Holdings, Inc. (the Company) as of March 31, 20212022 and 2020,2021, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2021,2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at March 31, 20212022 and 2020,2021, and the consolidated results of its operations, and its cash flows for each of the three years in the period ended March 31, 2021,2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2021,2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated June 25, 202124, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
 
F-2
Table of Contents
  
Fair value of less liquid financial instruments
Description of the Matter
  
The Company holds investment positions in the fixed income and equity markets bothfinancial instruments for trading, customer facilitation and customer facilitation. Theinvestment purposes. As disclosed in Note 2 to the consolidated financial statements as of March 31, 2022, the Company had JPY 835¥1,038 billion and JPY 963¥826 billion of financial instruments assets and liabilities, respectively, categorized within Level 3 of the fair value hierarchy. In determining the fair value of these financial instruments, the Company used valuation models and unobservable valuation inputs which reflect theirits assumptions and specific data. These inputs are significant to the fair value of the financial instruments and are supported by little or no market activity as of March 31, 2021.2022. The methodologiesvaluation techniques applied by management to determine the fair value of such instruments are described in Note 2 to the consolidated financial statements.
 
Auditing the fair value of the Company’s Level 3 financial instruments was complex and highly judgmental due to the subjectivity of the judgments used and estimations made by management in determining the fair value for these financial instruments especially considering the impact of
COVID-19
on global financial markets.instruments. In particular, to value certain financial instruments, management used a variety of valuation techniques which involved certain underlying valuation assumptions and significant unobservable valuation inputs, including WACC, growth rates, liquidity discounts, market multiples including EV/ EBITDA ratios,discount, volatilities, correlations, credit spreads, interest rates, recovery rates, loss severities, prepayment rates, default probabilities, yields and correlations which are significant to the value of these investments.repo rates.
How We Addressed the Matter in Our Audit
  
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risk of material misstatement relating to management’s assessment of the valuation models and significant unobservable inputs and estimates includedused in fair value measurement. This included the testing of model validation controls by various departments within the Company.
 
Our audit procedures to evaluate the valuation methodologiestechniques used by the Company included, among others, testing valuation models and significant unobservable inputs, estimates and the mathematical accuracy of the Company’s valuation models.inputs. We independently developed fair value estimates and compared them to the Company’s results, andfor which we involved our valuation specialists to assist with the application of these procedures and compared them to the Company’s results, on a sample basis. We also agreed significant unobservable inputs and underlying data used in the Company’s valuationsvaluation models to agreements, information available from third party sources and market data, where available. We evaluated subsequent transactions and considered whether they corroborate or contradict the Company’s
year-end
valuations.
  
Provisions
Contingencies for investigations, lawsuits and other legal proceedings
Description of the Matter
  
As disclosed in Note 21 to the consolidated financial statements, the
The Company is involved in investigations, lawsuits and other legal proceedings. As disclosed in Note 20 to the consolidated financial statements as of March 31, 2021,2022, the Company has recorded litigation provision of JPY 62,889¥76,866 million in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings and for those cases where the loss is considered probable and an estimate of the range of reasonably possible losses can be made, the Company estimates that the total aggregate reasonably possible maximum loss in excess of amounts recognized as a liability (if any) against these cases is approximately JPY 48¥6
1
 billion. Legal expenses of JPY 41,131¥63,338 million were recorded for the year ended March 31, 2021.2022 in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings.
 
The Company recognizes a liability for those contingencies for which it is probable that a liability hashad been incurred at the date of the consolidated financial statements and the amount is reasonably estimable. As part of this, management performs an assessment of the materiality of contingencies where a loss is either reasonably possible or it is reasonably possible that an exposure to loss exists in excess of the amount accrued. This includes the amounts at which the Company is willing to settle for any loss contingency. If it is reasonably possible that such a loss or an additional loss may have been incurred and the effect on the consolidated financial statements is material, the Company discloses the nature of the loss contingency and an estimate
F-3
Table of Contents
of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the consolidated financial statements.
F-3
Table of Contents
  
 
Auditing management’s determination of whether a loss contingency is probable and reasonably estimable, reasonably possible or remote, and the related disclosures, is highly subjective, complex and requires significant judgment. Management judgment is needed to determine whether an obligation exists and a loss contingency should be recorded at March 31, 2021.2022. This includes judgment in the determination of whether an outflow in respect of identified loss contingency is probable and can be estimated reliably. In addition, management judgment is needed to determine if an estimated loss is only reasonably possible rather than probable.
How We Addressed the Matter in Our Audit
  
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to management’s assessment for timely identification of contingencies that may arise out of lawsuits and regulatory investigations including the Company’s assessment of whether they are probable or reasonably possible and the associated measurement of the best estimate.
 
Our audit procedures to test the assessment of the probability of incurrence of a loss and whether the loss was reasonably estimable included, among others, reading the minutes of the meetings of the Board of Directors and Executive Management Board, and reading relevant regulatory and legal correspondence to assess developments in significant matters, requesting and receiving internal and external legal counsel confirmation letters, meeting with internal and external legal counsel to discuss the allegations and obtaining a representation letter fromevaluating management’s assessment regarding whether an unfavorable outcome is probable or reasonably possible and the Company’s management.associated measurement of the best estimate. In addition, our audit procedures to test the measurement of the loss contingency and the disclosure of the reasonably possible additionalmaximum loss in excess of amounts recognized as a liability included, among others, evaluating the method of measuring the contingency, testing the accuracy and completeness of the underlying data, reading correspondence received from internal and external counsel and inspecting evidence of approval from the individuals with the authority to determine the amount the Company is willing to settle that are used to determine a provision or a range of reasonably possible lossloss. We evaluated subsequent events and performing a search for newconsidered whether they corroborate or contrary evidence affectingcontradict the estimate.Company’s
year-end
assessments.
/s/
Ernst & Young ShinNihon LLC
We have served as the Company’s auditor for SEC reporting purposes since 2002, and as its Japanese statutory auditor since 1973, which includes the years we served as joint auditors between 1978 and 2002.
Tokyo, Japan
June 25, 202124, 2022
 
F-4
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Nomura Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Nomura Holdings, Inc.’s internal control over financial reporting as of March 31, 2021,2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Nomura Holdings, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021,2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Nomura Holdings, Inc. (the Company) as of March 31, 20212022 and 2020,2021, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended March 31, 2021,2022, and the related notes and our report dated June 25, 202124, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 25, 202124, 2022
 
F-5
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
 
         
   
Millions of yen
 
   
March 31
 
   
2020
  
2021
 
ASSETS
         
Cash and cash deposits:
         
Cash and cash equivalents
  ¥3,191,889  ¥3,509,754 
Time deposits
   309,373   281,422 
Deposits with stock exchanges and other segregated cash
   373,686   373,559 
          
Total cash and cash deposits
   3,874,948   4,164,735 
          
Loans and receivables:
         
Loans receivable (including ¥805,141 million and ¥818,523 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   2,857,405   2,943,472 
Receivables from customers (including ¥11 million and ¥163,388 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   541,284   459,090 
Receivables from other than customers
   1,731,236   793,669 
Allowance for doubtful accounts
   (13,012)   (53,784) 
          
Total loans and receivables
   5,116,913   4,142,447 
          
Collateralized agreements:
         
Securities purchased under agreements to resell (including ¥548,043 million and ¥366,506 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   12,377,315   10,775,078 
Securities borrowed
   3,529,797   5,264,360 
          
Total collateralized agreements
   15,907,112   16,039,438 
          
Trading assets and private equity and debt investments:
         
Trading assets (including securities pledged as collateral of ¥5,332,640 million and ¥5,587,555 million as of March 31, 2020 and March 31, 2021, respectively; including ¥12,407 million and ¥10,122 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   16,853,822   15,674,354 
Private equity and debt investments (including ¥6,395 million and ¥3,599 million measured at fair value by applying the fair value option in March 31, 2020 and March 31, 2021, respectively)
   44,278   63,825 
          
Total trading assets and private equity and debt investments
   16,898,100   15,738,179 
          
Other assets:
         
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥397,114 million and ¥395,429 million as of March 31, 2020 and March 31, 2021, respectively)
   440,512   464,449 
Non-trading
debt securities (including securities pledged as collateral
of ¥0— million and
 
¥
9,427
 
million as of March 31, 2020 and March 31, 2021, respectively)
   455,392   426,758 
Investments in equity securities
   112,175   126,649 
Investments in and advances to affiliated companies
   367,641   364,393 
Other (including ¥144,756 million and ¥171,482 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   827,022   1,049,432 
          
Total other assets
   2,202,742   2,431,681 
          
Total assets
  ¥43,999,815  ¥42,516,480 
          
   
Millions of yen
 
   
March 31
 
   
2021
  
2022
 
ASSETS
         
Cash and cash deposits:
         
Cash and cash equivalents
  ¥3,509,754  ¥3,316,238 
Time deposits
   281,422   320,754 
Deposits with stock exchanges and other segregated cash
   373,559   426,519 
   
 
 
  
 
 
 
Total cash and cash deposits
   4,164,735   4,063,511 
   
 
 
  
 
 
 
Loans and receivables:
         
Loans receivable (includ
es
¥818,523 and ¥1,210,590 at fair value
)
   2,943,472   3,579,727 
Receivables from customers (includ
es
¥163,388 and ¥86,839 at fair value
)
   459,090   417,661 
Receivables from other than customers (includes ¥ 0nil
 
and ¥10,362 at fair value)
   793,669   1,069,660 
Allowance for credit losses
   (53,784)   (66,346) 
   
 
 
  
 
 
 
Total loans and receivables
   4,142,447   5,000,702 
   
 
 
  
 
 
 
Collateralized agreements:
         
Securities purchased under agreements to resell (includ
es
¥366,506 and ¥297,653 at fair value
)
   10,775,078   11,879,312 
Securities borrowed
   5,264,360   4,997,129 
   
 
 
  
 
 
 
Total collateralized agreements
   16,039,438   16,876,441 
   
 
 
  
 
 
 
Trading assets and private equity and debt investments:
         
Trading assets (includes assets pledged of ¥
5,587,555 and ¥4,643,412
; includes ¥
10,122 and ¥14,328 at fair value
)
   15,674,354   15,230,817 
Private equity and debt investments (includ
es
¥3,599 and ¥10,770 at fair value
)
   63,825   65,193 
   
 
 
  
 
 
 
Total trading assets and private equity and debt investments
   15,738,179   15,296,010 
   
 
 
  
 
 
 
Other assets:
         
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥395,429 and ¥426,081
)
   464,449   419,047 
Non-trading debt securities (includes assets pledged of ¥
 
9,427 and ¥ 17,823
)
   426,758   484,681 
Investments in equity securities (includes assets pledged of ¥ 0nil and ¥
606)
   126,649   133,897 
Investments in and advances to affiliated companies (includes assets pledged of ¥ 0nil and ¥ 
5,038)
   364,393   364,281 
Other (includ
es
¥171,482 and ¥169,080 at fair value)
   1,049,432   773,586 
   
 
 
  
 
 
 
Total other assets
   2,431,681   2,175,492 
   
 
 
  
 
 
 
Total assets
  ¥42,516,480  ¥43,412,156 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-6
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
 
   
Millions of yen
 
   
March 31
 
   
2020
  
2021
 
LIABILITIES AND EQUITY
         
Short-term borrowings (including ¥376,910 million and ¥634,714 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
  ¥1,486,733  ¥1,368,098 
Payables and deposits:
         
Payables to customers
   1,467,434   1,454,755 
Payables to other than customers
   1,653,495   1,773,699 
Deposits received at banks (including ¥14,392 million and ¥49,874 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   1,276,153   1,342,464 
          
Total payables and deposits
   4,397,082   4,570,918 
          
Collateralized financing:
         
Securities sold under agreements to repurchase (including ¥111,609 million and ¥224,056 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   16,349,182   13,360,429 
Securities loaned (including ¥105,968 million and ¥128,886 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   961,446   1,380,629 
Other secured borrowings
   717,711   392,515 
          
Total collateralized financing
   18,028,339   15,133,573 
          
Trading liabilities
   8,546,284   9,473,261 
Other liabilities (including ¥9,183 million and ¥44,708 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   1,034,448   1,239,167 
Long-term borrowings (including ¥3,707,643 million and ¥4,098,457 million measured at fair value by applying the fair value option as of March 31, 2020 and March 31, 2021, respectively)
   7,775,665   7,975,012 
          
Total liabilities
   41,268,551   39,760,029 
          
Commitments and contingencies (Note 21)
   0    0  
Equity:
         
Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
         
Common stock
         
No par value shares;
Authorized—6,000,000,000 shares as of March 31, 2020 and March 31, 2021
Issued—3,493,562,601 shares as of March 31, 2020 and 3,233,562,601 shares as of March 31, 2021
Outstanding—3,038,587,493 shares as of March 31, 2020 and 3,063,155,434 shares as of March 31, 2021		   594,493   594,493 
Additional
paid-in
capital
   683,232   696,122 
Retained earnings
   1,645,451   1,533,713 
Accumulated other comprehensive income
   (26,105)   (38,144) 
          
Total NHI shareholders’ equity before treasury stock
   2,897,071   2,786,184 
Common stock held in treasury, at cost—454,975,108 shares as of March 31, 2020 and 170,407,167 shares as of March 31, 2021   (243,604)   (91,246) 
          
Total NHI shareholders’ equity
   2,653,467   2,694,938 
          
Noncontrolling interests
   77,797   61,513 
Total equity
   2,731,264   2,756,451 
          
Total liabilities and equity
  ¥43,999,815  ¥42,516,480 
          
   
Millions of yen
 
   
March 31
 
   
2021
  
2022
 
LIABILITIES AND EQUITY
         
Short-term borrowings (includ
es
¥634,714 and ¥710,629 at fair value)
  ¥1,368,098  ¥1,050,141 
Payables and deposits:
         
Payables to customers
   1,454,755   1,522,961 
Payables to other than customers
   1,773,699   1,636,725 
Deposits received at banks (includ
es
¥49,874 and ¥71,156 at fair value)
   1,342,464   1,760,679 
   
 
 
  
 
 
 
Total payables and deposits
   4,570,918   4,920,365 
   
 
 
  
 
 
 
Collateralized financing:
         
Securities sold under agreements to repurchase (includ
es
¥224,056 and ¥411,847 at fair value)
   13,360,429   12,574,556 
Securities loaned (includ
es
¥128,886 and ¥104,606 at fair value)
   1,380,629   1,567,351 
Other secured borrowings
   392,515   396,291 
   
 
 
  
 
 
 
Total collateralized financing
   15,133,573   14,538,198 
   
 
 
  
 
 
 
Trading liabilities
   9,473,261   9,652,118 
Other liabilities (includ
es
 ¥44,708 and ¥52,110 at fair value)
   1,239,167   1,020,225 
Long-term borrowings (includ
es
¥4,098,457 and ¥4,557,326 at fair value)
   7,975,012   9,258,306 
   
 
 
  
 
 
 
Total liabilities
   39,760,029   40,439,353 
   
 
 
  
 
 
 
Commitments and contingencies (Note 20)
   0   0 
Equity:
         
Nomura Holdings, Inc. (“NHI”) shareholders’ equity:
         
Common stock
         
No par value shares;
Authorized—6,000,000,000 shares
Issued—3,233,562,601 shares
Outstanding—3,063,155,434 and 3,017,804,012 share
s
   594,493   594,493 
Additional
paid-in
capital
   696,122   697,507 
Retained earnings
   1,533,713   1,606,987 
Accumulated other comprehensive income
   (38,144)   127,973 
   
 
 
  
 
 
 
Total NHI shareholders’ equity before treasury stock
   2,786,184   3,026,960 
Common stock held in treasury, at cost—170,407,167 and 215,758,589 shares
   (91,246)   (112,355) 
   
 
 
  
 
 
 
Total NHI shareholders’ equity
   2,694,938   2,914,605 
   
 
 
  
 
 
 
Noncontrolling interests
   61,513   58,198 
Total equity
   2,756,451   2,972,803 
   
 
 
  
 
 
 
Total liabilities and equity
  ¥42,516,480  ¥43,412,156 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-7
Table of Contents
The following table presents the classification of consolidated variable interest entities’ (“VIEs”) assets and liabilities included in the consolidated balance sheets above. The assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not typically have any recourse to Nomura beyond the assets held in the VIEs. See Note 6 “
Securitizations and Variable Interest Entities
” for further information.
 
   
Billions of yen
 
   
March 31
 
   
2020
   
2021
 
Cash and cash deposits
  ¥10   ¥13 
Trading assets and private equity and debt investments
   1,172    984 
Other assets
   39    77 
           
Total assets
  ¥1,221   ¥1,074 
           
Trading liabilities
  ¥19   ¥2 
Other liabilities
   4    2 
Borrowings
   947    837 
           
Total liabilities
  ¥970   ¥841 
           
   
Billions of yen
 
   
March 31
 
   
2021
   
2022
 
Cash and cash deposits
  ¥            13   ¥            62 
Trading assets and private equity and debt investments
   984    1,024 
Other assets
   77    125 
   
 
 
   
 
 
 
Total assets
  ¥1,074   ¥1,211 
   
 
 
   
 
 
 
Trading liabilities
  ¥2   ¥0 
Other liabilities
   2    6 
Borrowings
   837    892 
   
 
 
   
 
 
 
Total liabilities
  ¥841   ¥898 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-8
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
 
                                                                
   
Millions of yen
 
  
Year ended March 31
 
  
2019
  
2020
  
2021
 
Revenue:
             
Commissions
  ¥293,069  ¥308,805  ¥376,897 
Fees from investment banking
   101,521   103,222   108,681 
Asset management and portfolio service fees
   245,519   238,202   230,047 
Net gain on trading
   342,964   356,609   310,040 
Gain (loss) on private equity and debt investments
   1,007   (93)   12,734 
Interest and dividends
   776,964   794,472   356,466 
Gain (loss) on investments in equity securities
   (6,983)   (14,726)   14,053 
Other
   81,057   165,991   208,317 
              
Total revenue
   1,835,118   1,952,482   1,617,235 
Interest expense
   718,348   664,653   215,363 
              
Net revenue
   1,116,770   1,287,829   1,401,872  
              
Non-interest
expenses:
             
Compensation and benefits
   497,065   479,420   507,906 
Commissions and floor brokerage
   82,637   106,123   111,550 
Information processing and communications
   166,865   170,317   178,835 
Occupancy and related depreciation
   64,940   72,986   72,367 
Business development expenses
   36,915   31,885   13,520 
Other
   306,049   178,837   287,023 
              
Total
non-interest
expenses
   1,154,471   1,039,568   1,171,201 
              
Income (loss) before income taxes
   (37,701)   248,261   230,671 
              
Income tax expense
   57,010   28,894   70,274 
              
Net income (loss)
  ¥(94,711)  ¥219,367  ¥160,397 
              
Less: Net income attributable to noncontrolling interests
   5,731   2,369   7,281 
              
Net income (loss) attributable to NHI shareholders
  ¥(100,442)  ¥216,998  ¥153,116 
              
  
   
Yen
 
Per share of common stock:
             
Basic
—
             
Net income (loss) attributable to NHI shareholders per share
  ¥(29.90)  ¥67.76  ¥50.11 
              
Diluted
—
             
Net income (loss) attributable to NHI shareholders per share
  ¥(29.92)  ¥66.20  ¥48.63 
              
   
Millions of yen
 
  
Year ended March 31
 
  
2020
  
2021
   
2022
 
Revenue:
                                                              
Commissions
  ¥308,805  ¥376,897   ¥332,344 
Fees from investment banking
   103,222   108,681    149,603 
Asset management and portfolio service fees
   238,202   230,047    269,985 
Net gain on trading
   356,609   310,040    368,799 
Gain (loss) on private equity and debt investments
   (93)   12,734    30,768 
Interest and dividends
   794,472   356,466    284,222 
Gain (loss) on investments in equity securities
   (14,726)   14,053    5,446 
Other
   165,991   208,317    152,832 
   
 
 
  
 
 
   
 
 
 
Total revenue
   1,952,482   1,617,235    1,593,999 
Interest expense
   664,653   215,363    230,109 
   
 
 
  
 
 
   
 
 
 
Net revenue
   1,287,829   1,401,872    1,363,890 
   
 
 
  
 
 
   
 
 
 
Non-interest
expenses:
              
Compensation and benefits
   479,420   507,906    529,506 
Commissions and floor brokerage
   106,123   111,550    105,204 
Information processing and communications
   170,317   178,835    184,319 
Occupancy and related depreciation
   72,986   72,367    69,742 
Business development expenses
   31,885   13,520    15,641 
Other
   178,837   287,023    232,855 
   
 
 
  
 
 
   
 
 
 
Total
non-interest
expenses
   1,039,568   1,171,201    1,137,267 
   
 
 
  
 
 
   
 
 
 
Income before income taxes
   248,261   230,671    226,623 
   
 
 
  
 
 
   
 
 
 
Income tax expense
   28,894   70,274    80,090 
   
 
 
  
 
 
   
 
 
 
Net income
  ¥219,367  ¥160,397   ¥146,533 
   
 
 
  
 
 
   
 
 
 
Less: Net income attributable to noncontrolling interests
   2,369   7,281    3,537 
   
 
 
  
 
 
   
 
 
 
Net income attributable to NHI shareholders
  ¥216,998  ¥153,116   ¥142,996 
   
 
 
  
 
 
   
 
 
 
  
   
Yen
 
Per share of common stock:
              
Basic—
              
Net income attributable to NHI shareholders per share
  ¥67.76  ¥50.11   ¥46.68 
   
 
 
  
 
 
   
 
 
 
Diluted—
              
Net income attributable to NHI shareholders per share
  ¥66.20  ¥48.63   ¥45.23 
   
 
 
  
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-9
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
                                                                
   
Millions of yen
 
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Net income (loss)
  ¥(94,711)  ¥219,367  ¥160,397 
Other comprehensive income (loss):
             
Change in cumulative translation adjustments:
             
Change in cumulative translation adjustments
        36,031   (45,000)   46,821 
Deferred income taxes
   (1,852)   591   (1,287) 
              
Total
   34,179   (44,409)   45,534 
              
Defined benefit pension plans:
             
Pension liability adjustment
   (23,431)   7,843   20,720 
Deferred income taxes
   161   693   (1,626) 
              
Total
   (23,270)   8,536   19,094 
              
Own credit adjustments:
             
Own credit adjustments
   25,135        48,295   (91,666) 
Deferred income taxes
   (4,988)   (9,779)        15,943 
              
Total
   20,147   38,516   (75,723) 
              
Total other comprehensive income (loss)
   31,056   2,643   (11,095) 
              
Comprehensive income (loss)
   (63,655)   222,010   149,302 
Less: Comprehensive income attributable to noncontrolling interests
   6,481   2,067   8,225 
              
Comprehensive income (loss) attributable to NHI shareholders
  ¥(70,136)  ¥219,943  ¥141,077 
              
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Net income
  ¥219,367  ¥160,397  ¥146,533 
Other comprehensive income (loss):
             
Change in cumulative translation adjustments:
                                                          
Change in cumulative translation adjustments
   (45,000)   46,821   122,468 
Deferred income taxes
   591   (1,287)   (946) 
   
 
 
  
 
 
  
 
 
 
Total
   (44,409)   45,534   121,522 
   
 
 
  
 
 
  
 
 
 
Defined benefit pension plans:
             
Pension liability adjustment
   7,843   20,720   (404) 
Deferred income taxes
   693   (1,626)   78 
   
 
 
  
 
 
  
 
 
 
Total
   8,536   19,094   (326) 
   
 
 
  
 
 
  
 
 
 
Own credit adjustments:
             
Own credit adjustments
   48,295   (91,666)   60,777 
Deferred income taxes
   (9,779)   15,943   (12,930) 
   
 
 
  
 
 
  
 
 
 
Total
   38,516   (75,723)   47,847 
   
 
 
  
 
 
  
 
 
 
Total other comprehensive income (loss)
   2,643   (11,095)   169,043 
   
 
 
  
 
 
  
 
 
 
Comprehensive income
      222,010      149,302      315,576 
Less: Comprehensive income attributable to noncontrolling interests
   2,067   8,225   6,463 
   
 
 
  
 
 
  
 
 
 
Comprehensive income attributable to NHI shareholders
  ¥219,943  ¥141,077  ¥309,113 
   
 
 
  
 
 
  
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-10
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
                                                                
   
Millions of yen
 
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Common stock
             
Balance at beginning of year
  ¥594,493  ¥594,493  ¥594,493 
              
Balance at end of year
   594,493   594,493   594,493 
              
Additional
paid-in
capital
             
Balance at beginning of year
   675,280   687,761   683,232 
Stock-based compensation awards
   12,481   (4,326)   11,775 
Changes in ownership interests in subsidiaries
   0—     (203)   0—   
Changes in an affiliated company’s interests in its subsidiary
   0—   0—   1,115 
              
Balance at end of year
   687,761   683,232   696,122 
              
Retained earnings
             
Balance at beginning of year
   1,696,890   1,486,825   1,645,451 
Cumulative effect of change in accounting principle
(1)
   1,564   5,592   (18,200) 
Net income (loss) attributable to NHI shareholders
   (100,442)   216,998   153,116 
Cash dividends
   (20,080)   (63,670)   (107,104) 
Gain (loss) on sales of treasury stock
   (1,191)   (294)   (346) 
Cancellation of treasury stock
   (89,916)   0—     (139,204) 
              
Balance at end of year
   1,486,825   1,645,451   1,533,713 
              
Accumulated other comprehensive income (loss)
             
Cumulative translation adjustments
             
Balance at beginning of year
   (15,596)   17,833   (26,274) 
Net change during the year
   33,429   (44,107)   44,590 
              
Balance at end of year
   17,833   (26,274)   18,316 
              
Defined benefit pension plans
             
Balance at beginning of year
   (47,837)   (71,107)   (62,571) 
Pension liability adjustment
   (23,270)   8,536   19,094 
              
Balance at end of year
   (71,107)   (62,571)   (43,477) 
              
Own credit adjustments
             
Balance at beginning of year
   4,077   24,224   62,740 
Own credit adjustments
   20,147   38,516   (75,723) 
              
Balance at end of year
   24,224   62,740   (12,983) 
              
Balance at end of year
   (29,050)   (26,105)   (38,144) 
              
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Common stock
                                                          
Balance at beginning of year
  ¥594,493  ¥594,493  ¥594,493 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   594,493   594,493   594,493 
   
 
 
  
 
 
  
 
 
 
Additional
paid-in
capital
             
Balance at beginning of year
   687,761   683,232   696,122 
Stock-based compensation awards
   (4,326)   11,775   1,421 
Changes in ownership interests in subsidiaries
   (203)   0—     0—   
Changes in an affiliated company’s interests in its subsidiary
   0—     1,115   0—   
Changes in an affiliated company’s interests
   —     —     (36) 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   683,232   696,122   697,507 
   
 
 
  
 
 
  
 
 
 
Retained earnings
             
Balance at beginning of year
   1,486,825   1,645,451   1,533,713 
Cumulative effect of change in accounting principle (1)
   5,592   (18,200)   0—   
Net income attributable to NHI shareholders
   216,998   153,116   142,996 
Cash dividends
   (63,670)   (107,104)   (67,007) 
Gain (loss) on sales of treasury stock
   (294)   (346)   (2,715) 
Cancellation of treasury stock
   0—     (139,204)   0—   
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   1,645,451   1,533,713   1,606,987 
   
 
 
  
 
 
  
 
 
 
Accumulated other comprehensive income (loss)
             
Cumulative translation adjustments
             
Balance at beginning of year
   17,833   (26,274)   18,316 
Net change during the year
   (44,107)   44,590   118,596 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (26,274)   18,316   136,912 
   
 
 
  
 
 
  
 
 
 
Defined benefit pension plans
             
Balance at beginning of year
   (71,107)   (62,571)   (43,477) 
Pension liability adjustment
   8,536   19,094   (326) 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (62,571)   (43,477)   (43,803) 
   
 
 
  
 
 
  
 
 
 
Own credit adjustments
             
Balance at beginning of year
   24,224   62,740   (12,983) 
Own credit adjustments
   38,516   (75,723)   47,847 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   62,740   (12,983)   34,864 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (26,105)   (38,144)   127,973 
   
 
 
  
 
 
  
 
 
 
 
(1)
Represents the adjustmentadjustments to initially apply Accounting Standards Update (“ASU”)
2014-09,
“
Revenue from Contracts with Customers
” for the year ended March 31, 2019, ASU
2016-02,
“
Leases
” for the year ended March 31, 2020 and ASU
2016-13,
“
Measurement of Credit Losses on Financial Instruments
” for the year ended March 31, 2021.
 
F-11
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
 
                                                                
   
Millions of yen
 
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Common stock held in treasury
             
Balance at beginning of year
   (157,987)   (108,968)   (243,604) 
Repurchases of common stock
   (51,714)   (150,009)   (11) 
Sales of common stock
   0   0   0 
Common stock issued to employees
   10,817   15,373   13,165 
Cancellation of treasury stock
   89,916   0—     139,204 
              
Balance at end of year
   (108,968)   (243,604)   (91,246) 
              
Total NHI shareholders’ equity
             
Balance at end of year
   2,631,061   2,653,467   2,694,938 
              
Noncontrolling interests
             
Balance at beginning of year
   50,504   49,732   77,797 
Cash dividends
   (2,685)   (1,483)   (1,416) 
Net income attributable to noncontrolling interests
   5,731   2,369   7,281 
Accumulated other comprehensive income (loss) attributable to noncontrolling interests
             
Cumulative translation adjustments
   750   (302)   944 
Purchase/sale (disposition) of subsidiary shares, etc., net
   1,183   18,264   673 
Other net change in noncontrolling interests
   (5,751)   9,217   (23,766) 
              
Balance at end of year
   49,732   77,797   61,513 
              
Total equity
             
Balance at end of year
  ¥2,680,793  ¥2,731,264  ¥2,756,451 
              
                                                               
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Common stock held in treasury
    
Balance at beginning of year
   (108,968)   (243,604)   (91,246) 
Repurchases of common stock
   (150,009)   (11)   (39,650) 
Sales of common stock
   0   0   0 
Common stock issued to employees
   15,373   13,165   18,541 
Cancellation of treasury stock
   0—     139,204   0—   
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   (243,604)   (91,246)   (112,355) 
   
 
 
  
 
 
  
 
 
 
Total NHI shareholders’ equity
             
Balance at end of year
   2,653,467   2,694,938   2,914,605 
   
 
 
  
 
 
  
 
 
 
Noncontrolling interests
             
Balance at beginning of year
   49,732   77,797   61,513 
Cash dividends
   (1,483)   (1,416)   (1,421) 
Net income attributable to noncontrolling interests
   2,369   7,281   3,537 
Accumulated other comprehensive income (loss) attributable to noncontrolling interests
             
Cumulative translation adjustments
   (302)   944   2,926 
Purchase/sale (disposition) of subsidiary shares, etc., net
   18,264   673   1,307 
Other net change in noncontrolling interests
   9,217   (23,766)   (9,664) 
   
 
 
  
 
 
  
 
 
 
Balance at end of year
   77,797   61,513   58,198 
   
 
 
  
 
 
  
 
 
 
Total equity
             
Balance at end of year
  ¥2,731,264  ¥2,756,451  ¥2,972,803 
   
 
 
  
 
 
  
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-12
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                                                      
   
Millions of yen
 
  
Year ended March 31
 
  
2019
  
2020
  
2021
 
Cash flows from operating activities:
             
Net income (loss)
  ¥(94,711)  ¥219,367  ¥160,397 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
             
Depreciation and amortization
   57,924   63,583   63,846 
Impairment of goodwill
   81,372   
0—  
   —   
Stock-based compensation
   21,814   12,694   28,251 
(Gain) loss on investments in equity securities
   6,983   14,726   (14,053) 
(Gain) loss on investments in subsidiaries and affiliates
   5,719   (72,841)   45,086 
Equity in earnings of affiliates, net of dividends received
   (19,043)   (20,342)   (15,716) 
(
Gain)
Loss on disposal of office buildings, land, equipment and facilities
   2,455   (3,957)   (64,730) 
Deferred income taxes
   21,565   (23,911)   (21,113) 
Changes in operating assets and liabilities:
             
Time deposits
   21,832   (33,029)   43,560 
Deposits with stock exchanges and other segregated cash
   13,752   (97,424)   13,878 
Trading assets and private equity and debt investments
   925,384   (2,754,743)   1,468,357 
Trading liabilities
   (143,141)   428,997   777,741 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
   (3,274,866)   2,224,371   (1,453,871) 
Securities borrowed, net of securities loaned
   1,987,331   291,777   (1,242,489) 
Other secured borrowings
   1,198   301,019   (326,450) 
Loans and receivables, net of allowance for doubtful accounts
   157,599   (1,358,242)   1,145,429 
Payables
   (63,683)   788,007   (33,994) 
Bonus accrual
   (46,602)   16,202   15,840 
Accrued income taxes, net
   8,241   (2,787)   55,712 
Other, net
   (32,288)   (9,410)   20,089 
              
Net cash provided by (used in) operating activities
   (361,165)   (15,943)   665,770 
              
Cash flows from investing activities:
             
Payments for purchases of office buildings, land, equipment and facilities
   (319,090)   (206,745)   (119,875) 
Proceeds from sales of office buildings, land, equipment and facilities
   262,908   209,197   49,642 
Proceeds from sales of investments in equity securities
   519   13,323   6,502 
Decrease (increase) in loans receivable at banks, net
   (74,048)   43,920   (83,412) 
Decrease (increase) in
non-trading
debt securities, net
   29,452   (2,359)   38,409 
Business combinations or disposals, net
   
0—  
   (2,484)   (11,152) 
Decrease (increase) in investments in affiliated companies, net
   (8,290)   160,799   (9,182) 
Other, net
   (3,954)   685   (9,958) 
              
Net cash provided by (used in) investing activities
   (112,503)   216,336   (139,026) 
              
Cash flows from financing activities:
             
Increase in long-term borrowings
   2,142,212   2,364,260   2,067,725 
Decrease in long-term borrowings
   (1,625,516)   (2,402,621)   (2,068,695) 
Increase (decrease) in short-term borrowings, net
   85,900   656,205   (325,237) 
Increase (decrease) in deposits received at banks, net
   257,471   (93,260)   126,177 
Proceeds from sales of common stock held in treasury
   313   285   215 
Payments for repurchases of common stock held in treasury
   (51,714)   (150,009)   (11) 
Payments for cash dividends
   (47,475)   (58,416)   (76,358) 
Contribution from noncontrolling interests
   
0—  
   15,618   6,257 
              
Net cash provided by (used in) financing activities
   761,191   332,062   (269,927) 
              
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   44,741   (27,277)   60,884 
              
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
   332,264   505,178   317,701 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
   2,354,868   2,687,132   3,192,310 
              
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year
  ¥2,687,132  ¥3,192,310  ¥3,510,011 
              
Supplemental information:
             
Cash paid during the year for
—
             
Interest
  ¥700,855  ¥677,160  ¥222,024 
              
Income tax payments, net
  ¥27,204  ¥55,592  ¥35,675 
              
   
Millions of yen
 
  
Year ended March 31
 
  
2020
  
2021
  
2022
 
Cash flows from operating activities:
    
Net income
  ¥219,367  ¥160,397  ¥146,533 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
             
Depreciation and amortization
   63,583   63,846   59,524 
Stock-based compensation
   12,694   28,251   27,941 
(Gain) loss on investments in equity securities
   14,726   (14,053)   (5,446) 
(Gain) loss on investments in subsidiaries and affiliates
   (72,841)   45,086   (79,396) 
Equity in earnings of affiliates, net of dividends received
   (20,342)   (15,716)   (20,235) 
Gain on disposal of office buildings, land, equipment and facilities   (3,957)   (64,730)   (3,490) 
Deferred income taxes
   (23,911)   (21,113)   3,106 
Changes in operating assets and liabilities:
             
Time deposits
   (33,029)   43,560   (23,064) 
Deposits with stock exchanges and other segregated cash
   (97,424)   13,878   (18,408) 
Trading assets and private equity and debt investments
   (2,754,743)   1,468,357   1,254,261 
Trading liabilities
   428,997   777,741   (284,747) 
Securities purchased under agreements to resell, net of securities sold under agreements to repurchase
     2,224,371   (1,453,871)   (2,220,493) 
Securities borrowed, net of securities loaned
   291,777   (1,242,489)   595,116 
Other secured borrowings
   301,019   (326,450)   2,120 
Loans and receivables, net of allowance for credit losses   (1,358,242)   1,145,429   (412,429) 
Payables
   788,007   (33,994)   (247,980) 
Bonus accrual
   16,202   15,840   (1,865) 
Accrued income taxes, net
   (2,787)   55,712   (37,639) 
Other, net
   (9,410)   20,089   (102,119) 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) operating activities
   (15,943)   665,770   (1,368,710) 
   
 
 
  
 
 
  
 
 
 
Cash flows from investing activities:
             
Payments for purchases of office buildings, land, equipment and facilities
   (206,745)   (119,875)   (111,331) 
Proceeds from sales of office buildings, land, equipment and facilities
   209,197   49,642   94,985 
Payments for purchases of investments in equity securities
   0—     0—     (300) 
Proceeds from sales of investments in equity securities
   13,323   6,502   2,502 
Decrease (increase) in loans receivable at banks, net
   43,920   (83,412)   (112,782) 
Decrease (increase) in
non-trading
debt securities, net
   (2,359)   38,409   (51,065) 
Business combinations or disposals, net
   (2,484)   (11,152)   0—   
Decrease (increase) in investments in affiliated companies, net
   160,799   (9,182)   103,437 
Other, net
   685   (9,958)   29,253 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) investing activities
   216,336   (139,026)   (45,301) 
   
 
 
  
 
 
  
 
 
 
Cash flows from financing activities:
             
Increase in long-term borrowings
   2,364,260   2,067,725   3,895,059 
Decrease in long-term borrowings
   (2,402,621)   (2,068,695)   (2,670,106) 
Increase (decrease) in short-term borrowings, net
   656,205   (325,237)   (475,509) 
Increase (decrease) in deposits received at banks, net
   (93,260)   126,177   448,099 
Proceeds from sales of common stock held in treasury
   285   215   11 
Payments for repurchases of common stock held in treasury
   (150,009)   (11)   (39,650) 
Payments for cash dividends
   (58,416)   (76,358)   (70,714) 
Transactions with noncontrolling interests, net
   15,618   6,257   (16,475) 
   
 
 
  
 
 
  
 
 
 
Net cash provided by (used in) financing activities
   332,062   (269,927)   1,070,715 
   
 
 
  
 
 
  
 
 
 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
   (27,277)   60,884   149,693 
   
 
 
  
 
 
  
 
 
 
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
   505,178   317,701   (193,603) 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year
   2,687,132   3,192,310   3,510,011 
   
 
 
  
 
 
  
 
 
 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of year
  ¥3,192,310  ¥3,510,011  ¥3,316,408 
   
 
 
  
 
 
  
 
 
 
Supplemental information:
             
Cash paid during the year for—
             
Interest
  ¥677,160  ¥222,024  ¥225,679 
   
 
 
  
 
 
  
 
 
 
Income tax payments, net
  ¥55,592  ¥35,675  ¥114,623 
   
 
 
  
 
 
  
 
 
 
 
F-13
Table of Contents
NOMURA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
 
The following table presents a reconciliation of
cash and cash equivalents
, and restricted cash and restricted cash equivalents reported in
depositsDeposits with stock exchanges and other segregated cash
within the consolidated balance sheets to the total of the same such amounts shown in the statements of cash flows above. Restricted cash and restricted cash equivalents are amounts where access, withdrawal or usage by Nomura is substantively prohibited by a third party entity outside of the Nomura group.
 
                                                                
   
Millions of yen
 
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Cash and cash equivalents reported in
Cash and cash equivalents
  ¥2,686,659  ¥3,191,889  ¥3,509,754 
Restricted cash and restricted cash equivalents reported in
Deposits with stock exchanges and other segregated cash
   473   421   257 
              
Total cash, cash equivalent, restricted cash and restricted cash equivalents
  ¥2,687,132   ¥3,192,310   ¥3,510,011  
              
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Cash and cash equivalents reported in
Cash and cash equivalents
  ¥3,191,889  ¥3,509,754  ¥3,316,238 
Restricted cash and restricted cash equivalents reported in
Deposits with stock exchanges and other segregated cash
   421   257   170 
��  
 
 
  
 
 
  
 
 
 
Total cash, cash equivalent, restricted cash and restricted cash equivalents
  ¥3,192,310   ¥3,510,011   ¥3,316,408  
   
 
 
  
 
 
  
 
 
 
Non-cash—Non-cash
—
Total amount of Right- of use
right-of-use
assets recognized for the years ended March 31, 2020, 2021 and March 31, 20212022 were ¥18,026 million,
¥41,279 million and ¥41,279¥32,208 million, respectively.
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
F-14
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of accounting policies:
Description of business—
Nomura Holdings, Inc. (“Company”) and its broker-dealer, banking and other financial services subsidiaries provide investment, financing and related services to individual, institutional and government clients on a global basis. The Company and other entities in which it has a controlling financial interest are collectively referred to as “Nomura” within these consolidated financial statements.
Nomura operates its business through various divisions based upon the nature of specific products and services, its main client base and its management structure. On April 1, 2021, the Asset Management Division and the Merchant Banking Division were combined and the Investment Management Division was established. Nomura reports operating results through 3 business segments: Retail, AssetInvestment Management, and Wholesale.
In its Retail segment, Nomura provides investment consultation services mainly to individual clients in Japan. In its AssetInvestment Management segment, Nomura developsmainly provides various investment management services such as establishing and managesmanaging investment trusts, discretionary investment services for domestic and providesoverseas investors, investment advisory services.and management for investment corporation and for funds for institutional investors, and management of Tokumei kumiai (silent partnerships). In its Wholesale segment, Nomura engages in the sales and trading of debt and equity securities, foreign exchange contracts and derivatives globally, and provides investment banking services such as the underwriting and distribution of debt and equity securities as well as mergers and acquisitions and financial advisory.
Basis of presentation—
The accounting and financial reporting policies of the Nomura conform to accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to broker-dealers.
These consolidated financial statements include the financial statements of the Company and other entities in which it has a controlling financial interest. Nomura initially determines whether it has a controlling financial interest in an entity by evaluating whether the entity is a variable interest entity (“VIE”) under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810“810 “
Consolidation
”(“ASC 810”). VIEs are entities in which equity investors do not have the characteristics of a controlling financial interest or which do not have sufficient equity at risk for the entityentities to finance itstheir activities without additional subordinated financial support. Nomura consolidates VIEs where Nomura is the primary beneficiary, which is where (1) Nomura has power to direct the activities of the VIE that is most significantly impact the VIE’s economic performance; and (2) through Nomura’s interest in the VIE, the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, provided that Nomura is not acting as a fiduciary for other interest holders.
For entities other than VIEs, Nomura is generally determined to have a controlling financial interest in an entity when it owns a majority of the voting interests.
Equity investments in entities in which Nomura has significant influence over operating and financial decisions (generally defined as a holding of 20 to 50 percent of the voting stock of a corporate entity, or at least 3 
percent of a limited partnership) are accounted for under the equity method of accounting (“equity method investments”) and reported within
Other assets
—
Investments in and advances to affiliated companies
or at fair value by electing the fair value option permitted by ASC 825“
Financial Instruments
”(“ASC 825”) and reported within
Trading assets,
,
Private equity and debt investments or
or
Other assets—Other.
Other financial investments are generally reported within
Trading assets
.
—
Other
in consolidated balance sheets depending on the nature and purpose of the investments.
F-15
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Equity investments
in which Nomura has neither control nor significant influence are carried at fair value, with changes in fair value recognized through the consolidated statements of income and reported within
Trading assets, Private equity and debt investments or Other assets
—
Other
in consolidated balance sheets depending on the consolidated statementsnature or purpose of comprehensive income.the investments.
Certain consolidated entities are investment companies under ASC 946 “
“Financial Services—Services
—
Investment Companies
” (“ASC 946”). Nomura carries all of their investments at fair value, with changes in fair value recognized through the consolidated statements of income.
F-15 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company’s principal subsidiaries include Nomura Securities Co., Ltd. (“NSC”), Nomura Securities International, Inc. (“NSI”), Nomura International plc (“NIP”) and Nomura Financial Products & Services, Inc. (“NFPS”).
All material intercompany transactions and balances have been eliminated on consolidation.
Use of estimates—
Nomura uses accounting estimates to prepare these consolidated financial statements and they require difficult, subjective and complex judgments by management. Such estimates determined by management to be material include estimates regarding the fair value of financial instruments and the litigaionlitigation provisions. Estimates, by their nature, are based on underlying assumptions which require management judgment and depend on the extent of available information. Actual results in future periods may differ from current estimates, which could have a material impact on these consolidated financial statements.
The
COVID-19
pandemic has impacted some of the critical accounting estimates used in these consolidated financial statements during the years ended March 31, 2020 and 2021 and is expected to continue to impact these estimates in future periods. Assumptions around how long the
COVID-19
pandemic will last and how long the economies and financial markets in the key jurisdictions in which Nomura and its clients operate will take to recover has, and will continue to, affect these estimates. The key assumptions and estimates impacted by
COVID-19
include the volatility and dislocation in global financial markets for determination of fair value measurements.
Various references are made throughout the notes to these consolidated financial statements where critical accounting estimates based on management judgment have been made, the nature of the estimates, the underlying assumptions made by management used to derive those estimates and how the
COVID-19
pandemic, has and is expected to continue to impact these estimates and thereforeaffect the amounts reported in these consolidated financial statements.
Fair value of financial instruments—
A significant amount of Nomura’s financial assets and financial liabilities are carried at fair value, with changes in fair value recognized through the consolidated statements of income and/ or the consolidated statements of comprehensive income. Use of a fair value measurement is either specifically required under U.S. GAAP or Nomura makes an election to use a fair value measurement for certain eligible items under the fair value option.
Other financial assets and financial liabilities are carried at fair value on a nonrecurring basis, where the primary measurement basis is not fair value. Fair value is only used in specific circumstances after initial recognition, such as to measure impairment.
In both cases, fair value is generally determined in accordance with ASC 820 “
Fair Value Measurements and Disclosures
” (“ASC 820”) which defines fair value as the amount that would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between market participants at the measurement date. It assumes that the transaction occurs in Nomura’s principal market, or in the absence of a principal market, the most advantageous market for the relevant financial asset or financial liability. See Note 2 “
Fair value measurements
” for further information regarding how Nomura estimates fair value for specific types of financial instruments used in the ordinary course of business.
F
-16
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair valuevalues of financial assets and financial liabilities of consolidated VIEs which meet the definition of collateralized financing entities are both measured using the more observable fair value of the financial assets and financial liabilities.
F-16 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Allowance for current expected credit losses
—losses—
Management recognizes allowance for current expected credit losses on financial assets not carried at fair value and certain
off-balance
sheet financial instruments including unfunded loan commitments not carried at fair value in accordance with ASC 326, “
“Financial Instruments — Instruments—Credit LossesLosses”
” (“(“ASC 326”) which Nomura initially adopted on April 1, 2020. Prior to such date, allowances for credit losses were recognized for incurred losses rather than expected credit losses based on management’s estimate of probable losses incurred within these financial assets and
off-balance
sheet financial instruments.
Current expected credit losses are calculated over the expected life of the financial instruments in scope of the requirements on an individual or a portfolio basis, considering all relevant, reasonable supportable information available about the collectability of cash flows, including information about past events, current conditions and future forecasts. Accrued interest receivables are excluded from the amortized cost basis of financing receivables when calculating current expected credit losses.
The methodology used by Nomura to determine allowances for current expected credit losses in accordance with the CECL impairment model primarily depends on the nature of the financial instrument and whether certain practical expedients permitted by ASC 326 are applied by Nomura.
Allowances for current expected credit losses against recognized financial instruments are reported in the consolidated balance sheets within
AllowanceAllowances for doubtful accountscurrent expected credit losses
while allowances for current expected credit losses against
off-balance
sheet financial instruments are reported in the consolidated balance sheets within
Other
liabilities. All movements in the allowances are reported in the consolidated statements of income within
Other expensesexpenses.
.
See Note 7
“Financing receivables”
for further information including how allowance for current expected credit losses are calculated.
Transfers of financial assets—
Nomura accounts for the transfer of a financial asset as a sale when Nomura relinquishes control over the asset by meeting the following conditions: (a) the asset has been isolated from the transferor (even in bankruptcy or other receivership), (b) the transferee has the right to pledge or exchange the asset received, or if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, if, the holders of its beneficial interests have the right to pledge or exchange the beneficial interests held and (c) the transferor has not maintained effective control over the transferred asset.
In connection with its securitization activities, Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans, government and corporate securities or other types of financial assets. Nomura’s involvement with SPEs includes structuring and underwriting, distributing and selling debt instruments and beneficial interests issued by SPEs to investors. Nomura derecognizes financial assets transferred in securitizations provided that Nomura has relinquished control over such assets and does not consolidate the SPE. Nomura may obtain or retain an interest in the financial assets, including residual interests in the SPEs dependent upon prevailing market conditions. Any such interests are accounted for at fair value and reported within
Trading assets
in the consolidated balance sheets with the change in fair value reported within
Revenue—Revenue
—
Net gain on trading
in the consolidated statements of income.
F-17 F
-17
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Foreign currency translation—
The financial statements of the Company’s subsidiaries and operations are measured using their functional currency which is the currency of the primary economic environment in which the entity operates. All assets and liabilities of subsidiaries and operations which have a functional currency other than Japanese Yen are translated into Japanese Yen at exchange rates in effect at the balance sheet date, and all revenue and expenses are translated at the average exchange rates for the respective years and the resulting translation adjustments are accumulated and reported within
Accumulated other comprehensive income
(loss)
in NHI shareholders’ equity.
Foreign currency assets and liabilities are translated at exchange rates in effect at the balance sheet date and the resulting translation gains or losses are credited or charged to the consolidated statements of income.
Revenue from services provided to clients—
Nomura earns revenue through fees and commissions from providing financial services to customersclients across all three business divisions. These services primarily include trade execution and clearing services, distribution of fund unit services, financial advisory services, underwriting and distribution services and asset management services.
Revenues are recognized when or as the customerclient obtains control of the service provided by Nomura which depends on when each of the key distinct substantive promises made by Nomura within the contract with the customerclient (“performance obligations”) are satisfied. Such performance obligations are generally satisfied at a particularly point in time or, if certain criteria are met, over a period of time.
Revenues from providing distribution of fund units and clearing services are reported in the consolidated statements of income within
Revenue
—
Commissions,
revenues from asset management services are reported in
Revenue—Revenue
—
Asset management and portfolio service fees
and revenues from financial advisory services, underwriting and distribution services are reported in
Revenue—Revenue
—
Fees from investment banking
.
Costs to obtain or fulfill the underlying contract to provide services to a customerclient are deferred as assets if certain criteria are met. These deferred costs, which are reported in the consolidated balance sheets within
Other assets
are released to the consolidated statements of income when the related revenue from providing the service is also recognized or earlier if there is evidence that the costs are not recoverable and therefore impaired.
Trading assets and trading liabilities—
Trading assets and Trading liabilities
primarily comprise debt securities, equity securities and derivativesderivative assets which are recognized on the consolidated balance sheets on a trade date basis and loans which are recognized on the consolidated balance sheets on a settlement date basis.
Financial assets are classified as being held for trading when any of the following criteria are met:
The financial assets are originated or acquired with the intention to generate profit through sale of the financial assets in the short-term;
The financial assets are part of a portfolio of identified financial instruments that are managed together for the purposes of short-term profit or arbitrage profit-taking; or
The financial assets are derivative assets.
Trading liabilities
primarily comprise short sales of securities and derivative liabilities, which are recognized on the consolidated balance sheets on a trade date basis. Trading assets and liabilities are carried at fair value and changes in fair value are generally reported within
Revenue—Revenue
—Net gain on trading
in the consolidated statements of income.
F
-18
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Certain nonderivative trading liabilities are held to economically hedge the price risk of investments in equity securities held for operating purposes. Changes in fair value of these trading liabilities are reported within
Revenue—Gain (loss) on investments in equity securities
in the consolidated statements of income.​​​​​​​
Collateralized agreements and collateralized financing—
Collateralized agreements
consist of reverse repurchase agreements disclosed as
Securities purchased under agreements to resell
and securities borrowing transactions disclosed as
Securities borrowed
.
Collateralized financing
consists
of repurchase agreements disclosed as
Securities sold under agreements to repurchase
, securities lending transactions disclosed as
Securities loaned
and certain other secured borrowings.
F-18 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Reverse repurchase and repurchase agreements principally involve the buying or selling of securities under agreements with clients to resell or repurchase these securities to or from those clients, respectively. These transactions are generally accounted for as collateralized agreements or collateralized financing transactions and are recognized in the consolidated balance sheets at the amount for which the securities were originally acquired or sold. Certain reverse repurchase and repurchase agreements are carried at fair value through election of the fair value option.
Nomura also enters into Gensaki Repo transactions which are the standard type of repurchase agreement used in Japanese financial markets. Gensaki Repo transactions contain margin requirements, rights of security substitution, and certain restrictions on the client’s right to sell or repledge the transferred securities. Gensaki Repo transactions are accounted for as collateralized agreements or collateralized financing transactions and are recognized on the consolidated balance sheets at the amount that the securities were originally acquired or sold.
Allowances for current expected credit losses recognized against reverse repurchase agreements in accordance with ASC 326 “
Credit Losses
” (“ASC 326”) which Nomura initially adopted on April 1, 2020. are not significant due to an ongoing monitoring of the collaterals and our application of practical expedients permitted by ASC 326.
Reverse repurchase agreements and repurchase agreements (including Gensaki Repo transactions) accounted for as collateralized agreements and collateralized financing transactions, respectively, entered into with the same counterparty and documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
“
Balance Sheet—Offsetting
” (“ASC
210-20”)
are met. These criteria include requirements around the maturity of the transactions, the underlying systems on which the collateral is settled, associated banking arrangements and the legal enforceability of
close-out
and offsetting rights under the master netting agreement.
Securities borrowing and lending transactions are generally accounted for as collateralized agreements and collateralized financing transactions, respectively. These transactions are generally cash collateralized and are recognized on the consolidated balance sheets at the amount of cash collateral advanced or received. Allowances for current expected credit losses recognized against securities borrowing transactions are not significant due to an ongoing monitoring of the collateralscollateral and the short contractualexpected life of these transactions. Where Nomura acts as lenders in securities borrowing and lending transactions and receives securities that can be sold or pledged as collateral, Nomura recognizes the securities received at fair value within
Other assets—Other
and the obligation to return those securities as a liability within
Other liabilities.
See Note 7
“Financing receivables”
for further information including how allowances for current expected credit losses under ASC 326 are determined and the impact of the
COVID-19
pandemic on the approach to calculation of current expected credit losses during the years ended March 31, 2021 and 2022.
Offsetting of collateralized agreements and collateralized financings
Reverse repurchase agreements and repurchase agreements (including Gensaki Repo transactions) accounted for as collateralized agreements and collateralized financing transactions, respectively, entered into with the same counterparty and documented under a master netting agreement are offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
“
Balance Sheet
—Offsetting
” (“ASC
210-20”)
are met. These criteria include requirements around the maturity of these transactions.the transactions, the underlying systems on which the collateral is settled, associated banking arrangements and the legal enforceability of
close-out
Securitiesand offsetting rights under the master netting agreement. Similarly, securities borrowing and lending transactions accounted for as collateralized agreements and collateralized financing transactions, respectively, entered into with the same counterparty and documented under a master netting agreement are also offset in the consolidated balance sheets where the specific criteria defined by ASC
210-20
are met.
F
-19
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other secured borrowings
consist primarily of secured borrowings from financial institutions and central banks in the inter-bank money market, and are carried at contractual amounts due.
Trading balances of secured borrowings
consist of liabilities related to transfers of financial assets that are accounted for as secured financing transactions rather than sales under ASC 860 “
Transfers and Servicing
” (“ASC 860”) and are reported in the consolidated balance sheets within
Long-term borrowings
. The fair value option is generally elected for these transactions, which are carried at fair value on a recurring basis. See Note 7 “
6
“Securitizations and Variable Interest EntitiesEntities”
” and Note 11 “
Borrowings“Borrowings”
” for further information regarding these transactions.
All Nomura-owned securities pledged to counterparties where the counterparty has the right to sell or repledge the securities, including collateral transferred under Gensaki Repo transactions, are reported parenthetically within
Trading assets as Securities pledged as collateral
in the consolidated balance sheets.
F-19 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
See Note 5 “
“Collateralized transactionstransactions”
” for further information.
Derivatives—
Derivatives—
Nomura uses a variety of derivative financial instruments,derivatives, including futures, forwards, swaps and options, for both trading and
non-trading
purposes. Freestanding financial instruments which meet the accounting definition of a derivatives are carried at fair value in the consolidated balance sheets and reported within
Trading assets or Trading liabilities
depending on whether fair value at the balance sheet date is positive or negative, respectively. Certain derivatives embedded in hybrid financial instruments such as structured notes and certificates of deposit are bifurcated from the host contract and are also carried at fair value in the consolidated balance sheets and reported within
Short-term borrowings or Long-term borrowings
depending on the maturity of the underlying host contract.
Changes in fair value are recognized either through the consolidated statements of income or the consolidated statements of comprehensive income depending on the purpose for which the derivatives are used.
Derivative assets and liabilities with the same counterparty documented under a legally enforceable master netting agreement and the related cash collateral receivables and payables are presented on a net basis in the consolidated balance sheets where the specific criteria defined by ASC
210-20
and ASC 815 “
Derivatives and Hedging
” (“ASC 815”) are met.
Exchange traded and centrally cleared OTC derivatives typically involve daily variation margin payments and receipts which reflect changes in the fair value of the related derivative. Such variation margin amounts are accountedused for as either a partial settlement of the derivative or as a separate cash collateral receivable or payable depending on the legal form of the arrangement.trading purposes
Trading
Derivative financial instrumentsDerivatives used for trading purposes, including bifurcated embedded derivatives, are carried at fair value with changes in fair value reported in the consolidated statements of income within
Revenue—
Revenue
—Net gain on trading
.
Non-tradingDerivatives held for
non-trading
purposes
In addition to its trading activities, Nomura uses derivative financial instrumentsderivatives for other than trading purposes such as to manage risk exposures arising from recognized assets and liabilities, forecasted transactions and firm commitments. Certain derivatives usedDerivatives held for
non-trading
purposes arecomprise derivatives formally designated as fair value andor net investment hedges under ASC 815.815 “
Derivatives and Hedging
” (“ASC 815”) or economic expense hedges as follows:
Fair value hedges
Nomura designates certain derivative financial instruments as fair value hedges of interest rate risk and foreign exchange risk arising from specific financial liabilities and foreign currency denominated
non-trading
debt securities, respectively. These derivatives are effective in reducing the risk associated with the exposure being hedged and they are highly correlated with changes in the fair value of the underlying hedged items, both at inception and
F
-20
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
throughout the life of the hedging relationship. Changes in fair value of the hedging derivatives are reported together with those of the hedged financial assets and liabilities through the consolidated statements of income within
Interest expense
and
Revenue—
Revenue
—Other
, respectively.
Derivative financial instruments designated
Net investment hedges
Nomura designates certain derivatives as hedges of the net investment in foreign operations related to specific subsidiaries with
non-Japanese
Yen functional currencies. When determining the effectiveness of net investment hedges, the effective portion of the change in fair value of the hedging derivative is determined by
F-20 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
changes in spot exchange rates. Changes in fair value of the hedging derivatives attributable to changes in the difference between the forward rate and spot rate is excluded from the measurement of hedge effectiveness and are reported in the consolidated statements of income within
Revenue—Revenue
—Other
.
All other movements in fair value of highly effective net investment hedging derivatives are reported through NHI shareholders’ equity within
Accumulated other comprehensive income (loss)
.
Economic expense hedges
Nomura designates certain derivatives as economic expense hedges to manage equity price risk or foreign currency risk of certain expenses arising from forecasted transactions or firm commitments. Changes in fair value of these derivatives are reported in the same line item in the consolidated statements of income where expenses arising from the hedged transactions are reported.
Offsetting of derivatives
Derivative assets and liabilities with the same counterparty documented under a legally enforceable master netting agreement and the related cash collateral receivables and payables are presented on a net basis in the consolidated balance sheets where the specific criteria defined by ASC
210-20
and ASC 815 are met.
Settlement-to-market
derivatives
Exchange traded and centrally cleared OTC derivatives typically involve daily variation margin payments and receipts which reflect changes in the fair value of the related derivatives. Such variation margin amounts are accounted for as either a partial settlement of the derivative or as a separate cash collateral receivable or payable depending on the legal form of the arrangement with the relevant central clearing counterparty.
See Note 3 “
Derivative instrumentsDerivatives and hedging activities
” for further information.
Loans receivable—
Loans receivable are loans which management intends to hold for the foreseeable future. Loans receivable are either carried at fair value or at amortized cost. Interest earned on loans receivable is reported in the consolidated statements of income within
Revenue—Revenue
—Interest and dividends
.
Loans receivable carried at fair value
Certain loans which are risk managed on a fair value basis are carried at fair value through election of the fair value option. Nomura makes this election to mitigate volatility in the consolidated statements of income caused by the difference in measurement basis that would otherwise exist between the loans and the derivatives used to risk manage those loans. Changes in the fair value of loans receivable carried at fair value are reported in the consolidated statements of income within
Revenue—Revenue
—Net gain on trading
.
F
-21
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Loans receivable carried at amortized cost
Loans receivable which are not carried at fair value are carried at amortized cost. Amortized cost represents cost adjusted for deferred fees and direct costs, unamortized premiums or discounts on purchased loans and after deducting applicable allowances for current expected credit losses under ASC 326 which Nomura initially adopted from April 1, 2020. As of March 31, 2021, allowances for incurred credit losses reflected management’s best estimate of probable losses expected for these loans receivable.
Loan origination fees, net of direct origination costs, are amortized to
Revenue—Revenue
—Interest and dividends
as an adjustment to yield over the life of the loan. Net unamortized deferred fees and costs were immaterial as of March 31, 2020 and March 31, 2021.
Modifications of loans receivable where the borrower is in financial difficulty and Nomura has granted a financial concession are typically accounted for as troubled debt restructurings (“TDRs”). Consistent with guidance issued by U.S. banking regulators in March 2020 as a result of the
COVID-19
pandemic, certain modifications of loans receivable which met the above criteria were not accounted for TDRs nor the loan classified as impaired provided the borrower was current with payments prior to the
COVID-19
pandemic, the nature of the concession was short-term and only permitted a payment delay, waiver of fees or extension of repayment terms. Such guidance has no longer been applied by Nomura since October 1, 2020.
See Note 7 “
Financing receivables
” for further information including how allowances for current expected credit losses under ASC 326 are determined and the impact of the
COVID-19determined.
pandemic on the approach to calculation of current expected credit losses during the year ended March 31, 2021.
Other receivables—
Receivables from customers
include amounts receivable on client securities transactions, amounts receivable from customersclients for securities failed to deliver securities and receivables for commissions.commissions receivable.
Receivables from other than
F-21 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
customers
include amounts receivable from brokers and dealers for securities failed to deliver securities, margin deposits, cash collateral receivables for derivative transactions, and net receivables arising from unsettled securities transactions. The net receivable arising from unsettled securities transactions reported within
Receivables from other than customers
was ¥680,727¥0nil million and ¥0nil as of March 31, 20202021 and March 31, 2021,2022, respectively.
These amounts are carried at contractual amounts due less any applicable allowance for current expected credit losses recognized under ASC 326 which Nomura initially adopted from April 1, 2020. As of March 31, 2021, the allowance for credit losses reflected management’s best estimate of probable losses expected for these receivables.
See Note 7 “
Financing receivablesreceivables”
” for further information including how allowances for current expected credit losses under ASC 326 are determined and the impact of the COVID-19 pandemic on the approach to calculation of current expected credit losses during the year ended March 31, 2021.
determined.
Loan commitments—
Unfunded loan commitments written by Nomura are accounted for as either
off-balance
sheet instruments, or are carried at fair value on a recurring basis either as trading instruments or through election of the fair value option.
These loan commitments are generally accounted for in a manner consistent with the accounting for the loan receivable upon funding. Where the loan receivable will be classified as a trading asset or will be elected for the fair value option, the loan commitment is also generally held at fair value, with changes in fair value reported in the consolidated statements of income within
Revenue—Revenue
—Net gain on trading
. Loan commitment fees integral to the loan commitment are recognized as part of the fair value of the commitment.
F
-22
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For loan commitments where the loan will be held for the foreseeable future and will not be elected for the fair value option, Nomura recognizes allowances for current expected credit losses in accordance with ASC
326
which Nomura initially adopted from April 
1 2020.
,
2020
. As of March 
31 2021,
,
2020
, the allowance for incurred credit losses reflected management’s best estimate of probable losses expected incurred for these loan commitments.
Loan commitment fees are generally deferred and recognized over the term of the loan when funded as an adjustment to yield. If drawdown of the loan commitment is considered remote, loan commitment fees are recognized over the commitment period as service revenue.
See Note 7
“Financing receivables”
for further information including how allowances for current expected credit losses under ASC 326 are determined and the impact of the COVID-19 pandemic on the approach to calculation of current expected credit losses during the year ended March 31, 2021.determined.
Payables and deposits—
Payables to customers
include amounts payable on client securities transactions and are generally measured at contractual amounts due.
Payables to other than customers
include payables to brokers and dealers for
failed-to-receive
securities, failed to receive, cash collateral payable for derivative transactions, certain collateralized agreements and financing transactions and net payables arising from unsettled securities transactions. Amounts are measured at contractual amounts due. The net payable arising from unsettled securities transactions reported within
Payables to other than customers
was ¥0nil¥205,211 and ¥205,211¥67,258 million as of March 31, 20202021 and March 31, 2021,2022, respectively.
F-22 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deposits received at banks
represent amounts held on deposit within Nomura’s banking subsidiaries and are measured at contractual amounts due.
Office buildings, land, equipment and facilities—
Office buildings, land, equipment and facilities, owned and held for use by Nomura are stated at cost, net of accumulated depreciation and amortization, except for land, which is stated at cost. Significant renewals and additions are capitalized at cost. Maintenance, repairs and minor renewals are expensed as incurred in the consolidated statements of income.
Leases and subleases entered into by Nomura as either lessor or lessee are classified as either operating or finance leases on inception date in accordance with ASC 842
“Leases”
(“ASC842”) which Nomura adopted from April 1, 2019. On lease commencement date, Nomura as lessee recognizes
right-of-use
(“ROU”) assets and lease liabilities which are reported within
Other assets—Office buildings, land, equipment and facilities
and
Other liabilities
, respectively in the consolidated balance sheets.
Lease liabilities are initially measured at present value of the future minimum lease payments over the expected lease term. The future minimum lease payments are discounted using a relevant Nomura incremental borrowing rate as derived from information available at lease commencement date. The expected lease term is generally determined based on the contractual maturity of the lease, and adjusted for periods covered by options to extend or terminate the lease when Nomura is reasonably certain to exercise those options. ROU assets are initially measured at the amount of lease liabilities, and adjusted for any prepaid lease payments, initial direct costs incurred and any lease incentives received.
After lease commencement date, for operating leases Nomura as lessee recognizes lease expense over the lease term generally on a straight-line basis within
Occupancy and related depreciation
or
Information
F
-23
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
processing and communications
in the consolidated statements of income. While for finance leases, Nomura recognizes amortization charges of ROU assets over the lease term and interest expense on finance lease liabilities.
The following table presents a breakdown of owned and leased office buildings, land, equipment and facilities as of March 31, 2020 and 2021.
   
Millions of yen
 
   
March 31
 
   
2020
   
2021
 
Land
  ¥49,214   ¥39,233 
Office buildings
   71,468    76,725 
Equipment and facilities
   36,279    59,614 
Software
   111,031    103,385 
Construction in progress
   1,738    407 
Operating lease ROU assets
   170,782    185,085 
           
Total
  ¥440,512   ¥464,449 
           
Depreciation and amortization charges of owned assets are generally computed using the straight-line method and recognized over the estimated useful lives of each asset. The estimated useful life of an asset takes into consideration technological change, normal deterioration and actual physical usage by Nomura. Leasehold improvements are depreciated over the shorter of their useful life or the term of corresponding lease.
F-23
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The estimated useful lives for significant asset classes are as follows:
 
Office buildings
   3 to 50 years 
Equipment and facilities
   2 to 20 years 
Software
   3 to 10 years 
Depreciation and amortization charges of depreciable assets are reported within
Non-interest
expenses—Information processing and communications
in the amount of ¥45,818 million, ¥47,653 million, and ¥49,343 million, and in
Non-interest
expenses—Occupancy and related depreciation
in the amount of ¥12,106 million, ¥15,930 million, and ¥14,503 million for the years ended March 31, 2019, 2020 and 2021, respectively.
As of March 31, 2021, Nomura has classified buildings with a carrying value of ¥12,311 million as being held for sale and reported within Other assets—Office buildings, land, equipment and facilities in the consolidated balance sheet. Held-for-sale assets are carried at the lower of the carrying amount and fair value less cost to sell. During the year ended March 31, 2021, no gain or loss associated with the sale of held-for-sale assets was recognized through earnings. The sale was subsequently completed during the quarter ended June 30, 2021 and no material gain or loss was recorded.
Long-lived assets, including ROU assets and software assets but excluding goodwill and indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the estimated future undiscounted cash flows generated by the asset is less than the carrying amount of the asset, a loss is recognized to the extent that the carrying value exceeds its fair value.
See Note 8 “Leases”“
Leases
” for further information.
Investments in equity securities—
Nomura holds minority stakes in the equity securities of unaffiliated Japanese financial institutions and corporations in order to promote existing and potential business relationships. These companies often have similar investments in Nomura. Such cross-holdings are a customary business practice in Japan and provide a way for companies to manage shareholder relationships.
These investments, which Nomura refers to as being held for operating purposes, are carried at fair value and reported within
Other assets—assets
—
Investments in equity securities
in the consolidated balance sheets, with changes in fair value reported within
Revenue—Revenue
—
Gain (loss) on investments in equity securities
in the consolidated statements of income. These investments comprise listed and unlisted equity securities in the amounts of ¥74,755 million and ¥37,420 million, respectively, as of March 31, 2020 and ¥93,230 million and ¥33,419 million, respectively, as of March 31, 2021.
Other
non-trading
debt and equity securities—
Certain
non-trading
subsidiaries within Nomura hold debt securities and minority stakes in equity securities for
non-trading
purposes.
Non-trading
securities held by
non-trading
subsidiaries are carried at fair value and reported within
Other assets
assets—
—
Non-trading
debt securities
and
Other assets—assets
—
Other
in the consolidated balance sheets with changes in fair value reported within
Revenue—Revenue
—
Other
in the consolidated statements of income. Realized gains and losses on
non-trading
securities are reported within
Revenue—Revenue
—
Other
in the consolidated statements of income.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Short-term and long-term borrowings—
Short-term borrowings are defined as borrowings which are due on demand, which have a contractual maturity of one year or less at issuance date, or which have a longer contractual maturity but which contain
F
-24
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
features outside of Nomura’s control that allows the investor to demand redemption within one year from original issuance date. Short-term and long-term borrowings primarily consist of commercial paper, bank borrowings, and certain structured notes issued by Nomura and SPEs consolidated by Nomura, and financial liabilities recognized in transfers of financial assets which are accounted for as financings rather than sales under ASC 860 (“secured financing transactions”). Of these financial liabilities, certain structured notes and secured financing transactions are accounted for at fair value on a recurring basis through election of the fair value option. Other short and long-term borrowings are carried at amortized cost.
Structured notes are debt securities which contain embedded features (often meeting the accounting definition of a derivative) that alter the return to the investor from simply receiving a fixed or floating rate of interest to a return that depends upon some other variable(s) such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third party or more complex interest rate calculation. Structured borrowings are borrowings that have similar characteristics as structured notes.
All structured notes and certain structured borrowings issued by Nomura are carried at fair value on a recurring basis through election of the fair value option. This blanket election for structured notes and certain structured borrowings are made primarily to mitigate the volatility in the consolidated statements of income caused by differences in the measurement basis for structured notes and the derivatives used to risk manage those positions and to generally simplify the accounting Nomura applies to these financial instruments.
Changes in the fair value of structured notes elected for the fair value option are reported within
Revenue—Revenue
—
Net gain on trading
in the consolidated statements of income, except for those attributable to Nomura’s own creditworthiness which are reported within
Other comprehensive income
in the consolidated balance sheets.
See Note 11 “
Borrowings
” for further information.
Income taxes—
Deferred tax assets and liabilities are recognized to reflect the expected future tax consequences of operating loss carryforwards, tax credit carryforwards and temporary differences between the carrying amounts for financial reporting purposes and the tax bases of assets and liabilities based upon enacted tax laws and tax rates. Nomura recognizes deferred tax assets to the extent it believes that it is more likely than not that a benefit will be realized. A valuation allowance is established against deferred tax assets for tax benefits available to Nomura that are not deemed more likely than not to be realized.
Deferred tax assets and deferred tax liabilities that relate to the same
tax-paying
component within a particular tax jurisdiction are offset in the consolidated balance sheets. Net deferred tax assets and net deferred tax liabilities are reported within
Other assets—assets
—
Other
and
Other liabilities
in the consolidated balance sheets.
Nomura recognizes and measures unrecognized tax benefits based on Nomura’s estimate of the likelihood, based on technical merits, that tax positions will be sustained upon examination based on the facts and circumstances and information available at the end of each period. Nomura adjusts the level of unrecognized tax benefits when there is more information available, or when an event occurs requiring a change. The reassessment of unrecognized tax benefits could have a material impact on Nomura’s effective tax rate in the period in which it occurs.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura reports income
tax-related
interest and penalties within
Income tax expense
in the consolidated statements of income.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
See Note 1615 “
Income taxes
” for further information.
Stock-based and other compensation awards—
Stock-based awards issued by Nomura to senior management and other employees are classified as either equity or liability awards depending on the terms of the award.
Stock-based awards such as Stock Acquisition Rights (“SARs”) and Restricted Stock Units (“RSUs”) which are expected to be settled by the delivery of the Company’s common stock are classified as equity awards. For these awards, total compensation cost is generally fixed at the grant date and measured using the grant-date fair value of the award, net of any amount the employee is obligated to pay and estimated forfeitures.
Stock-based awards such as Notional Stock Units (“NSUs”) and Collared Notional Stock Units (“CSUs”) which are expected to be settled in cash are classified as liability awards. Other awards such as Notional Index Units (“NIUs”) which are linked to a world stock index quoted by Morgan Stanley Capital International and which are expected to be cash settled are also effectively classified as liability awards. Liability awards are remeasured to fair value at each balance sheet date, net of estimated forfeitures with the final measurement of cumulative compensation cost equal to the settlement amount.
For both equity and liability awards, fair value is determined either by using option pricing models, the market price of the Company’s common stock or the price of the third party index, as appropriate. Compensation cost is recognized in the consolidated statements of income over the requisite service period, which generally is equal to the contractual vesting period. Where an award has graded vesting, compensation expense is recognized using the accelerated recognition method.
Certain deferred compensation awards granted since May 2013 include “Full Career Retirement” (“FCR”) provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination or by claiming FCR during a
pre-defined
election window if certain criteria based on corporate title and length of service within Nomura are met. The requisite service period for these awards ends on the earlier of the contractual vesting date and the date that the recipients become eligible for or claim FCR.
See Note 14 “
Deferred compensation awards
” for further information.
Earnings per share—
The computation of basic earnings per share is based on the weighted average number of shares outstanding during the year. Diluted earnings per share reflects the assumed conversion of all dilutive securities based on the most advantageous conversion rate or exercise price available to the investors, and assuming conversion of convertible debt under the
if-converted
method.
See Note 12 “
Earnings per share
” for further information.
Cash and cash equivalents—
Nomura defines cash and cash equivalents as cash on hand and demand deposits with banks.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Goodwill and intangible assets—
Goodwill is recognized upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
is tested for impairment at a reporting unit level during the fourth quarter of each fiscal year, or more frequently during earlier interim periods if events or circumstances indicate there may be impairment. Nomura’s reporting units are at the same level as or one level below its business segments.
Nomura tests goodwill of each separate reporting unit by initially qualitatively assessing whether events and circumstances indicate that it is more likely than not (i.e., greater than 50%) likelihood) that a reporting unit’s fair value is less than its carrying amount. If such assessment indicates fair value is not less than the carrying value, the reporting unit is deemed not to be impaired and no further analysis is required. If it is more likely than not that fair value of the reporting unit is below its carrying value, a quantitative test is then performed. Following the adoption of ASU 350
2017-04
“Simplifying the Test for Goodwill Impairment”
(“ASU 350) effective from April 1, 2020, a goodwill impairment loss is now recognized through earnings as the excess of the carrying amount of a reporting unit, including goodwill, over its fair value but limited to the total amount of goodwill allocated to the reporting unit. Prior to such date, an impairment loss was only recognized if the estimated implied fair value of the goodwill is below its carrying value.
Intangible assets not subject to amortization (“indefinite-lived intangible assets”) are tested for impairment on an individual asset basis during the fourth quarter of each fiscal year, or more frequently during earlier interim periods if events or circumstances indicate there may be impairment. Similar to goodwill, Nomura tests an indefinite-lived intangible asset by initially qualitatively assessing whether events or circumstances indicate that it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If such assessment indicates fair value is not less than the carrying value, the intangible asset is deemed not to be impaired and no further analysis is required. If it is more likely than not that the fair value of the intangible asset is below its carrying value, the current estimated fair value of the intangible asset is compared with its carrying value. An impairment loss is recognized if the carrying value of the intangible asset exceeds its estimated fair value.
Intangible assets with finite lives (“finite-lived intangible assets”) are amortized over their estimated useful lives and tested for impairment either individually or with other assets (“asset group”) when events and circumstances indicate that the carrying value of the intangible asset (or asset group) may not be recoverable.
A finite-lived intangible asset is impaired when its carrying amount or the carrying amount of the asset group exceeds its fair value. An impairment loss is recognized only if the carrying amount of the intangible asset (or asset group) is not recoverable and exceeds its fair value.
For both goodwill and intangible assets, to the extent an impairment loss is recognized, the loss establishes a new cost basis for the asset which cannot be subsequently reversed.
See Note 10 “
Other assets
—
Office buildings, land, equipment and facilities and Other / Other liabilities
” for further information.
Nomura’s equity method investments are tested in their entirety for other-than-temporary impairment when there is an indication of impairment. The underlying assets associated with the equity method investments, including goodwill, are not tested separately for impairment.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Restructuring costs—
Costs associated with an exit activity are recognized at fair value in the period in which the liability is incurred. Such costs include
one-time
termination benefits provided to employees, costs to terminate certain contracts and costs to relocate employees. Termination benefits provided to employees as part of ongoing benefit arrangements are recognized as liabilities at the earlier of the date an appropriately detailed restructuring plan is approved by regional executive management or the terms of the involuntary terminations are communicated to employees potentially affected. Contractual termination benefits included in an employee’s contract of employment that is triggered by the occurrence of a specific event are recognized during the period in which it is probable that Nomura has incurred a liability and the amount of the liability can be reasonably estimated. A
one-time
termination benefit is established by a plan of termination that applies to a specified termination event and is recognized when an appropriately detailed restructuring plan is approved by regional executive management and the terms of the involuntary terminations are communicated to those employees potentially affected by the restructuring.
See Note 15
“Restructuring initiatives
” for further information.
Employee benefit plans—
Nomura provides certain eligible employees with various benefit plans, including pensions and other post-retirement benefits. These benefit plans are classified as either defined benefit plans or defined contribution plans.
Plan assets and benefit obligations, as well as the net periodic benefit cost of a defined benefit pension or post-retirement benefit plan, are recognized based on various actuarial assumptions such as discount rates,
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
expected return on plan assets and future compensation levels at the balance sheet date. Actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets and unrecognized prior service costs or credits are amortized to net periodic benefit cost on a straight-line basis over the average remaining service life of active employees expected to receive benefits. The overfunded or underfunded status of a plan is reported within
Other assets—assets
—
Other
or
Other liabilities
in the consolidated balance sheets, and changes in funded status are reflected in net periodic benefit cost and
Other comprehensive income (loss)
on a
net-of-tax
basis in the consolidated statements of comprehensive income.
The net periodic pension and other benefit cost of defined contribution plans is recognized within
Compensation and benefits
in the consolidated statements of income when the employee renders service to Nomura, which generally coincides with when contributions to the plan are made.
See Note 13 “
Employee benefit plans
” for further information.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
New accounting pronouncements adopted during the current year—
The following table presents a summary ofNo new accounting pronouncements relevant to Nomura which have beenwere adopted during the year ended March 31, 2021:
2022.
Pronouncement
Summary of new guidance
Adoption
date and method of
adoption
Effect on these
consolidated
statements
ASU 2016-13, “
Measurement of Credit Losses on Financial Instruments
”
(1)
•  Introduces a new model for recognition and measurement of credit losses against certain financial instruments such as loans, debt securities and receivables which are not carried at fair value with changes in fair value recognized through earnings. The model also applies to off balance sheet credit exposures such as written loan commitments, standby letters of credit and issued financial guarantees not accounted for as insurance, which are not carried at fair value through earnings.
•  The new model based on lifetime current expected credit losses (CECL) measurement, to be recognized at the time an in-scope instrument is originated, acquired or issued.
•  Replaces existing incurred credit losses model under current GAAP.
•  Permits electing the fair value option for certain financial instruments on adoption date.
•  Requires enhanced qualitative and quantitative disclosures around credit risk, the methodology used to estimate and monitor expected credit losses and changes in estimates of expected credit losses.
Modified retrospective adoption from April 1, 2020.
For financial instruments subject to CECL, ¥1,972 million increase in
Allowance for doubtful accounts
, ¥638 million increase in
Other liabilities
, ¥72 million increase of
Deferred tax assets
and cumulative effect adjustment to decrease
Retained earnings
, net of tax, of ¥2,538 million as of April 1, 2020.
For financial instruments elected for the FVO, ¥9,774 million decrease in
Loans receivable
, ¥5,888 million increase in
Other liabilities
and cumulative effect adjustment to decrease
Retained earnings
, net of tax, of ¥15,662 million as of April 1, 2020.
(2)
Allowances for credit losses as determined on adoption date under the new model increased as a result of the COVID-19 pandemic because of the increased credit risk caused by the impact of the pandemic on borrowers.
See Note 7 “
Financing receivables
” for new disclosures related to this matter
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pronouncement
Summary of new guidance
Adoption date and
method of adoption
Effect on these
consolidated
statements
ASU
2019-12,
“
Simplifying the Accounting for Income Taxes
”
•  Simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740
“Income Taxes”
, such as the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment and the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary.
•  Requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a
non-income—based
tax.
•  Makes other minor amendments for simplification and clarification of income taxes accounting.
Modified retrospective adoption from April 1, 2020.No material impact on adoption and no material impact expected in future reporting periods.
ASU 2017- 04
“
Goodwill
”
•  Simplifies the test for goodwill impairment by eliminating the existing requirement to measure an impairment loss by comparing the implied fair value of goodwill in a reporting unit to the actual carrying value of goodwill.
•  An impairment loss will be recognized if the carrying value of the reporting unit exceeds the estimated fair value of the reporting unit.
Prospective adoption to goodwill tests performed from April 1, 2020.No material impact expected on future goodwill impairment tests.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
However, Nomura has elected to apply certain practical reliefs provided by the following new accounting pronouncements during the year ended March 31, 2022:
 
Pronouncement
 
Summary of new guidance
  
Adoption
date and
method of
adoption
  
Effect on these
consolidated
statements
•  Requires to consider income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when measuring an impairment loss.
•  Does not impact when goodwill is tested for impairment or level at which goodwill is tested.
ASU
2020-04
“
Reference rate reformreform”
”
 
•  Provides temporary optional expedients and exceptions to the application of generally accepted accounting principles to certain contract and hedge relationships affected by reference rate reform.
•  Contract modifications solely related to the replacement of reference rate are eligible for relief from modification accounting requirements and accounted for as a continuation of the existing contract.
•  Allows various optional expedients and elections to allow hedging relationships affected by reference rate reform would continue uninterrupted during the reference rate transition if certain criteria are met.
  The expedients and exceptions provided by the ASU are permitted to be adopted any time until December 31, 2022.  
No material expedients have been applied forNomura has elected to apply the relief to certain contract modifications beginning from the year ended March 31, 2021.2022.
Nomura may apply certain of the optional expedients to relevant contract modification and hedge accounting relationship during the reference rate transition period and does
These modifications have not expecthad a material impact in future reporting periods.on these consolidated financial statements
.

 
(1)
As subsequently amended by ASU
2018-19
“
Codification Improvements to Topic 326, Financial Instruments—Credit Losses
”, ASU
2019-04
“
Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
”, ASU
2019-05
“
Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief
”,
ASU 2019-09
“
Codification Improvements to Topic 326, Financial Instruments—Credit Losses
” and
ASU 2019-10
“
Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.
”
(2)
Nomura elected the FVO for certain loans and loan commitments originated and acquired by the Wholesale division on April 1, 2020 as part of adoption of ASC 326 and as permitted by ASC 326. These loans and loan commitments were primarily elected for the FVO in order to actively risk manage them on a prospective basis through the
COVID-19
global pandemic. Active risk management for this purpose has consisted of hedging these financial instruments and also potentially selling certain positions within the
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
portfolio if and when active markets and buyers return. The financial instruments elected for the FVO were selected primarily based on the activity of the borrower, internal credit rating and from a credit and market risk perspective. The cumulative effect adjustment to decrease
retained earnings
, net of tax, of ¥15,662 million reflected that the estimated fair value of the financial instruments was lower than their carrying value caused by the volatile credit markets and impact on credit spreads at such date as a result of the
COVID-19
global pandemic. See Note 2,
“Fair Value of Financial Instruments”
for further information around the nature of this election and the subsequent performance of these financial instruments since the election.
Future accounting developments—
There are no
The following table presents a summary of new authoritative accounting pronouncements relevant to Nomura which will be adopted on or after April 1, 20212022 and which may have a material impact on these consolidated financial statements.statements:

Pronouncement
Summary of new guidance
Expected adoption
date and method of
adoption
Effect on these
consolidated
statements
ASU
2022-02
“Financial instruments—Credit losses (Topic 326): Troubled debt restructurings and vintage disclosures”
•  Eliminates specific recognition and measurement guidance for troubled debt restructurings (“TDRs”). Single guidance to be applied to all modifications when determining whether a modification results in a new receivable or a continuation of an existing receivable;
•  Requires to use a discounted cash flow (“DCF”) or reconcilable method for measurement of current expected credit losses for modified receivables is removed; where a DCF method is used for the measurement, an effective interest rate (EIR) derived from the modified contractual terms should be applied;
•  Enhances disclosures by creditors for modifications of receivables from debtors experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, other-than-insignificant payment delay or term extension;
•  Augments the current requirements for public business entity creditors to disclose current-period gross write-offs
Nomura tentatively plans to adopt the amendments from April 1, 2023
No material financial impact expected unless a significant number of TDRs occur in the future.
Certain disclosures about modification of receivables and write-offs will be updated or removed.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Pronouncement
Summary of new guidance
Expected adoption
date and method of
adoption
Effect on these
consolidated
statements
by year of origination (i.e., the vintage year) for financing receivables and net investments in leases.
2. Fair value measurements:
The fair value of financial instruments
A significant amount of Nomura’s financial instruments are
is
measured at fair value. Financial assets measured at fair value on a recurring basis are reported in the consolidated balance sheets within
Trading assets and private equity and debt investments, Loans and receivables, Collateralized agreements
and
Other assets
. Financial liabilities measured at fair value on a recurring basis are reported within
Trading liabilities, Short-term borrowings, Payables and deposits, Collateralized financing, Long-term borrowings
and
Other liabilities.
Other financial assets and financial liabilities are measured at fair value on a nonrecurring basis, where the primary measurement basis is not fair value but where fair value is used in specific circumstances after initial recognition, such as to measure impairment.
In all cases, fair value is determined in accordance with ASC 820 “
Fair Value Measurements and Disclosures
” (“ASC 820”) which defines fair value as the amount that would be exchanged to sell a financial asset or transfer a financial liability in an orderly transaction between market participants at the measurement date. It assumes that the transaction occurs in the principal market for the relevant financial assets or financial liabilities, or in the absence of a principal market, the most advantageous market.
Fair value is usually determined on an individual financial instrument basis consistent with the unit of account of the financial instrument. However, certain financial instruments managed on a portfolio basis are valued as a portfolio, namely based on the price that would be received to sell a net long position (i.e., a net financial asset) or transfer a net short position (i.e., a net financial liability) consistent with how market participants would price the net risk exposure at the measurement date.
Financial assets measured at fair value also include investments in certain funds where, as a practical expedient, fair value is determined on the basis of net asset value per share (“NAV per share”) if the NAV per share is calculated in accordance with certain industry standard principles.
Increases and decreases in the fair value of assets and liabilities will significantly impact Nomura’s position, performance, liquidity and capital resources. As explained below, valuation techniques applied contain inherent uncertainties and Nomura is unable to predict the accurate impact of future developments in the market. The valuation of financial instruments is more difficult during periods of market stress as a result of greater volatility and reduced price transparency, which has been the casesuch as during the
COVID-19
pandemic in 2020 and 2021 and during the invasion of Ukraine by the Russian Federation in 2022, and may therefore require the greater use of judgement in the determination of fair value. Where appropriate, Nomura uses economic hedging strategies to mitigate its risk, although these hedges are also subject to unpredictable movements in the market.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Valuation methodology for financial instruments carried at fair value on a recurring basis
The fair value of financial instruments is based on quoted market prices including market indices, broker or dealer quotations or an estimation by management of the expected exit price under current market conditions.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Various financial instruments, including cash instruments and
over-the-counter
(“OTC”) contracts, have bid and offer prices that are observable in the market. These are measured at the point within the
bid-offer
range which best represents Nomura’s estimate of fair value. Where quoted market prices or broker or dealer quotations are not available, prices for similar instruments or valuation pricing models are considered in the determination of fair value.
Where quoted prices are available in active markets, no valuation adjustments are taken to modify the fair value of assets or liabilities marked using such prices. Other instruments may be measured using valuation techniques, such as valuation pricing models incorporating observable valuation inputs, unobservable parameters or a combination of both. Valuation pricing models use valuation inputs which would be considered by market participants in valuing similar financial instruments.
Valuation pricing models and their underlying assumptions impact the amount and timing of unrealized and realized gains and losses recognized, and the use of different valuation pricing models or underlying assumptions could produce different financial results. Valuation uncertainty results from a variety of factors, including the valuation technique or model selected, the quantitative assumptions used within the valuation model, the inputs into the model, as well as other factors. Valuation adjustments are used to reflect the assessment of this uncertainty. Common valuation adjustments include model reserves, credit adjustments,
close-out
adjustments, and other appropriate instrument-specific adjustments, such as those to reflect transfer or sale restrictions.
The level of adjustments is largely judgmental and is based on an assessment of the factors that management believe other market participants would use in determining the fair value of similar financial instruments. The type of adjustments taken, the methodology for the calculation of these adjustments, and the valuation inputs for these calculations are reassessed periodically to reflect current market practice and the availability of new information.
For example, the fair value of certain financial instruments includes adjustments for credit risk; both with regards to counterparty credit risk on positions held and Nomura’s own creditworthiness on positions issued. Credit risk on financial assets is significantly mitigated by credit enhancements such as collateral and netting arrangements. Any net credit exposure is measured using available and applicable valuation inputs for the relevant counterparty. The same approach is used to measure the credit exposure on Nomura’s financial liabilities as is used to measure counterparty credit risk on Nomura’s financial assets.
Such valuation pricing models are calibrated to the market on a regular basis and inputs used are adjusted for current market conditions and risks. The Valuation Model Validation Group (“VMVG”) within Nomura’s Risk Management Department reviews pricing models and assesses model appropriateness and consistency independently of the front office. The model reviews consider a number of factors about a model’s suitability for valuation and sensitivity of a particular product. Valuation models are calibrated to the market on a periodic basis by comparison to observable market pricing, comparison with alternative models and analysis of risk profiles.
As explained above, any changes in fixed income, equity, foreign exchange and commodity markets can impact Nomura’s estimates of fair value in the future, potentially affecting trading gains and losses. Where financial contracts have longer maturity dates, Nomura’s estimates of fair value may involve greater subjectivity due to the lack of transparent market data.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair value hierarchy
All financial instruments measured at fair value, including those measured at fair value using the fair value option, have been categorized into a three-level hierarchy (“fair value hierarchy”) based on the transparency of
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
valuation inputs used by Nomura to estimate fair value. A financial instrument is classified in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement of the financial instrument. The three levels of the fair value hierarchy are defined as follows, with Level 1 representing the most transparent inputs and Level 3 representing the least transparent inputs:
Level 1:
Observable valuation inputs that reflect quoted prices (unadjusted) for identical financial instruments traded in active markets at the measurement date.
Level 2:
Valuation inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the financial instrument.
Level 3:
Unobservable valuation inputs which reflect Nomura assumptions and specific data.
The availability of valuation inputs observable in the market varies by product and can be affected by a variety of factors. Significant factors include, but are not restricted to the prevalence of similar products in the market, especially for customized products, how established the product is in the market, for example, whether it is a new product or is relatively mature, and the reliability of information provided in the market which would depend, for example, on the frequency and volume of current data. A period of significant change in the market may reduce the availability of observable data. Under such circumstances, financial instruments may be reclassified into a lower level in the fair value hierarchy.
Significant judgments used in determining the classification of financial instruments include the nature of the market in which the product would be traded, the underlying risks, the type and liquidity of market data inputs and the nature of observed transactions for similar instruments.
Where valuation models include the use of valuation inputs which are less observable or unobservable in the market, significant management judgment is used in establishing fair value. The valuations for Level 3 financial instruments, therefore, involve a greater degree of judgment than those valuations for Level 1 or Level 2 financial instruments and has become more prevalent during the
COVID-19
pandemic.
Certain criteria management use
d
to determine whether a market is active or inactive include the number of transactions, the frequency that pricing is updated by other market participants, the variability of price quotes among market participants, and the amount of publicly available information.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following tables present the amounts of Nomura’s financial instruments measured at fair value on a recurring basis as of March 31, 20202021 and 20212022 within the fair value hierarchy.
 
 
Billions of yen
  
Billions of yen
 
March 31, 2020
 
March 31, 2021
 
Level 1
 
Level 2
 
Level 3
 
Counterparty

and

Cash Collateral

Netting
(1)
 
Balance as of

March 31, 2020
 
Level 1
 
Level 2
 
Level 3
 
Counterparty

and

Cash Collateral

Netting
(1)
 
Balance as of

March 31, 2021
 
Assets:
                    
Trading assets and private equity and debt investments
(2)
                    
Equities
(3)
 ¥1,193  ¥908  ¥14  ¥0—    ¥2,115  ¥2,338  ¥968  ¥16  ¥0—    ¥3,322 
Private equity and debt investments
(4)(5)
  0—     7   31   0—     38   0—     0—     58   0—     58 
Japanese government securities
  1,826   0—     0—     0—     1,826   1,637   0—     0—     0—     1,637 
Japanese agency and municipal securities
  0—     106   2   0—     108   0—     76   2   0—     78 
Foreign government, agency and municipal securities
  3,257   2,000   8   0—     5,265   2,838   1,987   12   0—     4,837 
Bank and corporate debt securities and loans for trading purposes
  0—     1,266   228   0—     1,494   0—     1,259   135   0—     1,394 
Commercial mortgage-backed securities (“CMBS”)
  0—     0   1   0—     1   0—     0   8   0—     8 
Residential mortgage-backed securities (“RMBS”)
  0—     3,626   62   0—     3,688   0—     2,387   6   0—     2,393 
Issued/Guaranteed by government sponsored entity
  0—     3,602   14   0—     3,616   0—     2,325   0—     0—     2,325 
Other
  0—     24   48   0—     72   0—     62   6   0—     68 
Real estate-backed securities
  0—     0—     94   0—     94   0—     0   106   0—     106 
Collateralized debt obligations (“CDOs”) and other
(5)
  0—     21   32   0—     53 
Collateralized debt obligations (“CDOs”) and other
(6)
  0—     36   23   0—     59 
Investment trust funds and other
  204   44   0   0—     248   573   29   0   0—     602 
                
 
  
 
  
 
  
 
  
 
 
Total trading assets and private equity and debt investments
  6,480   7,978   472   0—     14,930   7,386   6,742   366   0—     14,494 
                
 
  
 
  
 
  
 
  
 
 
Derivative assets
(6)(7)
                    
Equity contracts
  4   1,869   48   0—     1,921   9   1,318   75   0—     1,402 
Interest rate contracts
  55   13,551   23   0—     13,629   29   9,577   26   0—     9,632 
Credit contracts
  3   318   86   0—     407   4   427   24   0—     455 
Foreign exchange contracts
  0   5,183   41   0—     5,224   0   4,479   37   0—     4,516 
Commodity contracts
  9   0   0—     0—     9   1   0   0—     0—     1 
Netting
  0—     0—     0—     (19,248)   (19,248)   0—     0—     0—     (14,786)   (14,786) 
                
 
  
 
  
 
  
 
  
 
 
Total derivative assets
  71   20,921   198   (19,248)   1,942   43   15,801   162   (14,786)   1,220 
                
 
  
 
  
 
  
 
  
 
 
Subtotal
 ¥6,551  ¥28,899  ¥670  ¥(19,248)  ¥16,872  ¥7,429  ¥22,543  ¥528  ¥(14,786)  ¥15,714 
                
 
  
 
  
 
  
 
  
 
 
Loans and receivables
(7)(8)
  0—     709   96   0—     805   0—     878   104   0—     982 
Collateralized agreements
(8)(9)
  0—     534   15   0—     549   0—     349   18   0—     367 
Other assets
                    
Non-trading
debt securities
  123   332   0—     0—     455   123   304   0—     0—     427 
Other
(3)(4)
  252   146   168   0—     566   353   173   185   0—     711 
                
 
  
 
  
 
  
 
  
 
 
Total
 ¥6,926  ¥30,620  ¥949  ¥(19,248)  ¥19,247  ¥7,905  ¥24,247  ¥835  ¥(14,786)  ¥18,201 
                
 
  
 
  
 
  
 
  
 
 
Liabilities:
                    
Trading liabilities
                    
Equities
 ¥1,412  ¥152  ¥0  ¥0—    ¥1,564  ¥2,341  ¥20  ¥0  ¥0—    ¥2,361 
Japanese government securities
  1,108   0—     0—     0—     1,108   1,039   0—     0—     0—     1,039 
Japanese agency and municipal securities
  0—     0   0—     0—     0   0—     1   0—     0—     1 
Foreign government, agency and municipal securities
  2,116   1,114   0   0—     3,230   2,912   1,172   1   0—     4,085 
Bank and corporate debt securities
  0—     272   1   0—     273   0—     230   5   0—     235 
Residential mortgage-backed securities (“RMBS”)
  0—     3   0—     0—     3   0—     0   0—     0—     0 
Collateralized debt obligations (“CDOs”) and other
(5)
  0—     1   1   0—     2 
Collateralized debt obligations (“CDOs”) and other
(6)
  0—     0   1   0—     1 
Investment trust funds and other
  409   148   0   0—     557   243   13   0   0—     256 
                
 
  
 
  
 
  
 
  
 
 
Total trading liabilities
  5,045   1,690   2   0—     6,737   6,535   1,436   7   0—     7,978 
                
 
  
 
  
 
  
 
  
 
 
Derivative liabilities
(6)(7)
                    
Equity contracts
  7   1,972   29   0—     2,008   1   2,112   116   0—     2,229 
Interest rate contracts
  18   13,125   77   0—     13,220   21   8,948   69   0—     9,038 
Credit contracts
  14   356   87   0—     457   3   458   62   0—     523 
Foreign exchange contracts
  0   5,071   34   0—     5,105   0—     4,380   22   0—     4,402 
Commodity contracts
  5   1   0—     0—     6   0   0   0—     0—     0 
Netting
  0—     0—     0—     (18,987)   (18,987)   0—     0—     0—     (14,697)   (14,697) 
                
 
  
 
  
 
  
 
  
 
 
Total derivative liabilities
  44   20,525   227   (18,987)   1,809   25   15,898   269   (14,697)   1,495 
                
 
  
 
  
 
  
 
  
 
 
Subtotal
 ¥5,089  ¥22,215  ¥229  ¥(18,987)  ¥8,546  ¥6,560  ¥17,334  ¥276  ¥(14,697)  ¥9,473 
                
 
  
 
  
 
  
 
  
 
 
Short-term borrowings
(9)
 ¥0—    ¥348  ¥29  ¥0—    ¥377 
Payables and deposits
(10)
  0—     14   1   0—     15 
Short-term borrowings
(10)
 ¥0—    ¥532  ¥103  ¥0—    ¥635 
Payables and deposits
(10)(11)

  0—     49   1   0—     50 
Collateralized financing
(8)(9)
  0—     247   0—     0—     247   0—     352   1   0—     353 
Long-term borrowings
(9)(11)(12)
  2   3,291   409   0—     3,702 
Other liabilities
(13)
  170   129   0   0—     299 
Long-term borrowings
(10)(12)(13)
  5   3,546   547   0—     4,098 
Other liabilities
(14)
  231   179   35   0—     445 
                
 
  
 
  
 
  
 
  
 
 
Total
 ¥5,261  ¥26,244  ¥668  ¥(18,987)  ¥13,186  ¥6,796  ¥21,992  ¥963  ¥(14,697)  ¥15,054 
                
 
  
 
  
 
  
 
  
 
 
 
F-3
F-36 3
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
 
Billions of yen
  
Billions of yen
 
March 31, 2021
 
March 31, 2022
 
Level 1
 
Level 2
 
Level 3
 
Counterparty

and

Cash Collateral

Netting
(1)
 
Balance as of

March 31, 2021
 
Level 1
 
Level 2
 
Level 3
 
Counterparty

and

Cash Collateral

Netting
(1)
 
Balance as of

March 31, 2022
 
Assets:
                    
Trading assets and private equity and debt investments
(2)
                    
Equities
(3)
 ¥2,338  ¥968  ¥16  ¥0—    ¥3,322  ¥2,100  ¥1,041  ¥14  ¥0—    ¥3,155 
Private equity and debt investments
(4)(5)
  0—     0—     58   0—     58   22   
0—  
   32   
0—  
   54 
Japanese government securities
  1,637   0—     0—     0—     1,637   1,730   
0—  
   
0—  
   
0—  
   1,730 
Japanese agency and municipal securities
  0—     76   2   0—     78   
0—  
   184   2   
0—  
   186 
Foreign government, agency and municipal securities
  2,838   1,987   12   0—     4,837   3,220   2,010   10   
0—  
   5,240 
Bank and corporate debt securities and loans for trading purposes
  0—     1,259   135   0—     1,394   
0—  
   1,134   220   
0—  
   1,354 
Commercial mortgage-backed securities (“CMBS”)
  0—     0   8   0—     8   
0—  
   0   7   
0—  
   7 
Residential mortgage-backed securities (“RMBS”)
  0—     2,387   6   0—     2,393   
0—  
   1,450   8   
0—  
   1,458 
Issued/Guaranteed by government sponsored entity
  0—     2,325   0—     0—     2,325   
0—  
   1,376   
0—  
   
0—  
   1,376 
Other
  0—     62   6   0—     68   
0—  
   74   8   
0—  
   82 
Real estate-backed securities
  0—     0   106   0—     106   
0—  
   58   79   
0—  
   137 
Collateralized debt obligations (“CDOs”) and other
(5)
  0—     36   23   0—     59 
Collateralized debt obligations (“CDOs”) and other
(6)
  
0—  
   34   26   
0—  
   60 
Investment trust funds and other
  573   29   0   0—     602   293   23   0   
0—  
   316 
                
 
  
 
  
 
  
 
  
 
 
Total trading assets and private equity and debt investments
  7,386   6,742   366   0—     14,494   7,365   5,934   398   
0—  
   13,697 
                
 
  
 
  
 
  
 
  
 
 
Derivative assets
(6)(7)
                    
Equity contracts
  9   1,318   75   0—     1,402   3   874   97   
0—  
   974 
Interest rate contracts
  29   9,577   26   0—     9,632   120   11,755   63   
0—  
   11,938 
Credit contracts
  4   427   24   0—     455   12   398   33   
0—  
   443 
Foreign exchange contracts
  0   4,479   37   0—     4,516   
0—  
   4,777   29   
0—  
   4,806 
Commodity contracts
  1   0   0—     0—     1   1   0   
0—  
   
0—  
   1 
Netting
  0—     0—     0—     (14,786)   (14,786)   
0—  
   
0—  
   
0—  
   (16,608)   (16,608) 
                
 
  
 
  
 
  
 
  
 
 
Total derivative assets
  43   15,801   162   (14,786)   1,220   136   17,804   222   (16,608)   1,554 
                
 
  
 
  
 
  
 
  
 
 
Subtotal
 ¥7,429  ¥22,543  ¥528  ¥(14,786)  ¥15,714  ¥7,501  ¥23,738  ¥620  ¥(16,608)  ¥15,251 
                
 
  
 
  
 
  
 
  
 
 
Loans and receivables
(7)(8)
  0—     878   104   0—     982   
0—  
   1,103   205   
0—  
   1,308 
Collateralized agreements
(8)(9)
  0—     349   18   0—     367   
0—  
   282   16   
0—  
   298 
Other assets
                    
Non-trading
debt securities
  123   304   0—     0—     427   117   367   
0—  
   
0—  
   484 
Other
(3)(4)
  353   173   185   0—     711   146   136   197   
0—  
   479 
                
 
  
 
  
 
  
 
  
 
 
Total
 ¥7,905  ¥24,247  ¥835  ¥(14,786)  ¥18,201  ¥7,764  ¥25,626  ¥1,038  ¥(16,608)  ¥17,820 
                
 
  
 
  
 
  
 
  
 
 
Liabilities:
                    
Trading liabilities
                    
Equities
 ¥2,341  ¥20  ¥0  ¥0—    ¥2,361  ¥1,796  ¥8  ¥0  ¥
0—  
  ¥1,804 
Japanese government securities
  1,039   0—     0—     0—     1,039   1,098   
0—  
   
0—  
   
0—  
   1,098 
Japanese agency and municipal securities
  
0—  
   1   0—     0—     1   
0—  
   0   
0—  
   
0—  
   0 
Foreign government, agency and municipal securities
  2,912   1,172   1   0—     4,085   3,451   1,328   0   
0—  
   4,779 
Bank and corporate debt securities
  0—     230   5   0—     235   
0—  
   222   3   
0—  
   225 
Residential mortgage-backed securities (“RMBS”)
  0—     0   0—     0—     0   
0—  
   0   
0—  
   
0—  
   0 
Collateralized debt obligations (“CDOs”) and other
(5)
  0—     0   1   0—     1 
Collateralized debt obligations (“CDOs”) and other
(6)
  
0—  
   3   0   
0—  
   3 
Investment trust funds and other
  243   13   0   0—     256   76   0   0   
0—  
   76 
                
 
  
 
  
 
  
 
  
 
 
Total trading liabilities
  6,535   1,436   7   0—     7,978   6,421   1,561   3   
0—  
   7,985 
                
 
  
 
  
 
  
 
  
 
 
Derivative liabilities
(6)(7)
                    
Equity contracts
  1   2,112   116   0—     2,229   2   1,368   87   
0—  
   1,457 
Interest rate contracts
  21   8,948   69   0—     9,038   60   10,826   74   
0—  
   10,960 
Credit contracts
  3   458   62   0—     523   14   434   66   
0—  
   514 
Foreign exchange contracts
  0—     4,380   22   0—     4,402   0   4,795   19   
0—  
   4,814 
Commodity contracts
  0   0   0—     0—     0   0   1   
0—  
   
0—  
   1 
Netting
  0—     0—     0—     (14,697)   (14,697)   
0—  
   
0—  
   
0—  
   (16,079)   (16,079) 
                
 
  
 
  
 
  
 
  
 
 
Total derivative liabilities
  25   15,898   269   (14,697)   1,495   76   17,424   246   (16,079)   1,667 
                
 
  
 
  
 
  
 
  
 
 
Subtotal
 ¥6,560  ¥17,334  ¥276  ¥(14,697)  ¥9,473  ¥6,497  ¥18,985  ¥249  ¥(16,079)  ¥9,652 
                
 
  
 
  
 
  
 
  
 
 
Short-term borrowings
(9)
 ¥0—    ¥532  ¥103  ¥0—    ¥635 
Payables and deposits
(10)
  0—     49   1   0—     50 
Short-term borrowings
(10)
 ¥
0��  
  ¥653  ¥58  ¥
0—  
  ¥711 
Payables and deposits
(10)(11)

  
0—  
   63   8   
0—  
   71 
Collateralized financing
(8)(9)
  0—     352   1   0—     353   
0—  
   516   
0—  
   
0—  
   516 
Long-term borrowings
(9)(11)(12)
  5   3,546   547   0—     4,098 
Other liabilities
(13)
  231   179   35   0—     445 
Long-term borrowings
(10)(12)(13)
  23   4,055   479   
0—  
   4,557 
Other liabilities
(14)
  32   155   32   
0—  
   219 
                
 
  
 
  
 
  
 
  
 
 
Total
 ¥6,796  ¥21,992  ¥963  ¥(14,697)  ¥15,054  ¥6,552  ¥24,427  ¥826  ¥(16,079)  ¥15,726 
                
 
  
 
  
 
  
 
  
 
 
 
(1)
Represents the amount offset under counterparty netting of derivative assets and liabilities as well as cash collateral netting against net derivatives.
 
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F-37 4
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(2)
Certain investments that are measured at fair value using net asset value per share as a practical expedient have not been classified in the fair value hierarchy. As of March 31, 20202021 and March 31, 2021,2022, the fair values of these investments which are included in
Trading assets and private equity and debt investments
were
¥26 ¥24 billion and ¥24 
¥45 billion, respectively. As of March 31, 20202021 and March 31, 2021,2022, the fair values of these investments which are included in
Other assets—Others
were
¥6 ¥4 billion and ¥4¥3 billion, respectively.
(3)
Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(4)
Includes equity investments which comprise listed and unlisted equity securities held for operating purposes in the amounts of
 ¥93,230 million and ¥33,419 million, respectively, as of March 31, 2021 and ¥101,503
million and ¥32,394
million, respectively, as of March 31, 2022.
(5)
Private equity and debt investments
are typicallyinclude private
non-traded
financial instruments including ownership orminority private equity and venture capital equity investments and other forms of junior capital (suchdebt investments such as mezzanine loan). Includesdebt held for
non-trading
purposes, and post-IPO investments. Also include minority equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.option to these investments as permitted under ASC 825.
(5)(6)
Includes collateralized loan obligations (“CLOs”) and asset-backed securities (“ABS”) such as those secured on credit card loans, auto loans and student loans.
(6)
Each derivative classification includes derivatives with multiple risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.
(7)
Derivatives which contain multiple types of risk are classified based on the primary risk type of the instrument.
(8)
Includes loans and receivables for which the fair value option has been elected.
(8)(9)
Includes collateralized agreements or collateralized financing for which the fair value option has been elected.
(9)(10)
Includes deposits received at banks and structured notes for which the fair value option has been elected.

(10)(11)
Includes embedded derivatives bifurcated from deposits received at banks. If unrealized gains are greater than unrealized losses, deposits are reduced by the excess amount.
(11)(12)
Includes embedded derivatives bifurcated from issued structured notes. If unrealized gains are greater than unrealized losses, borrowings are reduced by the excess amount.
(12)(13)
Includes liabilities recognized from secured financing transactions that are accounted for as financings rather than sales. Nomura elected the fair value option for these liabilities.
(13)(14)
Includes loan commitments for which the fair value option has been elected.
Valuation techniques by major class of financial instrument
The valuation techniques used by Nomura to estimate fair value for major classes of financial instruments, together with the significant inputs which determine classification in the fair value hierarchy, are as follows.
Equities
and equity securities reported within
Other assets
—Equities and equity securities reported within
Other assets
include direct holdings of both listed and unlisted equity securities, and fund investments. The fair value of listed equity securities is determined using quoted prices for identical securities from active markets where available. These valuations should be in line with market practice and therefore can be based on bid prices or
mid-market
prices. Nomura determines whether the market is active depending on the sufficiency and frequency of trading activity. Where these securities are classified in Level 1 of the fair value hierarchy, no valuation adjustments are made to fair value. Listed equity securities traded in inactive markets are also generally valued using the exchange price and are classified in Level 2. Whilst rare in practice, Nomura may apply a discount or liquidity adjustment to the exchange price of a listed equity security traded in an inactive market if the exchange price is not considered to be an appropriate representation of fair value. These adjustments are determined by individual security and are not determined or influenced by the size of holding. The amount of such adjustments made to listed equity securities traded in inactive markets was ¥nil as of March 31, 20
20
2021 and 202
1
,2022, respectively. The fair value of unlisted equity securities is determined using the same methodologyvaluation technique as private equity and debt investments described below and are usually classified in Level 3 because significant valuation inputs such as liquidity discounts and credit spreads are unobservable.
Private equity and debt investments
—
The determination of fair value of unlisted private equity and debt investments requires significant management judgment because the investments, by their nature, have little or no price transparency. Private equity and debt investments are initially carried at cost as an approximation of fair value. Adjustments to carrying value are made if there is third-party evidence of a change in value. Adjustments are also made, in the absence of third-party transactions, if it is determined that the expected exit price of the investment is different from carrying value. In reaching that determination, Nomura primarily uses either a discounted cash flow (“DCF”) or market multiple valuation technique. A DCF valuation technique incorporates estimated future cash flows to be generated from the underlying investee, as adjusted for an appropriate growth
 
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F-38 
5
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
rate discounted at a weighted average cost of capital (“WACC”). Market multiple valuation techniques include comparables such as Enterprise Value/earnings before interest, taxes, depreciation and amortization (“EV/EBITDA”) ratios, Price/Earnings (“PE”) ratios, Price/Book ratios, Price/Embedded Value ratios and other multiples based on relationships between numbers reported in the financial statements of the investee and the price of comparable companies. A liquidity discount may also be applied to either a DCF or market multiple valuation to reflect the specific characteristics of the investee. The liquidity discount includes considerations for various uncertainties in the model and inputs to valuation. Where possible these valuations are compared with the operating cash flows and financial performance of the investee or properties relative to budgets or projections, price/earnings data for similar quoted companies, trends within sectors and/or regions and any specific rights or terms associated with the investment, such as conversion features and liquidation preferences. Private equity and debt investments are generally classified in Level 3 since the valuation inputs such as those mentioned above are usually unobservable.
Government, agency and municipal securities
—
The fair value of Japanese and other G7 government securities is primarily determined using quoted market prices, executable broker or dealer quotations, or alternative pricing sources. These securities are traded in active markets and therefore are classified within Level 1 of the fair value hierarchy.
Non-G7
government securities, agency securities and municipal securities are valued using similar pricing sources but are generally classified in Level 2 as they are traded in inactive markets. Certain
non-G7
securities may be classified in Level 1 because they are traded in active markets. Certain securities may be classified in Level 3 because they are traded infrequently and there is not sufficient information from comparable securities to classify them in Level 2. These are valued using DCF valuation techniques which include significant unobservable valuation inputs such as credit spreads of the issuer.
Bank and corporate debt securities
—
The fair value of bank and corporate debt securities is primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar debt securities, if available. Consideration is given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. The significant valuation inputs used for DCF valuations are yield curves, asset swap spreads, recovery rates and credit spreads of the issuer. Bank and corporate debt securities are generally classified in Level 2 of the fair value hierarchy because these valuation inputs are usually observable or market-corroborated. Certain bank and corporate debt securities will be classified in Level 3 because they are traded infrequently and there is insufficient information from comparable securities to classify them in Level 2, or credit spreads or recovery rates of the issuer used in DCF valuations are unobservable.
Commercial mortgage-backed securities (“CMBS”)
and
Residential mortgage-backed securities (“RMBS”)
—
The fair value of CMBS and RMBS are primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar securities, if available. Consideration is given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. The significant valuation inputs include yields, prepayment rates, default probabilities and loss severities. CMBS and RMBS securities are generally classified in Level 2 because these valuation inputs are observable or market-corroborated. Certain CMBS and RMBS positions will be classified in Level 3 because they are traded infrequently and there is insufficient information from comparable securities to classify them in Level 2, or one or more of the significant valuation inputs used in DCF valuations are unobservable.
Real estate-backed securities
—
The fair value of real estate-backed securities is determined using broker or dealer quotations, recent market transactions or by reference to a comparable market index. Consideration is
F-39 
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6
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Real estate-backed securities
—The fair value of real estate-backed securities is determined using broker or dealer quotations, recent market transactions or by reference to a comparable market index. Consideration is given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. Where all significant inputs are observable, the securities will be classified in Level 2. For certain securities, no direct pricing sources or comparable securities or indices may be available. These securities are valued using DCF or valuation techniques and are classified in Level 3 as the valuation includes significant unobservable valuation inputs such as yields or loss severities.
Collateralized debt obligations (“CDOs”) and other
—
The fair value of CDOs is primarily determined using DCF valuation techniques but also using broker or dealer quotations and recent market transactions of identical or similar securities, if available. Consideration is given to the nature of the broker and dealer quotations, namely whether these are indicative or executable, the number of available quotations and how these quotations compare to any available recent market activity or alternative pricing sources. The significant valuation inputs used include market spread data for each credit rating, yields, prepayment rates, default probabilities and loss severities. CDOs are generally classified in Level 2 of the fair value hierarchy because these valuation inputs are observable or market-corroborated. CDOs will be classified in Level 3 where one or more of the significant valuation inputs used in the DCF valuations are unobservable.
Investment trust funds and other
—
The fair value of investment trust funds is primarily determined using NAV per share. Publicly traded funds which are valued using a daily NAV per share are classified in Level 1 of the fair value hierarchy. For funds that are not publicly traded but Nomura has the ability to redeem its investment with the investee at NAV per share on the balance sheet date or within the near term, the investments are classified in Level 2. Investments where Nomura does not have the ability to redeem in the near term or does not know when it can redeem are classified in Level 3. The fair value of certain other investments reported within
Investment trust funds and other
is determined using DCF valuation techniques. These investments are classified in Level 3 as the valuation includes significant unobservable valuation inputs such as credit spreads of issuer and correlation.
Derivatives—Derivatives
—
Equity contracts
—
Nomura enters into both exchange-traded and OTC equity derivative transactions such as index and equity options, equity basket options and index and equity swaps. Where these derivatives are traded in active markets and the exchange price is representative of fair value, the fair value of exchange-traded equity derivatives is determined using an unadjusted exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-traded equity derivatives which are traded in inactive markets or where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC equity derivatives is determined through option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include equity prices, dividend yields, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura‘s own creditworthiness on derivative liabilities. OTC equity derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex equity derivatives are classified in Level 3 where dividend yield, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—Derivatives
—
Interest rate contracts
—
Nomura enters into both exchange-traded and OTC interest rate derivative transactions such as interest rate swaps, currency swaps, interest rate options, forward rate agreements, swaptions, caps and floors. Where these derivatives are traded in active markets and the exchange price is representative of fair value, the fair value of exchange-traded interest rate derivatives is determined using an unadjusted exchange price and classified in Level 1 of the fair value hierarchy. The fair value of exchange-traded
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
interest rate derivatives which are traded in inactive markets or where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC interest rate
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include interest rates, forward foreign exchange (“FX”) rates, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura‘s own creditworthiness on derivative liabilities. OTC interest rate derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex OTC interest rate derivatives are classified in Level 3 where interest rate, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—
Derivatives
—
Credit contracts
—
Nomura enters into OTC credit derivative transactions such as credit default swaps and credit options on single names, indices or baskets of assets. The fair value of OTC credit derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include interest rates, credit spreads, recovery rates, default probabilities, volatilities and correlations. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative liabilities. OTC credit derivatives are generally classified in Level 2 of the fair value hierarchy because all significant valuation inputs and adjustments are observable or market-corroborated. Certain less liquid vanilla or more complex OTC credit derivatives are classified in Level 3 where credit spread, recovery rate, volatility or correlation valuation inputs are significant and unobservable.
Derivatives—
Derivatives
—
Foreign exchange contracts
—Nomura enters into both exchange-traded and OTC foreign exchange derivative transactions such as foreign exchange forwards and currency options. The fair value of exchange-traded foreign exchange derivatives which are traded in inactive markets or where the exchange price is not representative of fair value is determined using a model price and are classified in Level 2. The fair value of OTC foreign exchange derivatives is determined through DCF valuation techniques as well as option models such as Black-Scholes and Monte Carlo simulation. The significant valuation inputs used include interest rates, forward FX rates, spot FX rates and volatilities. Valuation adjustments are also made to model valuations in order to reflect counterparty credit risk on derivative assets and Nomura’s own creditworthiness on derivative liabilities. OTC foreign exchange derivatives are generally classified in Level 2 because all significant valuation inputs and adjustments are observable or market-corroborated. Certain foreign exchange derivatives are classified in Level 3 where interest rates, volatility or correlation valuation inputs are significant and unobservable.
Nomura includes valuation adjustments in its estimation of fair value of certain OTC derivatives relating to funding costs associated with these transactions to be consistent with how market participants in the principal market for these derivatives would determine fair value.
Loans
and receivables
—The fair value of loans and receivables carried at fair value either as trading assets or through election of the fair value option is primarily determined using DCF valuation techniques as quoted prices are typically not available. The significant valuation inputs used are similar to those used in the valuation of corporate debt securities described above. Loans and receivables are generally classified in Level 2 of the fair value hierarchy because all significant valuation inputs are observable. Certain loans and receivables, however, are classified in Level 3 because they are traded infrequently and there is not sufficient information from comparable securities to classify them in Level 2 or credit spreads of the issuer or recovery rates used in DCF valuations are significant and unobservable.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Collateralized agreements
and
Collateralized financing
—The primary types of collateralized agreement and financing transactions carried at fair value are reverse repurchase and repurchase agreements elected for the fair value option. The fair value of these financial instruments is primarily determined using DCF valuation techniques. The significant valuation inputs used include interest rates and collateral funding spreads such as

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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
general collateral or special rates. Reverse repurchase and repurchase agreements are generally classified in Level 2 of the fair value hierarchy because these valuation inputs are usually observable.
Non-trading
debt securities
—These are debt securities held by certain
non-trading
subsidiaries in the group and are valued and classified in the fair value hierarchy using the same valuation techniques used for other debt securities classified as
Government, agency and municipal securities
and
Bank and corporate debt securities
described above.
Short-term
and
long-term borrowings (“Structured notes”)
—Structured notes are debt securities issued by Nomura or by consolidated variable interest entities (“VIEs”) which contain embedded features that alter the return to the investor from simply receiving a fixed or floating rate of interest to a return that depends upon some other variables, such as an equity or equity index, commodity price, foreign exchange rate, credit rating of a third party or a more complex interest rate (i.e., an embedded derivative).
The fair value of structured notes is determined using a quoted price in an active market for the identical liability if available, and where not available, using a mixture of valuation techniques that use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, similar liabilities when traded as assets, or an internal model which combines DCF valuation techniques and option pricing models, depending on the nature of the embedded features within the structured note. Where an internal model is used, Nomura estimates the fair value of both the underlying debt instrument and the embedded derivative components. The significant valuation inputs used to estimate the fair value of the debt instrument component include yield curves, prepayment rates, default probabilities and loss severities. The significant valuation inputs used to estimate the fair value of the embedded derivative component are the same as those used for the relevant type of freestanding OTC derivative discussed above. A valuation adjustment is also made to the entire structured note in order to reflect Nomura’s own creditworthiness. This adjustment is determined based on recent observable secondary market transactions and executable broker quotes involving Nomura debt instruments and is therefore typically treated as a Level 2 valuation input. Structured notes are generally classified in Level 2 of the fair value hierarchy as all significant valuation inputs and adjustments are observable. Where any unobservable valuation inputs are significant, such as yields, prepayment rates, default probabilities, loss severities, volatilities and correlations used to estimate the fair value of the embedded derivative component, structured notes are classified in Level 3.
Long-term borrowings (“Secured financing transactions”)
—Secured financing transactions are liabilities recognized when a transfer of a financial asset does not meet the criteria for sales accounting under ASC 860 “
Transfer and Servicing
” (“ASC 860”) and therefore the transaction is accounted for as a secured borrowing. These liabilities are valued using the same valuation techniques that are applied to the transferred financial assets which remain on the consolidated balance sheets and are therefore classified in the same level in the fair value hierarchy as the transferred financial assets. These liabilities do not provide general recourse to Nomura and therefore, no adjustment is made to reflect Nomura’s own creditworthiness.
Level 3 financial instruments
The valuation of Level 3 financial assets and liabilities is dependent on certain significant valuation inputs which are unobservable. Common characteristics of an inactive market include a low number of transactions of the financial instrument, stale or
non-current
price quotes, price quotes that vary substantially either over time or among market makers,
non-executable
broker quotes or little publicly released information.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
If corroborative evidence is not available to value Level 3 financial instruments, fair value may be measured using other equivalent products in the market. The level of correlation between the specific Level 3 financial
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
instrument and the available benchmark instrument is considered as an unobservable valuation input. Other techniques for determining an appropriate value for unobservable valuation input may consider information such as consensus pricing data among certain market participants, historical trends, extrapolation from observable market data and other information Nomura would expect market participants to use in valuing similar instruments.
Use of reasonably possible alternative valuation input assumptions to value Level 3 financial instruments will significantly influence fair value determination. Ultimately, the uncertainties described above about input assumptions imply that the fair value of Level 3 financial instruments is a judgmental estimate. The specific valuation for each instrument is based on management’s judgment of prevailing market conditions, in accordance with Nomura’s established valuation policies and procedures.
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Quantitative and qualitative information regarding significant unobservable valuation inputs
The following tables present quantitative and qualitative information about the significant unobservable valuation inputs used by Nomura to measure the fair value of financial instruments classified in Level 3 as of March 31, 20202021 and 2021.2022. These financial instruments will also typically include observable valuation inputs (i.e., Level 1 or Level 2 valuation inputs) which are not included in the table and are also often hedged using financial instruments which are classified in Level 1 or Level 2 of the fair value hierarchy. Changes in each of these significant unobservable valuation inputs used by Nomura will impact upon the fair value measurement of the financial instrument. The following tables also illustrate qualitatively how an increase in those significant unobservable valuation inputs might result in a higher or lower fair value measurement at the reporting date and the interrelationship between significant unobservable valuation inputs where more than one is used to determine fair value measurement of the financial instruments. The impact of the
COVID-19
pandemic on financial markets has been considered in determining which valuation inputs are used to measure fair value
.
 
 
March 31, 2020
 
March 31, 2021
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Assets:
                            
Trading assets and private equity and debt investments
                            
Equities
 ¥      14  DCF Liquidity discounts 75.0% 75.0% Lower fair value Not applicable  ¥    16    DCF Liquidity discounts 75.0% 75.0% Lower fair value Not applicable
              
   Market multiples Liquidity discounts 20.0% 20.0% Lower fair value Not applicable
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Private equity and debt investments
 
        31 
 
DCF
 
WACC
Growth rates
Liquidity discounts
 
7.0 – 13.5%
0.0 – 1.0%
5.0 – 30.0%
 
10.0%
0.6%
9.9%
 
Lower fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
 
 
     58  
 
 
DCF
 
WACC
Growth rates
Credit spreads
Liquidity discounts
 
6.3 – 11.5%
0.0 – 1.0%
7.6 – 8.8%
5.0 – 30.0%
 
8.4%
0.5%
8.1%
12.8%
 
Lower fair value
Higher fair value
Lower fair valu
e
Lower fair value
 
No predictable interrelationship
                 
 
 
 
 
 
 
 
 
 
 
 
   Market multiples 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
1.0 – 11.0 x
9.6 x
5.0 – 30.0%
 
8.9 x
9.6 x
9.8%
 
Higher fair value
Higher fair value
Lower fair value
 No predictable interrelationship   Market multiples 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
1.9 – 10.8 x
11.1 x
5.0 – 20.0%
 
6.5 x
11.1 x
12.2%
 
Higher fair value
Higher fair value
Lower fair value
 No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign government, agency and municipal securities
 
          8 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 1.4%
4.0 – 18.0%
 
0.5%
10.8%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
 
 
 
 
    12  
 
 
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 1.5%
9.2 – 9.3%
 
0.4%
9.2%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Bank and corporate debt securities and loans for trading purposes
 
     228 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 17.9%
0.0 – 80.7%
 
5.8%
43.8%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
 
 
 135  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 23.1%
0.0 – 100.0%
 
7.4%
73.3%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage backed securities (“CMBS”)
 
 
  8  
 
 
DCF
 
Yields
Loss severities
 
4.2 – 10.6%
27.5 – 69.5%
 
5.0%
50.3%
 
Lower fair value
Lower fair value
 
No predictable interrelationship
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage backed securities (“RMBS”)
 
        62 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
0.0 – 30.8%
7.1 – 15.0%
0.0 – 100.0%
 
6.7%
8.9%
40.6%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
 
 
  6  
 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
0.0 – 14.3%
6.4 – 15.0%
0.8 – 100.0%
 
1.4%
7.2%
5.8%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Real estate-backed securities
 
        94 
 
DCF
 
Loss severities
 
0.0 – 8.1%
 
3.4%
 
Lower fair value
 
Not applicable
 
 
 106  
 
 
DCF
 
Loss severities
 
0.0 – 18.6%
 
2.4%
 
Lower fair value
 
Not applicable
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized debt obligations (“CDOs”) and other
 
        32 
 
DCF
 
Yields
Prepayment rates
Default probabilities
Loss severities
 
6.4 – 56.8%
20.0%
2.0%
0.0 – 100.0%
 
21.6%
20.0%
2.0%
73.0%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
              
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
 
March 31, 2020
 
March 31, 2021
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Collateralized debt obligations (“CDOs”) and other
 
 
23  
 
 
DCF
 
Yields
Prepayment rates
Default probabilities
Loss severities
 
5.4 – 35.0%
20.0%
2.0%
77.0 – 100.0%
 
11.0%
20.0%
2.0%
88.1%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net:
                            
Equity contracts
 ¥      19 Option models 
Dividend yield
Volatilities
Correlations
 
0.0 – 18.7%
12.2 – 144.7%
(0.85) – 0.97
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship  ¥(41)   Option models 
Dividend yield
Volatilities
Correlations
 
0.0 – 9.8%
4.0 – 102.0%
(0.80) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
(54) 
 
DCF/
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
(0.1) – 2.0%
8.8 – 13.8%
24.6 – 119.4 bp
(1.00) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
 
 
(43) 
 
 
DCF/
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.1 – 2.3%
9.6 – 13.1%
24.9 – 94.0 bp
(1.00) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Credit contracts
 (1)  
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.1 – 28.4%
0.0 – 105.4%
50.0 – 83.0%
0.16 – 0.82
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship  (38)   
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.0 – 20.8%
0.0 – 100.4%
41.9 – 65.0%
0.29 – 0.72
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
7 
 
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
(0.1) – 0.8%
2.0 – 23.9%
19.2 – 50.7 bp
(0.25) – 0.80
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
 
 
15  
 
 
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.1 – 2.1%
2.6 – 31.5%
16.2 – 25.5 bp
(0.25) – 0.80
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 96  DCF 
Credit spreads
Recovery rates
 
0.0 – 20.5%
57.5 – 98.0%
 
4.2%
85.0%
 
Lower fair value
Higher fair value
 No predictable interrelationship 
 
104  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 25.6%
26.4 – 100.0%
 
6.6%
95.8%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized agreements
 15  DCF Repo rate 3.8 – 5.6% 4.9% Lower fair value Not applicable 
 
18  
 
 
DCF
 
Repo rate
 
2.8 – 5.8%
 
4.0%
 
Lower fair value
 
Not applicable
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Other assets
                            
Other
(6)
 168  DCF 
WACC
Growth rates
Liquidity discounts
 
10.1%
2.0%
10.0%
 
10.1%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 No predictable interrelationship
Other
(7)
  185    DCF 
WACC
Growth rates
Liquidity discounts
 
9.2%
2.0%
10.0%
 
9.2%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 No predictable interrelationship
                 
 
 
 
 
 
 
 
 
 
 
 
   Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
3.9 – 10.3 x
6.3 – 20.7 x
0.3 – 1.3 x
10.0 – 40.0%
 
4.6 x
11.4 x
0.8 x
28.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.   Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
5.0 – 6.2 x
8.2 – 32.0 x
0.3 – 1.6 x
10.0 – 40.0%
 
5.4 x
13.8 x
0.9 x
30.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
                            
Trading Liabilities
              
Bank and corporate debt securities 
 
5  
 
 
DCF
 
Recovery rates
 
3.4 – 3.5%
 
3.4%
 
Higher fair value
 
Not applicable
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 29  
DCF/
Option models
 
Volatilities
Correlations
 
12.6 – 76.4%
(0.72) – 0.94
 
—  
—  
 
Higher fair value
Higher fair value
 No predictable interrelationship 
 
103  
 
 
DCF/
Option models
 
Volatilities
Correlations
 
13.8 – 82.3%
(0.69) – 0.96
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
Long-term borrowings
 409  
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
8.6 – 76.4%
30.0 – 103.2 bp
(1.00) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship 
 
547  
 
 
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
9.5 – 82.3%
29.6 – 77.0 bp
(1.00) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
 
  
 
 
 
 
 
 
 
 
 
 
 
 
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
  
March 31, 202
1
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Assets:
              
Trading assets and private equity and debt investments
              
Equities
 ¥      16  DCF Liquidity discounts 75.0% 75.0% Lower fair value Not applicable
               
Private equity and debt investments
 
        58 
 
DCF
 
WACC
Growth rates
Credit spreads
Liquidity discounts
 
6.3 – 11.5%
0.0 – 1.0%
7.6 – 8.8%
5.0 – 30.0%
 
8.4%
0.5%
8.1%
12.8%
 
Lower fair value
Higher fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
               
    Market multiples 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
1.9 – 10.8 x
11.1 x
5.0 – 20.0%
 
6.5 x
11.1 x
12.2%
 
Higher fair value
Higher fair value
Lower fair value
 No predictable interrelationship
               
Foreign government, agency and municipal securities
 
        12 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 1.5%
9.2 – 9.3%
 
0.4%
9.2%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
Bank and corporate debt securities and loans for trading purposes
 
      135 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 23.1%
0.0 – 100.0%
 
7.4%
73.3%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
               
Commercial mortgage backed securities (“CMBS”)
 
          8 
 
DCF
 
Yields
Loss severities
 
4.2 – 10.6%
27.5 – 69.5%
 
5.0%
50.3%
 
Lower fair value
Lower fair value
 
No predictable interrelationship
               
Residential mortgage backed securities (“RMBS”)
 
          6 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
0.0 – 14.3%
6.4 – 15.0%
0.8 – 100.0%
 
1.4%
7.2%
5.8%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
               
Real estate-backed securities
       106  DCF Loss severities 0.0 – 18.6% 2.4% Lower fair value Not applicable
               
Collateralized debt obligations (“CDOs”) and other
 
        23 
 
DCF
 
Yields
Prepayment rates
Default probabilities
Loss severities
 
5.4 – 35.0%
20.0%
2.0%
77.0 – 100.0%
 
11.0%
20.0%
2.0%
88.1%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
               
  
March 31, 2022
Financial Instrument
 
Fair
value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Assets:
                
Trading assets and private equity and debt investments
                
Equities
  ¥      14    DCF Liquidity discounts 75.0% 75.0% Lower fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Private equity and debt investments
 
 
32  
 
 
DCF
 
WACC
Growth rates
Liquidity discounts
 
7.1 – 13.0%
0.0 – 2.0%
5.0 – 30.0%
 
10.2%
0.7%
18.5%
 
Lower fair value
Higher fair value
Lower fair value
 
No predictable interrelationship
      
 
 
 
 
 
 
 
 
 
 
 
      Market multiples 
EV/EBITDA ratios
PE Ratios
Liquidity discounts
 
2.0 – 11.2 x
10.7 – 12.6 x
5.0 – 20.0%
 
6.9 x
11.6 x
11.9%
 
Higher fair value
Higher fair value
Lower fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign government, agency and municipal securities
 
 
    10  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 1.3%
6.0%
 
0.7%
6.0%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Bank and corporate debt securities and loans for trading purposes
 
 
 220  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.1 – 114.7%
0.0 – 100.0%
 
7.2%
84.4%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage backed securities (“CMBS”)
 
 
  7  
 
 
DCF
 
Yields
Loss severities
 
4.3 – 11.1%
28.3 – 73.0%
 
4.6%
40.8%
 
Lower fair value
Lower fair value
 
No predictable interrelationship
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage backed securities (“RMBS”)
 
 
  8  
 
 
DCF
 
Yields
Prepayment rates
Loss severities
 
0.0 – 22.2%
6.9 – 15.0%
0.0 – 99.9%
 
8.4%
9.5%
6.9%
 
Lower fair value
Lower fair value
Lower fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Real estate-backed securities
 
 
    79  
 
 
DCF
 
Loss severities
 
0.0 – 21.2%
 
2.9%
 
Lower fair value
 
Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized debt obligations (“CDOs”) and other
 
 
    26  
 
 
DCF
 
Yields
Prepayment rates Default probabilities
Loss severities
 
5.5 – 27.5%
18.0 – 20.0%
2.0%
0.0 – 100.0%
 
13.1%
19.5%
2.0%
44.0%
 
Lower fair value
Lower fair value
Lower fair value
Lower fair value
 
Change in default probabilities typically accompanied by directionally similar change in loss severities and opposite change in prepayment rates
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net:
                
Equity contracts
  ¥10    Option models 
Dividend yield
Volatilities
Correlations
 
0.0 – 12.6%
0.0 – 109.7%
(0.80) – 0.97
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
 
 
(11) 
 
 
 
DCF/
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.3 – 3.3%
9.2 – 13.9%
34.8 – 128.3 bp
(1.00) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
F-4
F-46 3
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
  
March 31, 202
1
Financial Instrument
 
Fair
value in
billions of
yen
 
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(3)(4)
 
Interrelationships
between valuation
inputs
(5)
Derivatives, net:
              
Equity contracts
 ¥    (41)  Option models 
Dividend yield
Volatilities
Correlations
 
0.0 – 9.8%
4.0 – 102.0%
(0.80) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
               
Interest rate contracts
 
    (43) 
 
DCF/
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.1 – 2.3%
9.6 – 13.1%
24.9 – 94.0 bp
(1.00) – 0.98
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Credit contracts
     (38)  
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.0 – 20.8%
0.0 – 100.4%
41.9 – 65.0%
0.29 – 0.72
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
               
Foreign exchange contracts
 
      15 
 
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.1 – 2.1%
2.6 – 31.5%
16.2 – 25.5 bp
(0.25) – 0.80
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
               
Loans and receivables
     104  DCF 
Credit spreads
Recovery rates
 
0.0 – 25.6%
26.4 – 100.0%
 
6.6%
95.8%
 
Lower fair value
Higher fair value
 No predictable interrelationship
               
Collateralized agreements
 
      18 
 
DCF
 
Repo rate
 
2.8 – 5.8%
 
4.0%
 
Lower fair value
 
Not applicable
               
Other assets
              
Other
(6)
     185  DCF 
WACC
Growth rates
Liquidity discounts
 
9.2%
2.0%
10.0%
 
9.2%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 No predictable interrelationship
               
    Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
5.0 – 6.2 x
8.2 – 32.0 x
0.3 – 1.6 x
10.0 – 40.0%
 
5.4 x
13.8 x
0.9 x
30.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
               
Liabilities:
              
Trading Liabilities Bank and corporate debt sec
 
        5 
 
DCF
 
Recovery rates
 
3.4 – 3.5%
 
3.4%
 
Higher fair value
 
Not applicable
               
Short-term borrowings
     103  
DCF/
Option models
 
Volatilities
Correlations
 
13.8 – 82.3%
(0.69) – 0.96
 
—  
—  
 
Higher fair value
Higher fair value
 No predictable interrelationship
               
Long-term borrowings
     547  
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
9.5 – 82.3%
29.6 – 77.0 bp
(1.00) – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
               
  
March 31, 2022
Financial Instrument
 
Fair
value in
billions of
yen
  
Valuation
technique
 
Significant
unobservable
valuation input
 
Range of
valuation
inputs
(1)
 
Weighted
Average
(2)(3)
 
Impact of
increases in
significant
unobservable
valuation
inputs
(4)(5)
 
      Interrelationships      
between valuation
inputs
(6)
Credit contracts
  (33)   
DCF/
Option models
 
Credit spreads
Recovery rates
Volatilities
Correlations
 
0.0 – 428.7%
0.0 – 90.0%
50.0 – 67.6%
0.00 – 0.90
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
 
 
 
10  
 
 
 
 
Option models
 
Interest rates
Volatilities
Volatilities
Correlations
 
0.3 – 2.9%
2.4 – 39.3%
13.9 – 24.0 bp
(0.25) – 0.84
 
—  
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Loans and receivables
 
 
205  
 
 
DCF
 
Credit spreads
Recovery rates
 
0.0 – 21.5%
44.0 – 100.0%
 
6.0%
98.2%
 
Lower fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Collateralized agreements
  16    DCF Repo rate 2.8 – 6.0% 3.6% Lower fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Other assets
                
Other
(7)
  197    DCF 
WACC
Growth rates
Liquidity discounts
 
10.1%
2.0%
10.0%
 
10.1%
2.0%
10.0%
 
Lower fair value
Higher fair value
Lower fair value
 No predictable interrelationship
      
 
 
 
 
 
 
 
 
 
 
 
      Market multiples 
EV/EBITDA ratios
PE Ratios
Price/Book ratios
Liquidity discounts
 
3.6 – 5.9 x
6.7 – 30.8 x
0.3 – 1.7 x
25.0 – 40.0%
 
4.4 x
13.1 x
0.9 x
30.6%
 
Higher fair value
Higher fair value
Higher fair value
Lower fair value
 Generally changes in multiples result in a corresponding similar directional change in a fair value measurement, assuming earnings levels remain constant.
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
                
Trading Liabilities
                
Bank and corporate debt securities  3    DCF Recovery rates 3.9 – 97.0% 84.1% Higher fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
 
58  
 
 
DCF/
Option models
 
Volatilities
Correlations
 
5.0 – 97.0%
(0.80) – 0.93
 
—  
—  
 
Higher fair value
Higher fair value
 
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Payable and deposits
  8    
DCF/
Option models
 
Volatilities
Volatilities
Correlations
 
9.2 – 11.3%
41.2 – 69.6 bp
0.34 – 0.98
 
—  
—  
—  
 
Higher fair value
Higher fair value
Higher fair value
 No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Long-term borrowings
 
 
479  
 
 
DCF
DCF/
Option models
 
Loss severities
Volatilities
Volatilities
Correlations
 
0.0%
5.0 – 97.0%
41.2 – 69.6 bp
(1.00) – 0.98
 
0.0%
—  
—  
—  
 
Lower fair value
Higher fair value
Higher fair value
Higher fair value
 
Not applicable
No predictable interrelationship
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Other liabilities
  32    DCF Recovery rates 90.0% 90.0% Higher fair value Not applicable
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Range information is provided in percentages, coefficients and multiples and represents the highest and lowest level significant unobservable valuation input used to value that type of financial instrument. A wide dispersion in the range does not necessarily reflect increased uncertainty or subjectivity in the valuation input and is typically just a consequence of the different characteristics of the financial instruments themselves.
(2)
Weighted average information for
non-derivativenon-derivatives
instruments is calculated by weighting each valuation input by the fair value of the financial instrument.
(3)
Nomura has not provided weighted average information for derivatives as unlike cash products the risk on such products is distinct from the balance sheet value and is subject to netting.  
(4)
The above table only considers the impact of an increase in each significant unobservable valuation input on the fair value measurement of the financial instrument. However, a decrease in the significant unobservable valuation input would have the opposite effect on the fair
F-4
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
value measurement of the financial instrument. For example, if an increase in a significant unobservable valuation input would result in a lower fair value measurement, a decrease in the significant unobservable valuation input would result in a higher fair value measurement.
F-47 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(4)(5)
The impact of an increase in the significant unobservable valuation input on the fair value measurement for a derivative assumes Nomura is long risk to the input e.g., long volatility. Where Nomura is short such risk, the impact of an increase would have a converse effect on the fair value measurement of the derivative.
(5)(6)
Consideration of the interrelationships between significant unobservable valuation inputs is only relevant where more than one unobservable valuation input is used to determine the fair value measurement of the financial instrument.
(6)(7)
Valuation technique(s)techniques and unobservable valuation inputs in respect of equity securities reported within
Other assets
in the consolidated balance sheets.
Qualitative discussion of the ranges of significant unobservable valuation inputs
The following comments present qualitative discussion about the significant unobservable valuation inputs used by Nomura for financial instruments classified in Level 3.
Derivatives—
Derivatives
—
Equity contracts
—
The significant unobservable valuation inputs are dividend yield, volatilities and correlations. The range of dividend yields varies as some companies do not pay any dividends, for example due to a lack of profits or as a policy during a growth period, and hence have a zero dividend yield while others may pay high dividends, for example to return money to investors. The range of volatilities is wide as the volatilities of shorter-dated equity derivatives or those based on single equity securities can be higher than those of longer-dated instruments or those based on indices. Correlations represent the relationships between one input and another (“pairs”) and can either be positive or negative amounts. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships throughout the range.
Derivatives—
Derivatives
—
Interest rate contracts
—
The significant unobservable valuation inputs are interest rates, volatilities and correlations. The range of interest rates is due to interest rates in different countries/currencies being at different levels with some countries having extremely low levels and others being at levels that while still relatively low are less so.levels. The range of volatilities is wide as volatilities can be higher when interest rates are at extremely low levels, and also because volatilities of shorter-dated interest rate derivatives are typically higher than those of longer-dated instruments. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships through the range. All significant unobservable valuation inputs are spread across the ranges.
Derivatives—
Derivatives
—
Credit contracts
—
The significant unobservable valuation inputs are credit spreads, recovery rates, volatilities and correlations. The range of credit spreads reflects the different risk of default present within the portfolio. At the low end of the range, underlying reference names have a very limited risk of default whereas at the high end of the range, underlying reference names have a much greater risk of default. The range of recovery rates varies primarily due to the seniority of the underlying exposure with senior exposures having a higher recovery than subordinated exposures. The range of volatilities is wide as the volatilities of shorter-dated credit contracts are typically higher than those of longer-dated instruments. The correlation range is positive since credit spread moves are generally in the same direction. Highly positive correlations are those for which the movement is very closely related and in the same direction, with correlation falling as the relationship becomes less strong.
Derivatives—
Derivatives
—
Foreign exchange contracts
—
The significant unobservable valuation inputs are interest rates, volatilities and correlations. The range of interest rates is due to interest rates in different countries/currencies
F-4
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
being at different levels with some countries having extremely low levels and others being at levels that while still relatively low are less so. The range of volatilities is mainly due to the lower end of the range arising from
F-48 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
currencies that trade in narrow ranges e.g.(e.g. versus the U.S. DollarDollar) while the higher end comes from currencies with a greater range of movement such as emerging market currencies. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships through the range.
Short-term borrowings and Long-term borrowings
—
The significant unobservable valuation inputs are yields, prepayment rates, default probabilities, loss severities, volatilities and correlations. The range of volatilities is wide as the volatilities of shorter-dated instruments are typically higher than those in longer-dated instruments. The range of correlations moves from positive to negative because the movement of some pairs is very closely related and in the same direction causing highly positive correlations while others generally move in opposite directions causing highly negative correlations with pairs that have differing relationships through the range.
Movements in Level 3 financial instruments
The following tables present gains and losses as well as increases and decreases of financial instruments measured at fair value on a recurring basis which Nomura classified in Level 3 for the years ended March 31, 20202021 and 2021.2022. Financial instruments classified in Level 3 are often hedged with instruments within Level 1 or Level 2 of the fair value hierarchy. The gains or losses presented below do not reflect the offsetting gains or losses for these hedging instruments. Level 3 financial instruments are also measured using both observable and unobservable valuation inputs. Fair value changes presented below, therefore, reflect realized and unrealized gains and losses resulting from movements in both observable and unobservable valuation inputs.
 
F-4
F-49 6
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
For the years ended March 31, 20202021 and 2021,2022, gains and losses related to Level 3 assets and liabilities did not have a material impact on Nomura’s liquidity and capital resources management.
 
                    
   
Billions of yen
    
Billions of yen
 
   
Year ended March 31, 2020
    
Year ended March 31, 2021
 
 
Balance

as of

April 1,

2019
 
Total gains

(losses)

recognized

in net
revenue
(1)
 
Total gains

(losses)

recognized in

other

comprehensive

income
 
Purchases

/ issues
(2)
 
Sales /

redemptions
(2)
 
Settlements
 
Foreign

exchange

movements
 
Transfers

into

Level 3
(4)(5)
 
Transfers

out of

Level 3
(5)
 
Balance

as of

March 31,

2020
  
Balance

as of

April 1,

2020
 
Total gains

(losses)

recognized

in net
revenue
(1)
 
Total gains

(losses)

recognized in

other

comprehensive

income
 
Purchases /
issues
(2)
 
Sales /

redemptions
(2)
 
Settlements
 
Foreign

exchange

movements
 
Transfers

into

Level 3
(4)(5)
 
Transfers

out of

Level 3
(5)
 
Balance

as of

March 31,

2021
 
Assets:
                                        
Trading assets and private equity and debt investments
                                        
Equities
 ¥13  ¥(1)  ¥0—    ¥8  ¥(4)  ¥0—    ¥0  ¥1  ¥(3)  ¥14  ¥14  ¥5  ¥—    ¥23  ¥(29)  ¥—    ¥1  ¥2  ¥0  ¥16 
Private equity and debt investments
  26   1   0—     8   (3)   0—     (1)   0—     0—     31   31   11   —     19   (4)   —     1   —     —     58 
Japanese agency and municipal securities
  1   0   0—     1   0   0—     0—     0—     0—     2   2   0   —     0   0   —     —     0   0   2 
Foreign government, agency and municipal securities
  5   0   0—     27   (26)   0—     0   5   (3)   8   8   1   —     21   (16)   —     0   5   (7)   12 
Bank and corporate debt securities and loans for trading purposes
  160   (2)   0—     158   (154)   0—     (7)   113   (40)   228   228   1   —     66   (165)   —     9   31   (35)   135 
Commercial mortgage-backed securities (“CMBS”)
  2   (1)   0—     1   (1)   0—     0—     0   0   1   1   1   —     6   0   —     0   0   0   8 
Residential mortgage-backed securities (“RMBS”)
  3   (8)   0—     93   (53)   0—     0   28   (1)   62   62   0   —     12   (46)   —     1   —     (23)   6 
Real estate-backed securities
  69   4   0—     197   (175)   0—     (1)   0—     0—     94   94   (5)   —     170   (155)   —     2   —     0   106 
Collateralized debt obligations (“CDOs”) and other
  19   (21)   0—     184   (167)   0—     (1)   25   (7)   32   32   0   —     102   (104)   —     0   0   (7)   23 
Investment trust funds and other
  1   0   0—     13   (14)   0—     0   0   0   0   0   0   —     16   (16)   —     0   0   —     0 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total trading assets and private equity and debt investments
  299   (28)   0—     690   (597)   0—     (10)   172   (54)   472   472   14   —     435   (535)   —     14   38   (72)   366 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Derivatives, net
(3)
                                        
Equity contracts
  (8)   29   0—     0—     0—     (6)   0   16   (12)   19   19   (43)   —     —     —     (26)   0   20   (11)   (41) 
Interest rate contracts
  (54)   9   0—     0—     0—     (9)   0   (1)   1   (54)   (54)   16   —     —     —     (6)   1   (3)   3   (43) 
Credit contracts
  (8)   7   0—     0—     0—     2   0   (12)   10   (1)   (1)   (19)   —     —     —     (14)   (1)   (4)   1   (38) 
Foreign exchange contracts
  20   (22)   0—     0—     0—     8   (1)   0   2   7   7   20   —     —     —     (15)   1   (2)   4   15 
Commodity contracts
  0   0   0—     0—     0—     0   0   0—     0—     0—   
                              
Total derivatives, net
  (50)   23   0—     0—     0—     (5)   (1)   3   1   (29)   (29)   (26)   —     —     —     (61)   1   11   (3)   (107) 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Subtotal
 ¥249  ¥(5)  ¥0—    ¥690  ¥(597)  ¥(5)  ¥(11)  ¥175   ¥(53)  ¥443  ¥443  ¥(12)  ¥—    ¥435  ¥(535)  ¥(61)  ¥15  ¥49  ¥(75)  ¥259 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Loans and receivables
 ¥129  ¥0  ¥0—    ¥163  ¥(117)  ¥0—    ¥(3)  ¥93  ¥(169)  ¥96  ¥96  ¥2  ¥—    ¥42  ¥(69)  ¥—    ¥7  ¥41  ¥(15)  ¥104 
Collateralized agreements
  33   0   0—     0—     (27)   0—     (1)   10   0—     15   15   (1)   —     —     (1)   —     0   5   —     18 
Other assets
                                        
Other
  166   (31)   0   43   (7)   0—     (3)   0   0—     168   168   47   0   4   (39)   —     5   —     0   185 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
 ¥577  ¥(36)  ¥0  ¥896  ¥(748)  ¥(5)  ¥(18)  ¥278  ¥(222)  ¥722  ¥722  ¥36  ¥0  ¥481  ¥(644)  ¥(61)  ¥27  ¥95  ¥(90)  ¥566 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Liabilities:
                                        
Trading liabilities
                                        
Equities
 ¥0  ¥0  ¥0—    ¥0  ¥0  ¥0—    ¥0  ¥0  ¥0  ¥0  ¥0  ¥0  ¥—    ¥1  ¥(1)  ¥0  —  ¥0  ¥0  ¥0  ¥0 
Foreign government, agency and municipal securities
  0   0   0—     0—     0—     0—     0   0—     0—     0   0   0   —     0   0   0  —   1   —     —     1 
Bank and corporate debt securities
  0   (1)   0—     1   (1)   0—     0   0   0—     1   1   0   —     4   (1)   0  —   0   2   (1)   5 
Collateralized debt obligations (“CDOs”) and other
  0—     0   0—     4   (3)   0—     0   0—     0—     1   1   1   —     11   (10)   0  —   0   —     —     1 
Investment trust funds and other
  0     0—     0—     0   0   0—     0   0   0—     0   0   0   —     0   0   0  —   0   —     —     0 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total trading liabilities
 ¥0  ¥(1)  ¥0—    ¥5  ¥(4)  ¥0—    ¥0  ¥0  ¥0  ¥2  ¥2  ¥1  ¥—    ¥16  ¥(12)  ¥0  —  ¥1  ¥2  ¥(1)  ¥7 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Short-term borrowings
  31   0   0   65   (58)   0—     0   7   (16)   29   29   (5)   0   220   (137)   0  —   0   13   (27)   103 
Payables and deposits
  0   0   0—     6   0   0—     0   0   (5)   1   1   0   0   0   0   0  —   —     1   (1)   1 
Collateralized financing
  —     (1)   —     —     —     —     0   —     —     1 
Long-term borrowings
  535   6   0   254   (291)   0—     (1)   56   (138)   409   409   (35)   (1)   343   (284)   0  —   0   111   (68)   547 
Other liabilities
  0   (8)   0—     2   (10)   0—     0   0—     0—     0   0   (2)   —     33   0   0  —   0   1   (1)   35 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
 ¥566  ¥(3)  ¥0   ¥332  ¥(363)  ¥0—    ¥(1)  ¥63  ¥(159)  ¥441  ¥441  ¥(42)  ¥(1)  ¥612  ¥(433)  ¥0  —  ¥1  ¥128  ¥  (98)  ¥694 
                               
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
F-4
F-50 7
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
     
Billions of yen
 
     
Year ended March 31, 2021
 
  
Balance

as of

April 1,

2020
  
Total gains

(losses)

recognized

in net

revenue
(1)
  
Total gains

(losses)

recognized in

other

comprehensive

income
  
Purchases

/ issues
(2)
  
Sales /

redemptions
(2)
  
Settlements
  
Foreign

exchange

movements
  
Transfers

into

Level 3
(4)(5)
  
Transfers

out of

Level 3
(5)
  
Balance

as of

March 31,

2021
 
Assets:
                                        
Trading assets and private equity and debt investments
                                        
Equities
 ¥14  ¥5  ¥0—    ¥23  ¥(29)  ¥0—    ¥1  ¥2  ¥0  ¥16 
Private equity and debt investments
  31   11   0—     19   (4)   0—     1   0—     0—     58 
Japanese agency and municipal securities
  2   0   0—     0   0   0—     0—     0   0   2 
Foreign government, agency and municipal securities
  8   1   0—     21   (16)   0—     0   5   (7)   12 
Bank and corporate debt securities and loans for trading purposes
  228   1   0—     66   (165)   0—     9   31   (35)   135 
Commercial mortgage-backed securities (“CMBS”)
  1   1   0—     6   0   0—     0   0   0   8 
Residential mortgage-backed securities (“RMBS”)
  62   0   0—     12   (46)   0—     1   0—     (23)   6 
Real estate-backed securities
  94   (5)   0—     170   (155)   0—     2   0—     0   106 
Collateralized debt obligations (“CDOs”) and other
  32   0   0—     102   (104)   0—     0   0   (7)   23 
Investment trust funds and other
  0   0   0—     16   (16)   0—     0   0   0—     0 
                                         
Total trading assets and private equity and debt investments
  472   14   0—     435   (535)   0—     14   38   (72)   366 
                                         
Derivatives, net
(3)
                                        
Equity contracts
  19   (43)   0—     0—     0—     (26)   0   20   (11)   (41) 
Interest rate contracts
  (54)   16   0—     0—     0—     (6)   1   (3)   3   (43) 
Credit contracts
  (1)   (19)   0—     0—     0—     (14)   (1)   (4)   1   (38) 
Foreign exchange contracts
  7   20   0—     0—     0—     (15)   1   (2)   4   15 
                                         
Total derivatives, net
  (29)   (26)   0—     0—     0—     (61)   1   11   (3)   (107) 
                                         
Subtotal
 ¥443  ¥(12)  ¥0—    ¥435  ¥(535)  ¥(61)  ¥15  ¥49  ¥(75)  ¥259 
                                         
Loans and receivables
 ¥96  ¥2  ¥0—    ¥42  ¥(69)  ¥0—    ¥7  ¥41  ¥(15)  ¥104 
Collateralized agreements
  15   (1)   0—     0—     (1)   0—     0   5   0—     18 
Other assets
                                        
Other
  168   47   0   4   (39)   0—     5   0—     0   185 
                                         
Total
 ¥722  ¥36  ¥0  ¥481  ¥(644)  ¥(61)  ¥27  ¥95  ¥(90)  ¥566 
                                         
Liabilities:
                                        
Trading liabilities
                                        
Equities
 ¥0  ¥0  ¥0—    ¥1  ¥(1)  ¥0—    ¥0  ¥0  ¥0  ¥0 
Foreign government, agency and municipal securities
  0   0   0—     0   0   0—     1   0—     0—     1 
Bank and corporate debt securities
  1   0   0—     4   (1)   0—     0   2   (1)   5 
Collateralized debt obligations (“CDOs”) and other
  1   1   0—     11   (10)   0—     0   0—     0—     1 
Investment trust funds and other
  0   0   0—     0   0   0—     0   0—     0—     0 
                                         
Total trading liabilities
 ¥2  ¥1  ¥0—    ¥16  ¥(12)  ¥0—    ¥1  ¥2  ¥(1)  ¥7 
                                         
Short-term borrowings
  29   (5)   0   220   (137)   0—     0   13   (27)   103 
Payables and deposits
  1   0   0   0   0   0—     0—     1   (1)   1 
Collateralized financing
  0—     (1)   0—     0—     0—     0—     0   0—     0—     1 
Long-term borrowings
  409   (35)   (1)   343   (284)   0—     0   111   (68)   547 
Other liabilities
  0   (2)   0—     33   0   0—     0   1   (1)   35 
                                         
Total
 ¥441  ¥(42)  ¥(1)  ¥612  ¥(433)  ¥0—    ¥1  ¥128  ¥(98)  ¥694 
                                         
                                         
     
Billions of yen
 
     
Year ended March 31, 2022
 
  
Balance

as of

April 1,

2021
  
Total gains

(losses)

recognized

in net
revenue
(1)
  
Total gains

(losses)

recognized in

other

comprehensive

income
  
Purchases /
issues
(2)
  
Sales /

redemptions
(2)
  
Settlements
  
Foreign

exchange

movements
  
Transfers

into

Level 3
(4)(5)
  
Transfers

out of

Level 3
(5)
  
Balance

as of

March 31,

2022
 
Assets:
                                        
Trading assets and private equity and debt investments
                                        
Equities
 ¥16  ¥3  ¥—    ¥2  ¥(9)  ¥—    ¥1  ¥3  ¥(2)  ¥14 
Private equity and debt investments
  58   2   —     14   (30)   —     1   —     (13)   32 
Japanese agency and municipal securities
  2   0   —     0   0   —     —     —     —     2 
Foreign government, agency and municipal securities
  12   1   —     13   (16)   —     0   2   (2)   10 
Bank and corporate debt securities and loans for trading purposes
  135   (3)   —     207   (194)   —     16   89   (30)   220 
Commercial mortgage-backed securities (“CMBS”)
  8   0   —     0   (1)   —     0   —     0   7 
Residential mortgage-backed securities (“RMBS”)
  6   0   —     5   (4)   —     1   0   —     8 
Real estate-backed securities
  106   4   —     370   (395)   —     10   —     (16)   79 
Collateralized debt obligations (“CDOs”) and other
  23   (4)   —     96   (89)   —     1   —     (1)   26 
Investment trust funds and other
  0   0   —     16   (16)   —     0   0   —     0 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading assets and private equity and debt investments
  366   3   —     723   (754)   —     30   94   (64)   398 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Derivatives, net
(3)
                                        
Equity contracts
  (41)   43   —     —     —     3   (1)   (31)   37   10 
Interest rate contracts
  (43)   (7)   —     —     —     13   0   14   12   (11) 
Credit contracts
  (38)   6   —     —     —     2   (2)   (2)   1   (33) 
Foreign exchange contracts
  15   (1)   —     —     —     (4)   1   0   (1)   10 
Total derivatives, net
  (107)   41   —     —     —     14   (2)   (19)   49   (24) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Subtotal
 ¥259  ¥44  ¥—    ¥723  ¥(754)  ¥14  ¥28  ¥75  ¥(15)  ¥ 374 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Loans and receivables
 ¥104  ¥18  ¥—    ¥95  ¥(89)  ¥—    ¥16  ¥73  ¥(12)  ¥205 
Collateralized agreements
  18   (1)   —     2   (5)   —     2   —     —     16 
Other assets
                                        
Other
  185   (2)   0   2   (1)   —     14   0   (1)   197 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥566  ¥59  ¥0  ¥822  ¥(849)  ¥14  ¥60  ¥148  ¥(28)  ¥792 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                                        
Trading liabilities
                                        
Equities
 ¥0  ¥0  ¥—    ¥0  ¥0  ¥0  —  ¥0  ¥—    ¥0  ¥0 
Foreign government, agency and municipal securities
  1   0   —     0   (1)   0  —   0   —     —     0 
Bank and corporate debt securities
  5   0   —     5   (6)   0  —   (1)   8   (8)   3 
Collateralized debt obligations (“CDOs”) and other
  1   0   —     2   (3)   0  —   0   0   —     0 
Investment trust funds and other
  0   0   —     0   0   0  —   0   —     —     0 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total trading liabilities
 ¥7  ¥0  ¥—    ¥7  ¥(10)  ¥0  —  ¥(1)  ¥8  ¥(8)  ¥3 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term borrowings
  103   (8)   0   152   (136)   0  —   1   15   (85)   58 
Payables and deposits
  1   0   0   2   —     0  —   —     7   (2)   8 
Collateralized financing
  1   —     —     —     —     —     —     —     (1)   —   
Long-term borrowings
  547   (6)   2   487   (409)   0  —   1   41   (192)   479 
Other liabilities
  35   (26)   —     1   (36)   0  —   6   0   0   32 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥694  ¥(40)  ¥2   ¥649  ¥(591)  ¥0  —  ¥7  ¥71  ¥(288)  ¥580 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
(1)
Includes gains and losses reported primarily within
Net gain on trading, Gain on private equity and debt investments,
and also within
Gain (loss) on investments in equity securities, Revenue—Revenue
—
Other
and
Non-interest
expenses
—
Other, Interest and dividends
and
Interest expense
in the consolidated statements of income.
F-51 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(2)
Amounts reported in
Purchases / issues
include increases in trading liabilities while
Sales / redemptions
include decreases in trading liabilities.
F-4
8
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(3)
Each derivative classification includes derivatives with
Derivatives which contain multiple types of risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rateare classified based on the primary risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.type of the instrument.
(4)
Amounts of gains and losses on these transfers which were recognized in the period when the
Transfers into Level
 3
occurred were not significant for the yearsyear ended March 31, 20202021 and 2021.March 31, 2022.
(5)
Transfers into Level
 3
indicate certain valuation inputs of a financial instrument become unobservable or significant.
Transfers out of Level
 3
indicate certain valuation inputs of a financial instrument become observable or insignificant. See
Quantitative and qualitative information regarding significant unobservable Valuation inputs
above for the valuation inputs of each financial instruments.
Unrealized gains and losses recognized for Level 3 financial instruments
The following table presents the amounts of unrealized gains (losses) for the years ended March 31, 20202021 and 2021,2022, relating to those financial instruments which Nomura classified in Level 3 within the fair value hierarchy and that were still held by Nomura at the relevant consolidated balance sheet date.
 
   
Billions of yen
 
  
March 31
 
  
2020
  
2021
 
  
Unrealized gains / (losses)
(1)
 
Assets:
         
Trading assets and private equity and debt investments
         
Equities
  ¥(2)  ¥4 
Private equity and debt investments
   1   12 
Japanese agency and municipal securities
   0   0 
Foreign government, agency and municipal securities
   (1)   1 
Bank and corporate debt securities and loans for trading purposes
   (5)   (1) 
Commercial mortgage-backed securities (“CMBS”)
   (1)   0 
Residential mortgage-backed securities (“RMBS”)
   (7)   0 
Real estate-backed securities
   0   (3) 
Collateralized debt obligations (“CDOs”) and other
   (19)   (3) 
Investment trust funds and other
   0   0 
          
Total trading assets and private equity and debt investments
   (34)   10 
          
Derivatives, net
(2)
         
Equity contracts
   36   (66) 
Interest rate contracts
   (19)   16 
Credit contracts
   2   (21) 
Foreign exchange contracts
   (24)   19 
          
Total derivatives, net
   (5)   (52) 
          
Subtotal
  ¥(39)  ¥(42) 
          
Loans and receivables
   (1)   (3) 
Collateralized agreements
   0   (1) 
Other assets
         
Other
   (20)   41 
          
Total
  ¥(60)  ¥(5) 
          
         
   
Billions of yen
 
   
March 31
 
   
2021
  
2022
 
        
   
Unrealized gains / (losses)
(1)
 
Assets:
         
Trading assets and private equity and debt investments
         
Equities
  ¥4  ¥2 
Private equity and debt investments
   12   1 
Japanese agency and municipal securities
   0   0 
Foreign government, agency and municipal securities
   1   0 
Bank and corporate debt securities and loans for trading purposes
   (1)   (2) 
Commercial mortgage-backed securities (“CMBS”)
   0   0 
Residential mortgage-backed securities (“RMBS”)
   0   0 
Real estate-backed securities
   (3)   1 
Collateralized debt obligations (“CDOs”) and other
   (3)   (7) 
Investment trust funds and other
   0   0 
   
 
 
  
 
 
 
Total trading assets and private equity and debt investments
   10   (5) 
   
 
 
  
 
 
 
Derivatives, net
(2)
         
Equity contracts
   (66)   46 
Interest rate contracts
   16   0 
Credit contracts
   (21)   5 
Foreign exchange contracts
   19   (13) 
   
 
 
  
 
 
 
Total derivatives, net
   (52)   38 
   
 
 
  
 
 
 
Subtotal
  ¥(42)  ¥33 
   
 
 
  
 
 
 
Loans and receivables
   (3)   16 
Collateralized agreements
   (1)   0 
Other assets
         
Other
   41   (2) 
   
 
 
  
 
 
 
Total
  ¥(5)  ¥47 
   
 
 
  
 
 
 
 
F-
F-52 49
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Billions of yen
 
  
March 31
 
  
2020
  
2021
 
  
Unrealized gains / (losses)
(1)
 
Liabilities:
         
Trading liabilities
         
Equities
  ¥0  ¥0 
Foreign government, agency and municipal securities
   0   0 
Bank and corporate debt securities
   (1)   0 
Collateralized debt obligations (“CDOs”) and other
   0   0 
          
Total trading liabilities
  ¥(1)  ¥0 
          
Short-term borrowings
(3)
   1   4 
Payables and deposits
(3)
   0   0 
Collateralized financing
(3)
   —     0 
Long-term borrowings
(3)
   19   (17) 
Other liabilities
   —     5 
          
Total
  ¥19  ¥(8) 
          
   
Billions of yen
 
   
March 31
 
   
2021
  
2022
 
        
   
Unrealized gains / (losses)
(1)
 
Liabilities:
         
Trading liabilities
         
Equities
  ¥0  ¥0 
Foreign government, agency and municipal securities
   0   0 
Bank and corporate debt securities
   0   0 
Collateralized debt obligations (“CDOs”) and other
   0   0 
   
 
 
  
 
 
 
Total trading liabilities
  ¥0  ¥0 
   
 
 
  
 
 
 
Short-term borrowings
(3)
   4   2 
Payables and deposits
(3)
   0   0 
Collateralized financing
(3)
   0   0—   
Long-term borrowings
(3)
   (17)   18 
Other liabilities
   5   (7) 
   
 
 
  
 
 
 
Total
  ¥(8)  ¥ 13 
   
 
 
  
 
 
 
 
(1)
Includes gains and losses reported within
Net gain on trading, Gain on private equity and debt investments
, and also within
Gain on investments in equity securities, Revenue—Revenue
—
Other
and
Non-interest expenses—
expenses
—Other, Interest and dividends
and
Interest expense
in the consolidated statements of income.
(2)
Each derivative classification includes derivatives withDerivatives which contain multiple types of risk underlyings. For example, interest rate contracts include complex derivatives referencing interest rateare classified based on the primary risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government debt securities.type of the instrument.
(3)
Includes changes in unrealized gains and losses in
Other comprehensive income (loss)
for recurring Level 3 fair value measurements held at the end of the reporting period. They were ¥2¥0 billion and ¥0¥5 billion for the years ended March 31, 20202021 and 2021.2022.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments in investment funds that calculate NAV per share
In the normal course of business, Nomura invests in
non-consolidated
funds which meet the definition of investment companies or are similar in nature and which do not have readily determinable fair values. For certain of these investments, Nomura uses NAV per share as the basis for valuation as a practical expedient. Some of these investments are redeemable at different amounts from NAV per share.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present information on these investments where NAV per share is calculated or disclosed as of March 31, 20202021 and 2021.2022. Investments are presented by major category relevant to the nature of Nomura’s business and risks.
 
  
Billions of yen
  
Billions of yen
 
  
March 31, 2020
  
March 31, 2021
 
  
Fair value
  
Unfunded

commitments
(1)
  
Redemption frequency

(if currently eligible)
(2)
  
Redemption notice
(3)
  
Fair
value
   
Unfunded

commitments
(1)
   
Redemption frequency

(if currently eligible)
(2)
   
Redemption notice
(3)
 
Hedge funds
   ¥2    ¥0—       Monthly     
Same day-90 days
   ¥2   ¥0—      Monthly    
Same day-30 days
 
Venture capital funds
    3     3     0—       0—    4    2    0—      0—   
Private equity funds
    21     9     0—       0—    18    21    0—      0—   
Real estate funds
    6     1     0—       0—    4    1    0—      0—   
                        
 
   
 
       
Total
   ¥    32    ¥    13              ¥28   ¥24       
                        
 
   
 
       
 
  
Billions of yen
  
Billions of yen
 
  
March 31, 2021
  
March 31, 2022
 
  
Fair value
  
Unfunded

commitments
(1)
  
Redemption frequency

(if currently eligible)
(2)
  
Redemption notice
(3)
  
Fair
value
   
Unfunded

commitments
(1)
   
Redemption frequency

(if currently eligible)
(2)
   
Redemption notice
(3)
 
Hedge funds
   ¥2    ¥0—       Monthly     Same
day
-30
days		   ¥12   ¥1    Monthly    Same
day-
30
days		 
Venture capital funds
    4     2     0—       0—    10    10    0—      0—   
Private equity funds
    18     21     0—       0—    22    19    0—      0—   
Real estate funds
    4     1     0—       0—    4    1    0—      0—   
                        
 
   
 
       
Total
   ¥28    ¥24              ¥    48   ¥    31       
                        
 
   
 
       
 
(1)
The contractual amount of any unfunded commitments Nomura is required to make to the entities in which the investment is held.
(2)
The range in frequency with which Nomura canis permitted to redeem investments.
(3)
The range in notice period required to be provided before redemption is possible.
Hedge funds:
These investments include funds of funds that invest in multiple asset classes. The fair values of these investments are determined using NAV per share. Although most of these funds can be redeemed within six months, certain funds cannot be redeemed within six months due to contractual, liquidity or gating issues. The redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties.
Venture capital funds:
These investments include primarily
start-up
funds. The fair values of these investments are determined using NAV per share. Most of these funds cannot be redeemed within six months. The redemption period is
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties.
Private equity funds:
These investments are made mainly in various sectors in Europe, U.S. and Japan. The fair values of these investments are determined using NAV per share. Redemption is restricted for most of these investments. The
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties.
Real estate funds:
These are investments in commercial and other types of real estate. The fair values of these investments are determined using NAV per share. Redemption is restricted for most of these investments. The redemption period is unknown for certain suspended or liquidating funds. Some of these investments contain restrictions against transfers of the investments to third parties.
Fair value option for financial assets and financial liabilities
Nomura measures certain eligible financial assets and liabilities at fair value through the election of the fair value option permitted by ASC 815 “
Derivatives and Hedging
” and ASC 825 “
Financial Instruments.
” When Nomura elects the fair value option for an eligible item, changes in that item’s fair value are recognized through earnings. Election of the fair value option is generally irrevocable unless an event occurs that gives rise to a new basis of accounting for that instrument.
The financial assets and financial liabilities primarily elected for the fair value option by Nomura, and the reasons for the election, are as follows:
 
Equity method investments reported within
Trading assets and private equity and debt investments
and
Other assets
held for capital appreciation or current income purposes which Nomura generally has an intention to exit rather than hold indefinitely. Nomura elects the fair value option to more appropriately represent the purpose of these investments in these consolidated financial statements.
 
Loans receivable
and
Receivables from customers
reported within
Loans and receivables
which are risk managed on a fair value basis and loan commitments related to loans receivable for which the fair value option will be elected upon funding. Nomura elects the fair value option to mitigate volatility through earnings caused by the difference in measurement basis that otherwise would arise between loans and the derivatives used to risk manage those instruments.
 
Reverse repurchase and repurchase agreements reported within
Collateralized agreements
and
Collateralized financing
which are risk managed on a fair value basis. Nomura elects the fair value option to mitigate volatility through earnings caused by the difference in measurement basis that otherwise would arise between the reverse repurchase and repurchase agreements and the derivatives used to risk manage those instruments.
 
All structured notes issued on or after April 1, 2008 reported within
Short-term borrowings
or
Long-term borrowings
. Nomura elects the fair value option for those structured notes primarily to mitigate the volatility through earnings caused by differences in the measurement basis for structured notes and the derivatives Nomura uses to risk manage those positions. Nomura also elects the fair value option for certain notes issued by consolidated VIEs for the same purpose and for certain structured notes issued prior to April 1, 2008. Certain subsidiaries elect the fair value option for structured loans and straight bonds.
vanilla debt securities issued by those subsidiaries.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Certain structured deposit issuances reported within
Deposits received at banks.
Nomura elects the fair value option for those structured deposits primarily to mitigate the volatility through earnings caused by differences in the measurement basis for structured deposits and the derivatives Nomura uses to risk manage those positions.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Financial liabilities reported within
Long-term borrowings
recognized in transactions which are accounted for as secured financing transactions under ASC 860. Nomura elects the fair value option for these financial liabilities to mitigate volatility through earnings that otherwise would arise had this election not been made. Even though Nomura usually has little or no continuing economic exposure to the transferred financial assets, they remain on the consolidated balance sheets and continue to be carried at fair value, with changes in fair value recognized through earnings.
Financial reinsurance contracts reported within
Other assets
. Nomura elects the fair value option to mitigate income volatility caused by the difference in measurement basis that would otherwise exist. Changes in the fair value of the reinsurance contracts carried at fair value are reported in the consolidated statements of income.
On April 1, 2020, Nomura also elected the fair value option for certain loans and loan commitments originated or purchased by the Wholesale division as part of its adoption of ASC 326. This election was made to allow these positions to be more appropriately risk managed on a prospective basis through the impact of the
COVID-19 pandemic.
pandemic at such time. Risk management for this purpose has included hedging these positions and also selling certain positions within the portfolio as and when active markets and buyers returned. These positions elected for the FVO were selected primarily based on the activity of the borrower, internal credit rating and from a credit and market risk perspective.
The impact of this election was to reduce the carrying value of recognized loans receivable as reported within
Loans and receivables
by ¥9,774 million as of April 1, 2020 as the fair value of these positions was below carrying value at such date. Similarly, a liability of JPY ¥5,888 million was recognized and reported within
Other liabilities
for loan commitments at such date as the fair value of these positions was negative. In both cases, fair value was below carrying value or negative primarily as a result of the volatile credit markets and impact of the
COVID-19
pandemic on credit spreads at such date.
The total difference between carrying value and fair value of ¥15,662 
million, net of tax, was recognized in opening
Retained earnings
as a cumulative effect adjustment on April 1, 2020. Subsequent changes in fair value after April 1, 2020 have been recognized in earnings and reported within
Revenue—Net gain (loss) on trading
.
In March 2021, Nomura also elected the fair value option for certain claims receivable arising from the U.S. prime brokerage losses.Prime Brokerage Event. This election was made as these receivables will be prospectively managed on a fair value basis. The receivables are reported within
Loans and receivables
andwith any subsequent changes in fair value recognized in earnings and reported within
Revenue—Net gain (loss) on tradingtrading.
.
See Note.23 “
U.S. Prime Brokerage Event
” for further information on this event.
Interest and dividends arising from financial instruments for which the fair value option has been elected are recognized within
Interest and dividends, Interest expense
or
Revenue—Net gain on trading
.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents gains (losses) due to changes in fair value for financial instruments measured at fair value using the fair value option for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
   
Billions of yen
 
   
Year ended March 31
 
   
  2019  
  
  2020  
  
  2021  
 
   
Gains/(Losses)
(1)
 
Assets:
             
Trading assets and private equity and debt investments
(2)
             
Trading assets
  ¥0  ¥1  ¥2 
Private equity and debt investments
   1   (1)   0 
Loans and receivables
   (2)   2   7 
Collateralized agreements
(3)
   2   4   5 
Other assets
(2)
   (26)   (16)   51 
              
Total
  ¥(25)  ¥(10)  ¥65 
              
Liabilities:
             
Short-term borrowings
(4)
  ¥28  ¥64  ¥(83) 
Payables and deposits
   —     0   3 
Collateralized financing
(3)
   0   (2)   9 
Long-term borrowings
(4)(5)
   (38)   58   (194) 
Other liabilities
(6)
   3   2   3 
              
Total
  ¥(7)  ¥122  ¥(262) 
              
   
Billions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
           
   
Gains/(Losses)
(1)
 
Assets:
             
Trading assets and private equity and debt investments
(2)
             
Trading assets
  ¥    1  ¥     2   ¥    1 
Private equity and debt investments
   (1)   0   6 
Loans and receivables
   2   7   39 
Collateralized agreements
(3)
   4   5   (1) 
Other assets
(2)
   (16)   51   (3) 
   
 
 
  
 
 
  
 
 
 
Total
  ¥(10)  ¥65  ¥42 
   
 
 
  
 
 
  
 
 
 
Liabilities:
             
Short-term borrowings
(4)
  ¥64  ¥(83)  ¥60 
Payables and deposits
   0   3   4 
Collateralized financing
(3)
   (2)   9   3 
Long-term borrowings
(4)(5)
   58   (194)   275 
Other liabilities
(6)
   2   3   4 
   
 
 
  
 
 
  
 
 
 
Total
  ¥122  ¥(262)  ¥346 
   
 
 
  
 
 
  
 
 
 
 
(1)
Includes gains and losses reported primarily within
Revenue—Net gain on trading
and
Revenue—Revenue
—
Other
in the consolidated statements of income.
(2)
Includes equity investments that would have been accounted for under the equity method had Nomura not chosen to elect the fair value option.
(3)
Includes reverse repurchase and repurchase agreements.
(4)
Includes structured notes and other financial liabilities.
(5)
Includes secured financing transactions arising from transfers of financial assets which did not meet the criteria for sales accounting.
(6)
Includes unfunded written loan commitments.
As of March 31, 20202021 and 2021,2022, Nomura held an economic interest of 39.19%39.27% and 39.27%39.21% in American Century Companies, Inc., respectively. The investment is measured at fair value on a recurring basis through election of the fair value option and is reported within
Other assets – assets—Other
in the consolidated balance sheets
.
There was no significant impact on financial assets for which the fair value option was elected
Changes in gains and losses attributable to instrument-specific credit risk.risk of loans and receivables elected for the FVO during the year ended March 31, 2022 were primarily due to a recovery of increasing in the estimated fair value of certain transactions with a U.S. client in connection with the U.S. Prime Brokerage Event elected to be measured at fair value and not significant from others. See Note 23 “
U.S. Prime Brokerage Event
” for further information on this event.
Nomura calculates the impact of changes in its own creditworthiness on certain financial liabilities for which the fair value option is elected by DCF valuationrevaluation techniques using a rate which incorporates observable changes in its credit spread.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents changes in the valuation adjustment for Nomura’s own creditworthiness recognized in other comprehensive income during the years pertaining to certain financial liabilities for which the fair value option has been elected recognized in other comprehensive income during the years and cumulatively, and amounts reclassified to earnings from accumulated other comprehensive income on early settlement of such financial liabilities during the years ended March 
31 2020
,
2021
and 2021.
2022
 
   
Billions of Yen
 
   
Year ended March 31
 
   
  2020  
  
  2021  
 
Changes recognized as a credit (debit) to other comprehensive income
  ¥49  ¥(88) 
Credit (debit) amounts reclassified to earnings
   (1)   (10) 
Cumulative credit (debit) balance recognized in accumulated other comprehensive income
   80   (11) 
As of March 31, 2020, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Loans and receivables
for which the fair value option was elected was ¥8 billion less than the principal balance of such
Loans and receivables
. The fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Long-term borrowings
for which the fair value option was elected was ¥27 billion less than the principal balance of such
Long-term borrowings
. There were no
Loans and receivables
for which the fair value option was elected that were 90 days or more past due.
   
Billions of Yen
 
   
Year ended March 31
 
   
  2021  
  
  2022  
 
Changes recognized as a credit (debit) to other comprehensive income
  ¥(88)  ¥60 
Credit (debit) amounts reclassified to earnings
   (10)   1 
Cumulative credit (debit) balance recognized in accumulated other comprehensive income
   (11)   49 
As of March 31, 2021, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Loans and receivables
for which the fair value option was elected was ¥219 
billion less than the principal balance of such
Loans and receivables
. TheA significant portion of the principal balance is derived fromrelates to receivables recognized for the claim of the losses on the related hedges from default byclaims in connection with the U.S. client. prime brokerage event in March 2021. See Note.23
“U.S. Prime Brokerage Event”
for further information on this event. There were no
Loans and receivables
for which the fair value option was elected that were 90 days or more past due.
The fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Long-term borrowings
for which the fair value option was elected was ¥
45
¥45 billion less than the principal balance of such
Long-term borrowings
. There were no
As of March 31, 2022, the fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Loans and receivables
for which the fair value option was elected was ¥267 
billion less than the principal balance of such
Loans and receivables
. A significant portion of the principal balance relates to receivables recognized for claims in connection with the U.S. prime brokerage event in March 2021. See Note.23
“U.S. Prime Brokerage Event”
for further information on this event. The unpaid principal balance of
Loans and receivables
for which the fair value option was elected that were 90 days or more past due.due was ¥278 billion.
The fair value of the aggregate unpaid principal balance (which is contractually principally protected) of
Long-term borrowings
for which the fair value option was elected was ¥212 billion less than the principal balance of such
Long-term borrowings
.
Investment by Investment companies
Nomura carries all of investments by investment companies under ASC 946 “
Financial Services—Investment Companies
” (“ASC 946”) at fair value, with changes in fair value recognized through the consolidated statements of income.
Concentrations of credit risk
Concentrations of credit risk may arise from trading, securities financing transactions and underwriting activities, and may be impacted by changes in political or economic factors. Nomura has credit risk concentrations on debt securities issued by the Japanese Government, U.S. Government, British Government (“U.K.”), Governments within the European Union (“EU”), their states and municipalities, and their agencies.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
These concentrations generally arise from taking trading positions and are reported within
Trading assets
in the consolidated balance sheets. Government, agency and municipal securities, including
Securities pledged as collateral
, represented 16%15% of total assets as of March 31, 20202021 and 15%
16% as of March 31, 2021.2022.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present geographic allocations of Nomura’s trading assets related to government, agency and municipal securities as of March 31, 20202021 and 2021.2022. See Note 3 “
Derivative instruments and hedging activities
” for further information regarding the concentration of credit risk for derivatives.
 
   
Billions of yen
 
   
March 31, 2020
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,934   ¥1,889   ¥2,704   ¥672   ¥7,199 
   
Billions of yen
 
   
March 31, 2021
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,715   ¥1,888   ¥2,329   ¥620   ¥6,552 
 
   
Billions of yen
 
   
March 31, 2021
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,715   ¥1,888   ¥2,329   ¥620   ¥6,552 
   
Billions of yen
 
   
March 31, 2022
 
   
Japan
   
U.S.
   
EU & U.K.
   
Other
   
Total
(1)
 
Government, agency and municipal securities
  ¥1,916   ¥2,368   ¥2,151   ¥721   ¥7,156 
(1)
Other than above, there were ¥321¥299 billion and ¥299¥331 billion of government, agency and municipal securities reported within
Other assets
assets—
—
Non-trading
debt securities
in the consolidated balance sheets as of March 31, 20202021 and 2021,2022, respectively. These securities are primarily Japanese government, agency and municipal securities.
Estimated fair value of financial instruments not carried at fair value
Certain financial instruments are not carried at fair value on a recurring basis in the consolidated balance sheets since they are neither held for trading purposes nor are elected for the fair value option. These are typically carried at contractual amounts due or amortized cost.
The carrying value of the majority of the financial instruments detailed below will approximateapproximates their fair value since they are short-term in nature and contain minimal credit risk. These financial instruments include financial assets reported within
Cash and cash equivalents, Time deposits, Deposits with stock exchanges and other segregated cash, Receivables from customers, Receivables from other than customers, Securities purchased under agreements to resell
and
Securities borrowed
and financial liabilities reported within
Short-term borrowings, Payables to customers, Payables to other than customers, Deposits received at banks, Securities sold under agreements to repurchase, Securities loaned
and
Other secured borrowings
in the consolidated balance sheets.
The fair values of other financial instruments which are longer-term in nature or may contain more than minimal credit risk may be different to their carrying value. Financial assets of this type primarily include certain loans which are reported within
Loans receivable
while financial liabilities primarily include long-term borrowings which are reported within
Long-term
borrowings
.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present carrying values, fair values and classification within the fair value hierarchy for certain classes of financial instrument of which a portion of the ending balance was carried at fair value as of March 31, 20202021 and 2021.2022.

  
Billions of yen
 
  
March 31, 2021
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,510  ¥3,510  ¥3,510  ¥
0—  
  ¥
0—  
 
Time deposits
  281   281   0—     281   
0—  
 
Deposits with stock exchanges and other segregated cash
  374   374   0—     374   
0—  
 
Loans receivable
(2)
  2,937   2,937   0—     2,120   817 
Securities purchased under agreements to resell
  10,775   10,775   0—     10,757   18 
Securities borrowed
  5,264   5,264   0—     5,264   
0—  
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥23,141  ¥23,141  ¥3,510  ¥18,796  ¥   835 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Short-term borrowings
 ¥1,368  ¥1,368  ¥—    ¥1,265  ¥103 
Deposits received at banks
  1,342   1,343   
0—  
   1,342   1 
Securities sold under agreements to repurchase
  13,360   13,360   
0—  
   13,360   0 
Securities loaned
  1,381   1,381   
0—  
   1,381   
0—  
 
Other secured borrowings
  393   393   
0—  
   393   
0—  
 
Long-term borrowings
  7,975   7,978   5   7,370   603 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥25,819  ¥25,823  ¥       5  ¥25,111  ¥   707 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
  
Billions of yen
 
  
March 31, 2020
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,192  ¥3,192  ¥3,192  ¥0—    ¥0—   
Time deposits
  309   309   0—     309   0—   
Deposits with stock exchanges and other segregated cash
  374   374   0—     374   0—   
Loans receivable
(2)
  2,848   2,842   0—     2,201   641 
Securities purchased under agreements to resell
  12,377   12,377   0—     12,362   15 
Securities borrowed
  3,530   3,529   0—     3,529   0—   
                     
Total
 ¥22,630  ¥22,623  ¥3,192  ¥18,775  ¥656 
                     
Liabilities:
                    
Short-term borrowings
 ¥1,487  ¥1,487  ¥0—    ¥1,458  ¥29 
Deposits received at banks
  1,276   1,276   0—     1,275   1 
Securities sold under agreements to repurchase
  16,349   16,349   0—     16,349   0—   
Securities loaned
  961   962   0—     962   0—   
Other secured borrowings
  718   718   0—     718   0—   
Long-term borrowings
  7,776   7,733   2   7,263   468 
                     
Total
 ¥28,567  ¥28,525  ¥2  ¥28,025  ¥498 
                     
  
  
Billions of yen
 
  
March 31, 2021
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,510  ¥3,510  ¥3,510  ¥0—    ¥0—   
Time deposits
  281   281   0—     281   0—   
Deposits with stock exchanges and other segregated cash
  374   374   0—     374   0—   
Loans receivable
(2)
  2,937   2,937   0—     2,120   817 
Securities purchased under agreements to resell
  10,775   10,775   0—     10,757   18 
Securities borrowed
  5,264   5,264   0—     5,264   0—   
                     
Total
 ¥23,141  ¥23,141  ¥3,510  ¥18,796  ¥      835 
                     
  
Billions of yen
 
  
March 31, 2022
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Assets:
                    
Cash and cash equivalents
 ¥3,316  ¥3,316  ¥3,316  ¥
0—  
  ¥
0—  
 
Time deposits
  321   321   
0—  
   321   
0—  
 
Deposits with stock exchanges and other segregated cash
  427   427   
0—  
   427   
0—  
 
Loans receivable
(2)
  3,515   3,515   
0—  
   2,461   1,054 
Securities purchased under agreements to resell
  11,879   11,879   
0—  
   11,863   16 
Securities borrowed
  4,997   4,994   
0—  
   4,994   
0—  
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥24,455  ¥24,452  ¥3,316  ¥20,066  ¥1,070 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Liabilities:
                    
Short-term borrowings
 ¥1,050  ¥1,050  ¥
0—  
  ¥993  ¥57 
Deposits received at banks
  1,761   1,761   
0—  
   1,752   9 
Securities sold under agreements to repurchase
  12,575   12,575   
0—  
   12,575   0 
Securities loaned
  1,567   1,568   
0—  
   1,568   
0—  
 
Other secured borrowings
  396   396   
0—  
   396   
0—  
 
Long-term borrowings
  9,258   9,236   23   8,688   525 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥26,607  ¥26,586  ¥23  ¥25,972  ¥591 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
  
Billions of yen
 
  
March 31, 2021
(1)
 
        
Fair value by level
 
  
Carrying

value
  
Fair
value
  
Level 1
  
Level 2
  
Level 3
 
Liabilities:
                    
Short-term borrowings
 ¥1,368  ¥1,368  ¥0—    ¥1,265  ¥103 
Deposits received at banks
  1,342   1,343   0—     1,342   1 
Securities sold under agreements to repurchase
  13,360   13,360   0—     13,360   0 
Securities loaned
  1,381   1,381   0—     1,381   0—   
Other secured borrowings
  393   393      0—     393   0—   
Long-term borrowings
  7,975   7,978   5   7,370   603 
                     
Total
 ¥25,819  ¥25,823  ¥5  ¥25,111  ¥      707 
                     
(1)
Includes financial instruments which are carried at fair value on a recurring basis.
(2)
Carrying values are shown after deducting relevant allowances for credit losses.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Assets and liabilities measured at fair value on a nonrecurring basis
In addition to financial instruments carried at fair value on a recurring basis, Nomura also measures other financial and
non-financial
assets and liabilities at fair value on a nonrecurring basis, where the primary measurement basis is not fair value. Fair value is only used in specific circumstances after initial recognition such as to measure impairment.
As of March 31, 2020, there were no significant amount of assets and liabilities which were measured at fair value on a nonrecurring basis.
As of March 31, 2021, the equity method investment in Nomura Real Estate Holdings, Inc., one of Nomura’s affiliated companies, is measured at fair value on a nonrecurring basis. The investment that is reported within
Investments in and advances to affiliated companies
in the consolidated balance sheets was impaired by ¥47,661 million. The fair value used to measure the other than temporary impairment was the quoted market price as of March 31, 2021 which would be classified in Level 1 of the fair value hierarchy. See Note 20
19
“
Affiliated companies and other equity-method investees
” for further information.
As of March 31, 2022, there were no significant amount of assets
or
liabilities which were measured at fair value on a nonrecurring basis.
3. Derivative instruments and hedging activities:
Nomura uses a variety of derivative financial instruments,derivatives, including futures, forwards, options and swaps, for both trading and
non-trading
purposes.
Derivatives used for trading purposes
In the normal course of business, Nomura enters into transactions involving derivative financial instrumentsderivatives to meet client needs, for trading purposes, and to reduce its own exposure to loss due to adverse fluctuations in interest rates, currency exchange rates and market prices of securities. These financial instruments include contractual agreements such as commitments to swap interest payment streams, exchange currencies or purchase or sell securities and other financial instruments on specific terms at specific future dates.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura maintains active trading positions in a variety of derivative financial instruments.derivatives. Most of Nomura’s trading activities are client oriented. Nomura utilizes a variety of derivative financial instrumentsderivatives as a means of bridging clients’ specific financial needs and investors’ demands in the securities markets. Nomura also actively trades securities and various derivatives to assistfacilitate its clients in adjusting their risk profiles as markets change. In performing these activities, Nomura carries an inventory of capital markets instruments and maintains its access to market liquidity by quoting bid and offer prices to and trading with other market makers. These activities are essential to provide clients with securities and other capital market products at competitive prices.
Futures and forward contracts are commitments to either purchase or sell securities, foreign exchange contracts or other capital market instruments at a specific future date for a specified price and may be settled in cash or through delivery. Foreign exchange contracts include spot and forward contracts and involve the exchange of two currencies at a rate agreed by the contracting parties. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in market prices. Futures contracts are executed through exchanges which clear and guarantee performance of counterparties. Accordingly, credit risk associated with futures contracts is considered minimal. In contrast, forward contracts are generally negotiated between two counterparties and, therefore, are subject to counterparty risks.
Options are contracts that grant the purchaser, for a premium payment, the right to either purchase or sell a financial instrument at a specified price within a specified period of time or on a specified date from or to the
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
writer of the option. The writer of options receives premiums and bears the risk of unfavorable changes in the market price of the financial instruments underlying the options.
Swaps are contractual agreements in which two counterparties agree to exchange certain cash flows, at specified future dates, based on an agreed contract. Certain agreements may result in combined interest rate and foreign exchange exposures. Entering into swap agreements may involve the risk of credit losses in the event of counterparty default.
To the extent these derivative financial instrumentsderivatives are economically hedging financial instruments or securities positions of Nomura, the overall risk of loss may be fully or partly mitigated by the hedged position
.position.
Nomura seeks to minimize its exposure to market risk arising from its use of these derivative financial instrumentsderivatives through various control policies and procedures, including position limits, monitoring procedures and hedging strategies whereby Nomura enters into offsetting or other positions in a variety of financial instruments.
Derivatives used for
non-trading
purposes
Nomura’s principal objectives in using derivatives for
non-trading
purposes are to manage interest rate risk, to modify interest rate risk profile of certain financial liabilities, to manage foreign exchange risk of certain foreign currency denominated debt securities, to manage net investment exposure to fluctuations in foreign exchange rates arising from certain foreign operations and to mitigate equity price risk arising from certain stock-based compensation awards given to employees. Credit risk associated with derivatives utilized for
non-trading
purposes is controlled and managed in the same way as that associated with derivatives used for trading purposes.
Fair value hedges
Nomura designates certain derivative financial instrumentsderivatives as fair value hedges of interest rate risk arising from specific financial liabilities and foreign currency risk arising from specific foreign currency denominated debt securities. These derivatives are effective in reducing the risk associated with the exposure being hedged
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
and are highly correlated with changes in the fair value and foreign currency rates of the underlying hedged items, both at inception and throughout the life of the hedging relationship. Changes in fair value of the hedging derivatives are reported together with those of the hedged liabilities and assets through the consolidated statements of income within
Interest expense
and
Revenue—Revenue
—
Other
, respectively.
Net investment hedges
Derivative financial instrumentsNomura designates certain derivatives designated as hedges of theits net investment in foreign operations relaterelating to specific subsidiaries withwhich have
non-Japanese
Yen functional currencies. When determining the effectiveness of net investment hedges, the effective portion of the change in fair value of the hedging derivative is determined by changes in spot exchange rates. Changes in fair value of the hedging derivatives attributable to changes in the difference between the forward rate and spot rate are excluded from the measurement of hedge effectiveness and are reported in the consolidated statements of income within
Revenue—OtherRevenue-Other
. All other movements in the fair value of highly effective net investment hedging derivatives are reported through NHI shareholders’ equity within
Accumulated other comprehensive income (loss)
.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Concentrations of credit risk for derivatives
The following tables present Nomura’s significant concentration of exposures to credit risk in OTC derivatives with financial institutions including transactions cleared through central counterparties as of March 31, 20202021 and 2021.2022. The gross fair value of derivative assets represents the maximum amount of loss due to credit risk that Nomura would incur if the counterparties of Nomura failed to perform in accordance with the terms of the instruments and any collateral or other security Nomura held in relation to those instruments proved to be of no value.
   
Billions of yen
 
   
March 31, 2020
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
  
Impact of

collateral
  
Net exposure to

credit risk
 
Financial institutions
  ¥17,711   ¥(15,479)  ¥(1,707)  ¥525 
 
   
Billions of yen
 
   
March 31, 2021
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
  
Impact of

collateral
  
Net exposure to

credit risk
 
Financial institutions
  ¥13,474   ¥(11,473)  ¥(1,500)  ¥501 
   
Billions of yen
 
   
March 31, 2021
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
  
Impact of

collateral
  
Net exposure to

credit risk
 
Financial institutions
  ¥13,474   ¥(11,473)  ¥(1,500)  ¥501 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Billions of yen
 
   
March 31, 2022
 
   
Gross fair value of

derivative assets
   
Impact of

master netting

agreements
  
Impact of

collateral
  
Net exposure to

credit risk
 
Financial institutions
  ¥15,667   ¥(13,193)  ¥(1,669)  ¥805 
Derivative activities
The following tables quantify the volume of Nomura’s derivative activitypositions as of March 31, 20202021 and 20212022 through a disclosure of notional amounts, in comparison with the fair value of those derivatives. All amounts are disclosed on a gross basis, prior to counterparty nettingoffsetting of derivative assets and liabilities and cash collateral nettingoffsetting against net derivatives. Derivatives which contain multiple types of risk are classified in the table based on the primary risk type of the instrument. Changes in the fair value of derivatives are recognized either through earnings or other comprehensive income depending on the purpose for which the derivatives are used.
 
      
Billions of yen
       
Billions of yen
 
      
March 31, 2020
       
March 31, 2021
 
��      
Derivative

assets
   
Derivative

liabilities
 
      
Derivative

assets
   
Derivative

liabilities
   
Total notional
(1)
   
Fair value
   
Fair value
(1)
 
  
Total Notional
(1)
   
Fair value
   
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)(3)
:
         
Derivatives used for trading and
non-trading
purposes
(2)
:
         
Equity contracts
  ¥47,976   ¥1,921   ¥2,008   ¥40,396   ¥1,402   ¥2,229 
Interest rate contracts
   2,522,172    13,590    13,214    2,524,407    9,617    9,023 
Credit contracts
   36,155    407    457    38,850    455    523 
Foreign exchange contracts
   267,313    5,224    5,104    351,662    4,511    4,402 
Commodity contracts
   601    9    6    334    1    0 
              
 
   
 
   
 
 
Total
  ¥2,874,217   ¥21,151   ¥20,789   ¥2,955,649   ¥15,986   ¥16,177 
              
 
   
 
   
 
 
Derivatives designated as hedging instruments:
         
Derivatives designated as formal fair value or net investment accounting hedges:
         
Interest rate contracts
  ¥1,064   ¥39   ¥0   ¥1,168   ¥15   ¥14 
Foreign exchange contracts
   115    0—      1    130    5    0—   
              
 
   
 
   
 
 
Total
  ¥1,179   ¥39   ¥1   ¥1,298   ¥20   ¥14 
              
 
   
 
   
 
 
Total derivatives
  ¥2,875,396   ¥21,190   ¥20,790   ¥2,956,947   ¥16,006   ¥16,191 
              
 
   
 
   
 
 
  
      
Billions of yen
 
      
March 31, 2021
 
      
Derivative

assets
   
Derivative

liabilities
 
  
Total Notional
(1)
   
Fair value
   
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)(3)
:
         
Equity contracts
  ¥40,396   ¥1,402   ¥2,229 
Interest rate contracts
   2,524,407    9,617    9,023 
Credit contracts
   38,850    455    523 
Foreign exchange contracts
   351,662    4,511    4,402 
Commodity contracts
   334    1    0 
            
Total
  ¥2,955,649   ¥15,986   ¥16,177 
            
Derivatives designated as hedging instruments:
         
Interest rate contracts
  ¥1,168   ¥15   ¥14 
Foreign exchange contracts
   130    5    0—   
            
Total
  ¥1,298   ¥20   ¥14 
            
Total derivatives
  ¥2,956,947   ¥16,006   ¥16,191 
            
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
       
Billions of yen
 
       
March 31, 2022
 
       
Derivative

assets
   
Derivative

liabilities
 
   
Total notional
(1)
   
Fair value
   
Fair value
(1)
 
Derivatives used for trading and
non-trading
purposes
(2)
:
               
Equity contracts
  ¥34,526   ¥974   ¥1,457 
Interest rate contracts
   2,769,546    11,938    10,865 
Credit contracts
   37,572    443    514 
Foreign exchange contracts
   314,763    4,804    4,814 
Commodity contracts
   300    1    1 
   
 
 
   
 
 
   
 
 
 
Total
  ¥3,156,707   ¥18,160   ¥17,651 
   
 
 
   
 
 
   
 
 
 
Derivatives designated as formal fair value or net investment accounting hedges:
               
Interest rate contracts
  ¥2,166   ¥
0—
  		   ¥88 
Foreign exchange contracts
   145    2    
0—
  		 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,311   ¥2   ¥88 
   
 
 
   
 
 
   
 
 
 
Total derivatives
  ¥3,159,018   ¥18,162   ¥17,739 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2)Each derivative classification includes derivatives referencing multiple risk components. For example, certain interest rate contracts include complex derivatives referencing interest rate risk as well as foreign 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government securities.
(3)
As of March 31, 20202021 and 2021,2022, the amounts reported include derivatives used for
non-trading
purposes which are notother than those designated as fair value or net investment accounting hedges. These amounts have not been separately presented since such amounts were not significant.
Changes in fair value are recognized either through earnings or other comprehensive income depending on the purpose for which the derivatives are used.
Offsetting of derivatives
Counterparty credit risk associated with derivative financial instrumentsderivatives is controlled by Nomura through credit approvals, limits and monitoring procedures. To reduce the risk of loss, Nomura requires collateral, principally cash collateral and government securities, for certain derivative transactions. In certain cases, Nomura may agree for such collateral to be posted to a third-party custodian under a control agreement that enables Nomura to take control of such collateral in the event of counterparty default. From an economic standpoint, Nomura evaluates default risk exposure net of related collateral. Furthermore, OTC derivative transactions are typically documented under industry standard master netting agreements which mitigate Nomura’s credit exposure to counterparties. A master netting agreement is a single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency in the event of a default of the counterparty (“
(“close-out
and offsetting rights”).
For certain OTC centrally-cleared and exchange-traded derivatives, the clearing or membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of the relevant central clearing party or exchange. Nomura generally seeks to obtain an external legal opinion in order to ascertinascertain the enforceability of such
close-out
and offsetting rights within these agreements.
For certain counterparties and/ or in certain jurisdictions, Nomura may enter into derivative transactions which are not documented under a master netting agreement. Even when derivatives are documented under such agreements, Nomura may not have obtained, or may not be able to obtain evidence to determine with sufficient certainty that
close-out
and offsetting rights within such agreements are legally enforceable. This may be the case where the relevant local laws explicitly prohibit the enforceability of such
close-out
and offsetting rights, or
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
where the local laws are complex, ambiguous or silent on the enforceability of such rights. This may include derivative transactions executed with certain foreign governments, agencies, municipalities, central clearing counterparties, exchanges and pension funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirements from the counterparty.
Derivative assets and liabilities with the same counterparty and the related cash collateral receivables and payables documented under an enforceable master netting agreement are presented on a net basis on the consolidated balance sheets where the specific criteria defined by ASC
210-20
and ASC 815 are met.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents information about offsetting of derivatives and related cash collateral amounts on the consolidated balance sheets as of March 31, 20202021 and 20212022 by type of derivative contract, and additional amounts permitted to be offset legally by Nomura under enforceable master netting agreements, central clearing counterparties or exchange rules in the event of counterparty default but not offset on the consolidated balance sheets due to one or more of the criteria defined by ASC
210-20
and ASC 815 are not met. Derivative transactions which are not documented under a master netting agreement or are documented under a master netting agreement for which Nomura does not have sufficient evidence of enforceability of
close-out
and offsetting rights are not offset in the following table.
 
  
Billions of yen
 
Billions of yen
   
Billions of yen
 
Billions of yen
 
  
March 31, 2020
 
March 31, 2021
   
March 31, 2021
 
March 31, 2022
 
  
Derivative

assets
 
Derivative

liabilities
(1)
 
Derivative

assets
 
Derivative

liabilities
(1)
   
Derivative

assets
 
Derivative

liabilities
(1)
 
Derivative

assets
 
Derivative

liabilities
(1)
 
Equity contracts
                  
OTC settled bilaterally
  ¥869  ¥875  ¥904  ¥1,439   ¥904  ¥1,439  ¥709  ¥1,054 
Exchange-traded
   1,052   1,133   498   790    498   790   265   403 
Interest rate contracts
                  
OTC settled bilaterally
   11,881   11,438   8,456   7,871    8,456   7,871   9,486   8,584 
OTC centrally-cleared
   1,692   1,758   1,147   1,146    1,147   1,146   2,332   2,309 
Exchange-traded
   56   18   29   20    29   20   120   60 
Credit contracts
                  
OTC settled bilaterally
   278   311   169   251    169   251   208   276 
OTC centrally-cleared
   126   132   282   269    282   269   223   224 
Exchange-traded
   3   14   4   3    4   3   12   14 
Foreign exchange contracts
                  
OTC settled bilaterally
   5,224   5,105   4,516   4,402    4,516   4,402   4,806   4,814 
Commodity contracts
                  
OTC settled bilaterally
   1   1   0   00    0   0   1   1 
Exchange-traded
   8   5   1   0    1   0   0   0 
               
 
  
 
  
 
  
 
 
Total gross derivative balances
(2)
  ¥21,190  ¥20,790  ¥16,006  ¥16,191   ¥16,006  ¥16,191  ¥18,162  ¥17,739 
Less: Amounts offset in the consolidated balance sheets
(3)
   (19,248)   (18,987)   (14,786)   (14,697)    (14,786)   (14,697)   (16,608)   (16,079) 
               
 
  
 
  
 
  
 
 
Total net amounts reported on the face of the consolidated balance sheets
(4)
  ¥1,942  ¥1,803  ¥1,220  ¥1,494   ¥1,220  ¥1,494  ¥1,554  ¥1,660 
Less: Additional amounts not offset in the consolidated balance sheets
(5)
         
Financial instruments and
non-cash
collateral
  ¥(240)  ¥(310)  ¥(432)  ¥(134) 
  
 
  
 
  
 
  
 
 
Net amount
  ¥980  ¥1,184  ¥1,122  ¥1,526 
  
 
  
 
  
 
  
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Billions of yen
  
Billions of yen
 
   
March 31, 2020
  
March 31, 2021
 
   
Derivative

assets
  
Derivative

liabilities
(1)
  
Derivative

assets
  
Derivative

liabilities
(1)
 
Less: Additional amounts not offset in the consolidated balance sheets
(5)
                 
Financial instruments and
non-cash
collateral
  ¥(182)  ¥(125)  ¥(240)  ¥(310) 
                  
Net amount
  ¥   1,760  ¥   1,678  ¥      980  ¥   1,184 
                  
 
(1)
Includes the amount of embedded derivatives bifurcated in accordance with ASC 815.
(2)
Includes all gross derivative asset and liability balances irrespective of whether they are transacted under a master netting agreement or whether Nomura has obtained sufficient evidence of enforceability of the master netting agreement. As of March 31, 2020,2021, the gross balance of derivative assets and derivative liabilities which are not documented under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥1,013¥392 billion and ¥1,046¥589 billion, respectively. As of March 31, 2021,2022, the gross balance of such derivative assets and derivative liabilities was ¥392¥458 billion and ¥589¥671 billion, respectively.
(3)
Represents amounts offset through counterparty nettingoffsetting of derivative assets and liabilities as well as cash collateral nettingoffsetting against net derivatives under master netting and similar agreements for which Nomura has obtained sufficient evidence of enforceability in accordance with ASC 815. As of March 31, 2020, Nomura offset a total of ¥1,679 billion of cash collateral receivables against net derivative liabilities and ¥1,940 billion of cash collateral payables against net derivative assets. As of March 31, 2021, Nomura offset a total of ¥1,594 billion of cash collateral receivables against net derivative liabilities and ¥1,683 billion of cash collateral payables against net derivative assets. As of March 31, 2022, Nomura offset a total of ¥1,431 billion of cash collateral receivables against net derivative liabilities and ¥1,960 billion of cash collateral payables against net derivative assets.
(4)
Net derivative assets and net derivative liabilities are generally reported within
Trading assets and private equity investments—and debt investments
—
Trading assets
and
Trading liabilities
, respectively in the consolidated balance sheet. Bifurcated embedded derivatives are reported within
Short-term borrowings
or
Long-term borrowings
depending on the maturity of the underlying host contract.
(5)
Represents amounts which are not permitted to be offset on the consolidated balance sheets in accordance with ASC
210-20
and ASC 815 but which provide Nomura with a legally enforceable right of offset in the event of counterparty default. Amounts relating to derivative and collateral agreements where Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded. As of March 31, 2020, a total of ¥374 billion of cash collateral receivables and ¥540 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives. As of March 31, 2021, a total of ¥283 billion of cash collateral receivables and ¥572 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives. As of March 31, 2022, a total of ¥359 billion of cash collateral receivables and ¥652 billion of cash collateral payables, including amounts reported in the table, have not been offset against net derivatives.
For information on offsetting of collateralized transactions, see Note 5 “
Collateralized transactions
”.
Derivatives used for trading purposes
Derivative financial instruments used for trading purposes, including bifurcated embedded derivatives, are carried at fair value with changes in fair value recognized through the consolidated statements of income within
Revenue—Net gain on trading
.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents amounts included in the consolidated statements of income for the years ended March 31, 2019, 2020, 2021 and 20212022 related to derivatives used for trading and
non-trading
purposes by typetypes of underlying derivative contract.
Derivatives which contain multiple types of risk are classified in the table based on the primary risk type of instrument.
 
  
Billions of yen
   
Billions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Derivatives used for trading and
non-trading
purposes
(1)(2)
:
                                              
Derivatives used for trading and
non-trading
purposes
(1)
:
                                                  
Equity contracts
  ¥(32)  ¥93  ¥26   ¥93  ¥26  ¥(36) 
Interest rate contracts
   104   (192)   254    (192)   254   198 
Credit contracts
   (19)   (118)   (90)    (118)   (90)   (118) 
Foreign exchange contracts
   (50)   57   (11)    57   (11)   27 
Commodity contracts
   10   (1)   50    (1)   50   87 
            
 
  
 
  
 
 
Total
  ¥13  ¥(161)  ¥229   ¥(161)  ¥229  ¥158 
            
 
  
 
  
 
 
 
(1)
Each derivative classification includes derivatives referencing multiple risk components. For example, interest rates contracts include complex derivatives referencing interest rate risk as well as foreign exchange risk or other factors such as prepayment rates. Credit contracts include credit default swaps as well as derivatives referencing corporate and government securities.
(2)
Includes net gains (losses) on derivatives used for
non-trading
purposes which are not designated as fair value or net investment hedges. For the yearsyear ended March 31, 2019 and 2020, these amounts were not significant. For the year ended March 31, 2021, net losses for these
non-trading
derivatives were ¥3 billion.
For the year ended March 31, 2022, these amounts were not significant.
Fair value hedges
Nomura issues Japanese Yen and foreign currency denominated debt with both fixed and floating interest rates. Nomura generally enters into swap agreements to convert fixed rate interest payments on its debt obligations to a floating rate and applies fair value hedge accounting to these instruments.
In conjunction with the abolition of LIBOR, Nomura terminated the hedging instruments that reference LIBOR and began new hedging transactions. The cancelled hedging transactions are accounted for as termination of hedge accounting.
The following table presents the carrying value of the hedged items that are currently designated in a hedging relationship andby line items in the consolidated balance sheets where the hedged item is reported, the related cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items and the cumulative amount of fair value hedging adjustment remaining for the liabilities which hedge accounting has been discontinued as of March 31, 20202021 and 2021.2022.
 
Line items in the statement of financial
position in which the hedged item is
included:
 
Billions of yen
 
Carrying amount of the hedged liabilities
 
Cumulative gains/(losses) of fair value hedging
adjustment included in the carrying amount of the
hedged liabilities
 
March 31, 2020
 
March 31, 2021
 
March 31, 2020
 
March 31, 2021
 
  
Billions of yen
 
Balance sheet line
item in which the
hedged item is
included:
  
Carrying amount of the hedged
assets/liabilities
   
Cumulative gains of fair value
hedging adjustment included in
the carrying amount of the
hedged assets/liabilities
   
Cumulative amount of fair value
hedging adjustment remaining
for the liabilities which hedge
accounting has been discontinued
 
  
March 31, 2021
   
March 31, 2022
   
March 31, 2021
   
March 31, 2022
   
March 31, 2021
   
March 31, 2022
 
Long-term borrowings
 ¥1,098  ¥1,164  ¥    (36)  ¥    2   ¥1,164   ¥2,075   ¥2   ¥90   ¥0   ¥0 
              
 
   
 
   
 
   
 
   
 
   
 
 
Total
 ¥1,098  ¥1,164  ¥    (36)  ¥    2   ¥1,164   ¥2,075   ¥2   ¥90   ¥0   ¥0 
              
 
   
 
   
 
   
 
   
 
   
 
 
Hedging derivatives designated as fair value hedges are carried at fair value attributable to the hedged risk, which is recognized in the consolidated statements of income within
Interest expense
and
Revenue-Other
, respectively together with the change in fair value of the hedged items.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents amounts included in the consolidated statements of income for the years ended March 31, 2019, 2020, 2021 and 20212022 related to derivatives designated as fair value hedges by type of underlying derivative contract and the nature of the hedged item.
 
  
Billions of yen
   
Billions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Derivatives designated as hedging instruments:
                                              
Derivatives designated as fair value hedging instruments:
                                              
Interest rate contracts
  ¥6  ¥(26)  ¥29   ¥(26)  ¥29  ¥85 
            
 
  
 
  
 
 
Total
  ¥6  ¥(26)  ¥29   ¥(26)  ¥ 29   ¥ 85  
            
 
  
 
  
 
 
  
  
Billions of yen
   
Billions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Hedged items:
                                              
Hedged items in fair value hedges:
                                              
Long-term borrowings
  ¥(6)  ¥26  ¥(29)   ¥26  ¥(29)  ¥(85) 
            
 
  
 
  
 
 
Total
  ¥(6)  ¥26  ¥(29)   ¥ 26   ¥(29)  ¥(85) 
            
 
  
 
  
 
 
Net investment hedges
Nomura designates certain foreign currency derivative contracts,derivatives, as hedges of net investments in certain foreign operations with significant foreign exchange risks and applies hedge accounting to these instruments. Accordingly, foreign exchange gains (losses)and losses arising from the derivative contractsderivatives and
non-derivative
financial productsinstruments designated as hedges, except for the portion excluded from effectiveness assessment, are recognized through the consolidated statements of comprehensive income within
Other comprehensive income (loss)—Change in cumulative translation adjustments, net of tax
. This is offset by the foreign exchange adjustments arising from consolidation of the relevant foreign subsidiaries.
The following table presents gains (losses) from derivatives designated as net investment hedges included in the consolidated statements of comprehensive income for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
   
Billions of yen
 
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Hedging instruments:
                                              
Foreign exchange contracts
  ¥7   ¥2   ¥(7) 
              
Total
  ¥7  ¥2  ¥(7) 
              
   
Billions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Net investment hedging instruments:
                                              
Foreign exchange contracts
  ¥2  ¥(7)  ¥7 
   
 
 
  
 
 
  
 
 
 
Total
  ¥   2   ¥(7)  ¥   7  
   
 
 
  
 
 
  
 
 
 
The portion of gains (losses) representing the amount excluded from the assessment of hedge effectiveness are recognized within
Revenue—Net gain on trading and Revenue
—
Other
in the consolidated statements of income. The amount of gains (losses) was not significant during the years ended March 31, 2019, 2020, 2021 and 2021.2022.
Derivatives containing credit risk related contingent features
Nomura enters into certain OTC derivatives and other agreements containing credit-risk-related contingent features. These features would require Nomura to post additional collateral or settle the instrument upon occurrence of a credit event, the most common of which would be a downgrade in the Company’s long-term credit rating.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position as of March 31, 2020, was ¥750 billion with related collateral pledged of ¥635 billion. In the event of a
one-notch
downgrade to Nomura’s long-term credit rating in effect as of March 31, 2020, the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been needed to settle the instruments immediately was ¥3 billion.
The aggregate fair value of all derivative instrumentsderivatives with credit-risk-related contingent features that are in a liability position as of March 31, 2021, was ¥727 billion with related collateral pledged of ¥583 billion. In the event of a
one-notch
downgrade to Nomura’s long-term credit rating in effect as of March 31, 2021, the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been needed to settle the instruments immediately was approximately ¥2 billion.
The aggregate fair value of all derivatives with credit-risk-related contingent features that are in a liability position as of March 31, 2022 was ¥638 billion with related collateral pledged of ¥421 billion. In the event of a
.one-notch
downgrade to Nomura’s long-term credit rating in effect as of March 31, 2022, the aggregate fair value of assets that would have been required to be posted as additional collateral or that would have been needed to settle the instruments immediately was approximately ¥1 billion.
Credit derivatives
Credit derivatives are derivative instrumentsderivatives in which one or more of their underlyingsunderlying reference assets of the instrument are related to the credit risk of a specified entity (or group of entities) or an index based on the credit risk of a group of entities that expose the seller of credit protection to potential loss from credit events specified in the contract.
Written credit derivatives are instruments or embedded features where Nomura assumes third party credit risk, either as guarantor in a guarantee-type contract, or as the party that provides credit protection in an option-type contract, credit default swap, or any other credit derivative contract.
Nomura enters into credit derivatives as part of its normal trading activities as both purchaser and/or seller of protection for credit risk mitigation, proprietary trading positions and for client transactions.
The most common type of credit derivatives used by Nomura are single-name credit default swaps where settlement of the derivative is based on the credit risk of a single third party. Nomura also writes credit derivatives linked to the performance of credit default indices and issues other credit risk related portfolio products.
Nomura would have to perform under a credit derivative contract if a credit event as defined in the respective contract occurs. Typical credit events include bankruptcy, failure to pay and restructuring of obligations of the underlying reference asset.
Credit derivative contractsderivatives written by Nomura are either cash or physically settled. In cash-settled instruments, once payment is made upon an event of a default, the contract usually terminates with no further payments due. Nomura generally has no right to assume the reference assets of the counterparty in exchange for payment, nor does Nomura usually have any direct recourse to the actual issuers of the reference assets to recover the amount paid. In physically settled contracts, upon a default event, Nomura takes delivery of the reference asset in return for payment of the full notional amount of the contract.
Nomura actively monitors and manages its credit derivative exposures. Where protection is sold, risks may be mitigated by purchasing credit protection from other third parties either on identical underlying reference assets or on underlying reference assets with the same issuer which would be expected to behave in a correlated fashion. The most common form of recourse provision to enable Nomura to recover from third parties any amounts paid under a written credit derivative is therefore not through the derivative itself but rather through the purchase of separate credit derivative protection with identical or correlated underlyings.underlying reference assets.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Extent
The extent of these purchased credit protection contracts is quantified in the following tables under the column titled “Purchased Credit Protection.” These amounts represent purchased credit protection with identical underlyingsunderlying reference assets to the written credit derivative contractsderivatives which act as a hedge against Nomura’s exposures. To the
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
extent Nomura is required to pay out under the written credit derivative, a similar amount would generally become due to Nomura under the purchased credit protection.
CreditWritten credit derivatives have a stated notional amount which represents the maximum payment Nomura may be required to make under the written credit derivative contract.derivative. However, this is generally not a true representation of the amount Nomura will actually pay under these contracts as there are other factors that affect the likelihood and amount of any payment obligations under the contracts, including:
Probability of default
: Nomura values credit derivatives by taking into account of the probability that the underlying reference asset will default and that Nomura will be required to make payments under the contract. Based on historical experience and Nomura’s assessment of the market, Nomura believes that the probability that all reference assets on which Nomura provides protection will default in a single period is remote. The notional amounts are therefore, significantly higher than Nomura’s actual exposures to these contracts as a whole.
Recovery value on the underlying asset
: In the case of the occurrence of an event of default, Nomura’s liability on a written credit derivative contract is limited to the difference between the notional amount and the recovery value of the underlying reference asset under default. While the recovery value on a defaulted asset may be minimal in certain cases, this does reduce amounts paid on these contracts.
Nomura holds assets as collateral in relation to written credit derivatives. However, these amounts do not enable Nomura to recover any amounts paid under the credit derivative but rather mitigate the risk of economic loss arising from a counterparty defaulting against amounts due to Nomura under the contract. Collateral requirements are determined on a counterparty level rather than individual contract, and also generally cover all types of derivative contracts rather than just credit derivatives.
The following tables present information about Nomura’s written credit derivatives and purchased credit protection with identical underlyingsunderlying reference assets as of March 31, 20202021 and 2021.2022.
   
Billions of yen
 
   
March 31, 2021
 
   
Carrying value

(Asset) / Liability
(1)
  
Maximum potential payout/Notional
   
Notional
 
      
Years to maturity
   
Purchased

credit

protection
 
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps
  ¥(80)  ¥7,035   ¥1,318   ¥2,297   ¥2,642   ¥778   ¥5,452 
Credit default swap indices   (246)   10,235    1,271    4,065    3,989    910    7,737 
Other credit risk related portfolio products
   10   396    73    180    131    12    280 
Credit-risk related options and swaptions
   0   39    0—      0—      39    0—      33 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥(316)  ¥17,705   ¥2,662   ¥6,542   ¥6,801   ¥1,700   ¥13,502 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
F-6
7
   
Billions of yen
 
   
March 31, 2020
 
      
Maximum potential payout/Notional
   
Notional
 
          
Years to maturity
   
Purchased

credit

protection
 
   
Carrying value

(Asset) / Liability
(1)
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps
  ¥96  ¥8,018   ¥2,323   ¥2,238   ¥2,552   ¥905   ¥5,836 
Credit default indices
   18   8,064    721    2,455    4,179    709    6,364 
Other credit risk related portfolio products
   65   357    39    130    175    13    274 
Credit-risk related options and swaptions
   1   16    
0—  
    
0—  
    16    
0—  
    16 
                                   
Total
  ¥180  ¥16,455   ¥3,083   ¥4,823   ¥6,922   ¥1,627   ¥12,490 
                                   
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Billions of yen
 
   
March 31, 2021
 
      
Maximum potential payout/Notional
   
Notional
 
          
Years to maturity
   
Purchased

credit

protection
 
   
Carrying value

(Asset) / Liability
(1)
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps  ¥(80)  ¥7,035   ¥1,318   ¥2,297   ¥2,642   ¥778   ¥5,452 
Credit default indices
   (246)   10,235    1,271    4,065    3,989    910    7,737 
Other credit risk related portfolio products
   10   396    73    180    131    12    280 
Credit-risk related options and swaptions
   0   39    0—      0—      39    
0—  
    33 
  
  
 
 
  
 
  
  
 
  
  
 
  
  
 
  
  
 
  
  
 
Total
  ¥(316)  ¥17,705   ¥2,662   ¥6,542   ¥6,801   ¥1,700   ¥13,502 
                                  
   
Billions of yen
 
   
March 31, 2022
 
   
Carrying value

(Asset) / Liability
(1)
  
Maximum potential payout/Notional
   
Notional
 
      
Years to maturity
   
Purchased

credit

protection
 
  
Total
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Single-name credit default swaps
  ¥19  ¥7,708   ¥1,339   ¥2,915   ¥2,448   ¥1,006   ¥5,688 
Credit default swap indices   (140)   10,015    2,045    4,189    3,257    524    7,494 
Other credit risk related portfolio products
   19   419    56    286    63    14    293 
Credit-risk related options and swaptions
   0   115    0—      0—      88    27    68 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥(102)  ¥18,257   ¥3,440   ¥7,390   ¥5,856   ¥1,571   ¥13,543 
   
 
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Carrying value amounts are shown on a gross basis prior to cash collateral or counterparty netting.offsetting. Asset balances represent positive fair value amounts caused by tightening of credit spreads of underlyings since inception of the credit derivative contracts
.
derivatives.
The following tables present information about Nomura’s written credit derivatives by external credit rating of the underlying asset. RatingsCredit ratings are based on S&P Global Ratings (“S&P”), or if not rated by S&P, based on Moody’s Investors Service. If credit ratings from either of these agencies are not available, the credit ratings are based on Fitch Ratings Ltd. or Japan Credit Rating Agency, Ltd. For credit default indices, the credit rating is determined by taking the weighted average of the external credit ratings given for each of the underlying reference entities comprising the portfolio or index.
   
Billions of yen
 
   
March 31, 2021
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥198   ¥1,218   ¥1,887   ¥2,098   ¥753   ¥881   ¥7,035 
Credit default swap indices   114    128    1,880    6,294    1,415    404    10,235 
Other credit risk-related portfolio products   0—      0—      4    237    58    97    396 
Credit risk-related options and swaptions   0—      0—      0—      32    7    0—      39 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥312   ¥1,346   ¥3,771   ¥8,661   ¥2,233   ¥1,382   ¥17,705 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
  
   
Billions of yen
 
   
March 31, 2022
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥192 �� ¥1,485   ¥2,164   ¥2,057   ¥869   ¥941   ¥7,708 
Credit default swap indices   105    215    3,369    5,012    988    326    10,015 
Other credit risk-related portfolio products   0—      0—      28    226    47    118    419 
Credit risk-related options and swaptions   0—      0—      61    27    27    0—      115 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥297   ¥1,700   ¥5,622   ¥7,322   ¥1,931   ¥1,385   ¥18,257 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Billions of yen
 
   
March 31, 2020
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥122   ¥1,683   ¥1,935   ¥2,643   ¥1,198   ¥437   ¥8,018 
Credit default indices
   24    153    2,211    4,027    1,318    331    8,064 
Other credit risk related portfolio products
   0—      0—      2    191    73    91    357 
Credit-risk related options and swaptions
   0—      0—      0—      0—      16    0—      16 
                                    
Total
  ¥146   ¥1,836   ¥4,148   ¥6,861   ¥2,605   ¥859   ¥16,455 
                                    
  
   
Billions of yen
 
   
March 31, 2021
 
   
Maximum potential payout/Notional
 
   
AAA
   
AA
   
A
   
BBB
   
BB
   
Other
(1)
   
Total
 
Single-name credit default swaps
  ¥198   ¥1,218   ¥1,887   ¥2,098   ¥753   ¥881   ¥7,035 
Credit default indices
   114    128    1,880    6,294    1,415    404    10,235 
Other credit risk related portfolio products
   0—      0—      4    237    58    97    396 
Credit-risk related options and swaptions
   0—      0—      0—      32    7    0—      39 
                                    
Total
  ¥312   ¥1,346   ¥3,771   ¥8,661   ¥2,233   ¥1,382   ¥17,705 
                                    
 
(1)
“Other”Other includes credit derivatives where the credit rating of the underlying reference asset is below investment grade or where a credit rating is unavailable.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivatives entered into in contemplation of sales of financial assets
Nomura enters into transactions which involve both the transfer of financial assets to a counterparty and contemporaneously enters into a separate agreement entered contemporaneously with the same counterparty through which Nomura retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. These transactions primarily include sales of securities with bilateral OTC total return swaps or other derivative agreements which are
in-substance
total return swaps.
These transactions are accounted for as sales of the securities with the derivative accounted for separately if the criteria for derecognition of the securities under ASC 860 are met. Where the derecognition criteria are not met, the transfer and separate derivative are accounted for as a single collateralized financing transaction which is reported within
Long-term borrowings
or
Short-term borrowings
in the consolidated balance sheets.
As of March 31, 2020 there were no outstanding sales with total return swap or
in-substance
total return swap transactions accounted for as sales rather than collateralized financing transactions.
For the year ended March 31, 2021, certain transactions which involve sales of securities and total return swaps were accounted for as sales. As of the date of
transfer,
the carrying amount of the securities and the amount of gross cash proceeds from the sales were ¥69,405 million and ¥69,535 million, respectively. As of March 31, 2021, the fair value of the securities derecognized by Nomura and the gross liability balances of the total return swapsderivatives arising from the transactions were ¥67,773 million and ¥1,539 million respectively.
For the year ended March 31, 2022, certain transactions which involve sales of securities and total return swaps were accounted for as sales. As of the date of transfer, the carrying amount of the securities and the amount of gross cash proceeds from the sales were ¥69,405 million and ¥69,535 million, respectively. As of March 31, 2022, the fair value of the securities derecognized by Nomura and the gross liability balances of the derivatives arising from the transactions were ¥63,994 million and ¥5,319 million, respectively.
4. Revenue from services provided to customers
RevenuesRevenue by types of service
The following table presents revenue earned by Nomura from providing services to customers by relevant line item in Nomura’sthe consolidated statementstatements of income for the yearyears ended March 31, 2019, 2020, 2021 and 2021. 2022.
   
Millions of yen
 
   
Year ended March 31
 
   
2020
   
2021
   
2022
 
Commissions
  ¥308,805   ¥376,897   ¥332,344 
Fees from investment banking
   103,222    108,681    149,603 
Asset management and portfolio service fees
   238,202    230,047    269,985 
Other revenue
   49,901    44,235    38,863 
   
 
 
   
 
 
   
 
 
 
Total
  ¥700,130   ¥759,860   ¥790,795 
   
 
 
   
 
 
   
 
 
 
F-
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Millions of yen
 
   
Year ended March 31
 
   
2019
   
2020
   
2021
 
Commissions
  ¥293,069   ¥308,805   ¥376,897 
Fees from investment banking
   101,521    103,222    108,681 
Asset management and portfolio service fees
   245,519    238,202    230,047 
Other revenue
   54,284    49,901    44,235 
                
Total
  ¥694,393   ¥700,130   ¥759,860 
                
Commissions
represent revenue principally from trade execution, clearing services and distribution of fund units provided by both the Wholesale and Retail and Wholesale Divisionsdivisions generated approximately equally across the divisions. The following table shows thea breakdown of
Commissions
for the yearyears ended March 31, 2019, 2020, 2021 and 2021.2022.
 
   
Millions of yen
 
   
Year ended March 31
 
   
2019
   
2020
   
2021
 
Stock Brokerage Commissions
  ¥192,032   ¥196,491   ¥262,286 
Commissions for distributing of investment trusts
   56,649    66,664    68,794 
Other
   44,388    45,650    45,817 
                
Total
  ¥293,069   ¥308,805   ¥376,897 
                
   
Millions of yen
 
   
Year ended March 31
 
   
2020
   
2021
   
2022
 
Brokerage commissions  ¥196,491   ¥262,286   ¥236,353 
Fund unit distribution fees   66,664    68,794    43,695 
Other commissions   45,650    45,817    52,296 
   
 
 
   
 
 
   
 
 
 
Total
  ¥308,805   ¥376,897   ¥332,344 
   
 
 
   
 
 
   
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fees from investment banking
represent revenues from financial advisory, underwriting and distribution primarily from the Wholesale followed by Retail.division, and to a lesser extent, the Retail division. The following table shows the breakdown of
Fees from investment banking
for the yearyears ended March 31, 2019, 2020, 2021 and 2021.2022.​​​​​​​
   
Millions of yen
 
   
Year ended March 31
 
   
2019
   
2020
   
2021
 
Equity underwriting and distribution
  ¥30,046   ¥13,958   ¥30,647 
Bond underwriting and distribution
   22,739    25,546    23,120 
Financial advisory fees   33,195    41,646    37,760 
Other
   15,541    22,072    17,154 
                
Total
  ¥101,521   ¥103,222   ¥108,681 
                
 
   
Millions of yen
 
   
Year ended March 31
 
   
2020
   
2021
   
2022
 
Equity underwriting and distribution fees
  ¥13,958   ¥30,647   ¥33,113 
Debt underwriting and distribution fees
   25,546    23,120    29,812 
Financial advisory fees
   41,646    37,760    64,240 
Other fees   22,072    17,154    22,438 
   
 
 
   
 
 
   
 
 
 
Total
  ¥103,222   ¥108,681   ¥149,603 
   
 
 
   
 
 
   
 
 
 
Asset management and portfolio service fees
represent revenues from asset management services primarily from the AssetInvestment Management Division followed by Retail.division, and to a lesser extent, the Retail division.
The following table shows the breakdown of
Asset management and portfolio service fees
for the yearyears ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
   
2020
   
2021
   
2020
   
2021
   
2022
 
Asset management fees
  ¥168,695   ¥159,494   ¥150,218   ¥159,494   ¥150,218   ¥171,056 
Administration fees
   60,983    62,619    63,215    62,619    63,215    79,572 
Custodial fees
   15,841    16,089    16,614    16,089    16,614    19,357 
              
 
   
 
   
 
 
Total
  ¥245,519   ¥238,202   ¥230,047   ¥238,202   ¥230,047   ¥269,985 
              
 
   
 
   
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents summary information regarding the key methodologies, assumptions and judgments used in recognizing revenue for each of the primary types of service provided to customers, including the nature of underlying performance obligations within each type of service and whether those performance obligations are satisfied at a point in time or over a period of time. For performance obligations recognized over time, information is also provided to explain the nature of the input or output method used to recognize revenue over time.
 
Type of service provided to
customers
 
Overview of key services provided
 
Key revenue recognition policies,
assumptions and
judgments
Trade execution, clearing services and distribution of fund units 
•  Buying and selling of securities on behalf of customers
 
•  Distribution of fund units
 
•  Clearing of securities and derivatives on behalf of customers
 
•  Trade execution and clearing commissions recognized at a point in time, namely trade date.
 
•  Distribution fees are recognized at a point in time when the fund units have been sold to third party investors.
 
•  Commissions recognized net of soft dollar credits provided to customers where Nomura is acting as agent in providing investment research and
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
Overview of key services provided
Key revenue recognition policies,
assumptions and
judgments
similar services to the customer.
   
Financial advisory services
 
•  Provision of financial advice to customers in connection with a specific forecasted transaction or transactions such as mergers and acquisitions
 
•  Provision of financial advice not in connection with a specific forecasted transaction or transactions such as general corporate intelligence and similar research
 
•  Issuance of fairness opinions
 
•  Structuring complex financial instruments for customers
 
•  Fees contingent on the success of an underlying transaction are variable consideration recognized when the underlying transaction has been completed since only at such point is it probable that a significant reversal of revenue will not occur.
 
•  Retainer and milestone fees are recognized either over the period to which they relate or are deferred until consummation of the underlying transaction depending on whether the underlying performance obligation is satisfied at a point in time or over time.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
Overview of key services provided
Key revenue recognition policies,
assumptions and
judgments
 
•  Judgment is required to make this determination with factors influencing this determination including, but not limited to, whether the fee is in connection with an engagement designed to achieve a specific transaction or outcome for the customer (such as the purchase or sale of a business), the nature and extent of benefit to be provided to the customer prior to, and in addition to such specific transaction or outcome and the fee structure for the engagement.
 
•  Retainer and milestone fees recognized over time are normally recognized on a straight-line basis over the term of the contract based on time elapsed.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
 
Overview of key services provided
Key revenue recognition policies,
assumptions and
judgments
Underwriting and syndication services 
•  Underwriting of debt, equity and other financial instruments on behalf of customers
 
•  Distributing securities on behalf of issuers
 
•  Arranging loan financing for customers
 
•  Syndicating loan financing on behalf of customer
 
•  Underwriting and syndication revenuesfees are recognized at a point in time when the underlying transaction is complete.
 
•  Commitment fees where drawndraw down of the facility is deemed remote recognized on a straight-line basis over the life of the facility based on time elapsed.
 
•  Underwriting and syndication costs recognized either as a reduction of revenue or on a gross basis depending on whether Nomura is acting as principal or agent for such amounts.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Type of service provided to
customers
Overview of key services provided
Key revenue recognition policies,
assumptions and
judgments
   
Asset management services
 
•  Management of funds, investment trusts and other investment vehicles
 
•  Provision of investment advisory services
 
•  ProvidingProvision of custodial and administrative services to customers
 
•  Management fees earned by Nomura in connection with managing a fund, investment trust or other vehicle generally are recognized on a straight-line basis based on time elapsed.
 
•  Performance-based fees are variable consideration recognized when the performance metric has been determined since only at such point is it probable that a significant reversal of revenue will not occur.
 
•  Custodial and administrative fees are recognized on a straight-line basis over time based on time elapsed.
Where revenue is recognized at a point onin time, payments of fees are typically received at the same time as when the performance obligation is satisfied, or within several days or months after satisfying a performance obligation. In relation to revenue recognized over time, payments of fees are typically received every month, three monthssettled monthly, quarterly or six months.semi-annually.
The underlying contracts entered into by Nomura in order to provideconnection with the services described above typically do not have significant financing components within the contracts either provided to or from Nomura.components. If such components did not exist in a contract, Nomura has made an accounting policy permitted by ASC 606 “
Revenue
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
from Contracts with Customers
” (“ASC 606”) not to adjust for the effects of a significant financing component where the financing is effectively for a period of one year or less. Such contracts also typically do not contain any rights of return or similar features for the customer
Customer contract balances
When Nomura or the customer performs in accordance with the terms of a customer contract, a contract asset, customer contract receivable or contract liability is recognized in Nomura’s consolidated balance sheet.
A contract asset represents accrued revenue recognized by Nomura for completingcompletion or partially completingcompletion of a performance obligation, namely a right of Nomura to receive consideration for providing the service to the customer, which is conditionedconditional on somethingfactors or events other than the passage of time. A customer contract receivable is an unconditional right of Nomura to receive consideration in exchange for providing the service.services provided. Both contract assets and customer contract receivables are reported in
Receivables from Customers
within Nomura’s consolidated balance sheet. A contract liability is any liability recognized in connection with a customer contract, including obligations to provide refunds andrefund or obligations to provide a service in the future for which consideration has already been received or is due to be received. Contract liabilities are reported in
Payables to Customers
within Nomura’s consolidated balance sheet.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the balances of customer contract receivables contract assets and contract liabilities in scope of ASC 606 as of March 31, 2020 and 2021.606. The amount of contract assets as of March 31, 20202021 and 2021 were immaterial.2022 was not significant.
 
  
Millions of yen
   
Millions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
Customer contract receivables
  ¥       103,557   ¥       85,205   ¥       85,205   ¥       88,621 
Contract liabilities
(1)
   3,444    3,497    3,497    3,834 
 
(1)
Contract liabilities primarily rise from investment advisory services and are recognized in connection withover the term of the contract based on time elapsed.
The balance of contract liabilities as of March 31, 2019 were recognized as revenue for the year ended March 31, 2020. Nomura recognized ¥744 million of revenue from performance obligations satisfied in previous periods for the year ended March 31, 2020.
The balance of contract liabilities as of March 31, 2020 were recognized as revenue for the year ended March 31, 2021. Nomura recognized ¥1,565 million of revenue from performance obligations satisfied in previous periods for the year ended March 31, 2021. The balance of contract liabilities as of March 31, 2021 were recognized as revenue for the year ended March 31, 2022. Nomura recognized ¥8,108 million of revenue from performance obligations satisfied in previous periods for the year ended March 31, 2022.
Transaction price allocated to the remaining performance obligations
In the ordinary course of business, Nomura retained no significant transactions for which individual estimated contract period exceeds onemay enter into customer contracts where the performance obligations are wholly or partially unsatisfied as of fiscal year for the year ended March 31, 2020. Transaction priceends. The total transaction prices allocated to the remaining unsatisfied performance obligations is ¥1,187within these customer contracts were
¥1,187 million as of March 31, 2021.
2021 and ¥1,350 million as of March 31, 2022. As permitted by ASC 606, Nomura has chosenelected not to disclose information about remaining performance obligations that have original expected durationsan individual estimated contract period of one year or less as of March 31, 2020 and 2021. These amounts are not included in the above.less. In addition, considerations arising from contracts with customers do not comprise any significant amount that is not included in transaction price.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Customer contract costs
As permitted by ASC 340 “
Other Assets and Deferred Costs,
” Nomura has elected to expense all costs to obtain customer contracts where such amounts would be otherwise expensed within one year or less. As a result, the amount of deferred costs to obtain or fulfill customer contracts as of March 31, 20202021 and 2021 were2022 was not significant.
5. Collateralized transactions:
Nomura enters into collateralized transactions, including reverse repurchase agreements, repurchase agreements, securities borrowing transactions, securities lending transactions, other secured borrowings and similar transactions mainly to meet clients’ financing needs, finance trading inventory positions and obtain securities for settlements.settlement.
Reverse repurchase agreements, repurchase agreements, securities borrowing transactions and securities lending transactions are typically documented under industry standard master netting agreements which mitigate Nomura’s credit exposure to counterparties. For certain centrally-cleared reverse repurchase and repurchase agreements, the clearing or membership agreements entered into by Nomura provide similar rights to Nomura in the event of default of the relevant central clearing counterparty. Nomura generally seeks to obtain an external legal opinion in order to ascertain the enforceability of such
close-out
and offsetting rights within these agreements.
For certain counterparties and/ or in certain jurisdictions, F-7
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nomura may enter into reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions with certain types of counterparty and in certain jurisdictions which are not documented under a master netting agreement. Even when these transactions are documented under such master netting agreements, Nomura may not have obtained, or may not be able to obtain, evidence to determine with sufficient certainty that the
close-out
and offsetting rights in the agreements are legally enforceable. This may be the case where relevant local laws explicitly prohibit such
close-out
and offsetting rights, or where local laws are complex, ambiguous or silent on the enforceability of such rights. This may include reverse repurchase agreements, repurchase agreements, securities borrowing and securities lending transactions executed with certain foreign governments, agencies, municipalities, central clearing counterparties, agent banks and pension funds.
Nomura considers the enforceability of a master netting agreement in determining how credit risk arising from transactions with a specific counterparty is hedged, how counterparty credit exposures are calculated and applied to credit limits and the extent and nature of collateral requirements from the counterparty.
In all of these transactions, Nomura either receives or provides collateral, including Japanese and
non-Japanese
government, agency, mortgage-backed, bank and corporate debt securities and equities. In most cases, Nomurathe party receiving the collateral is permittedfree to sell or repledge thesethe securities to third parties such asreceived through repurchase agreements, securities lending transactions or to cover short positions. In repurchase and reverse repurchase agreements, the value of collateral typically exceeds the amount of cash transferred. Collateraltransferred, where collateral is generally in the form of securities. Securities borrowing transactions generally require Nomura to provide the counterparty with collateral in the form of cash or other securities. For securities lending transactions, Nomura generally receives collateral in the form of cash or other securities. Nomura monitors the market value of the securities either received from or provided to the counterparty. Additional cash or securities are exchanged as necessary, to ensure that such transactions are adequately collateralized throughout the life of the transactions.
Offsetting of certain collateralized transactions
Reverse repurchase agreements and repurchase agreements, securities borrowing and lending transactions with the same counterparty documented under a master netting agreement are presented on a net basis onoffset in the consolidated balance sheets where the specific criteria as defined by ASC
210-20
are met. These criteria include requirements around maturity of transactions, underlying systems on which collateral is settled, associated banking arrangements and legal enforceability of
close-out
and offsetting rights under relevant master netting agreements.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
requirements around the maturity of the transactions, the underlying systems on which the collateral is settled, associated banking arrangements and the legal enforceability of
close-out
and offsetting rights under the master netting agreement.
The following tables present information about offsetting of these transactions in the consolidated balance sheets as of March 31, 20202021 and 2021,2022, together with the extent to which master netting agreements entered into with counterparties and central clearing parties permit additional offsetting in the event of counterparty default. Transactions which are not documented under a master netting agreement or are documented under a master netting agreement for which Nomura does not have sufficient evidence of enforceability are not offset in the following tables.
   
Billions of yen
 
   
March 31, 2021
 
   
Assets
  
Liabilities
 
   
Reverse

repurchase

agreements
  
Securities

borrowing

transactions
  
Repurchase

agreements
  
Securities

lending

transactions
 
Total gross balance
(1)
  ¥31,568  ¥5,241  ¥34,154  ¥1,781 
Less: Amounts offset in the consolidated balance sheets
(2)
   (20,793)   0—     (20,794)   0—   
   
 
 
  
 
 
  
 
 
  
 
 
 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
  ¥10,775  ¥5,241  ¥13,360  ¥1,781 
   
 
 
  
 
 
  
 
 
  
 
 
 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
                 
Financial instruments and
non-cash
collateral
   (9,390)   (3,211)   (9,448)   (1,488) 
Cash collateral
   (1)   0—     (1)   0—   
   
 
 
  
 
 
  
 
 
  
 
 
 
Net amount
  ¥1,384  ¥2,030  ¥3,911  ¥293 
   
 
 
  
 
 
  
 
 
  
 
 
 
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2022
 
  
Assets
 
Liabilities
   
Assets
 
Liabilities
 
  
Reverse

repurchase

agreements
 
Securities

borrowing

transactions
 
Repurchase

agreements
 
Securities

lending

transactions
   
Reverse

repurchase

agreements
 
Securities

borrowing

transactions
 
Repurchase

agreements
 
Securities

lending

transactions
 
Total gross balance
(1)
  ¥32,425  ¥3,508  ¥36,397  ¥1,252   ¥31,365  ¥4,994  ¥32,061  ¥1,734 
Less: Amounts offset in the consolidated balance sheets
(2)
   (20,048)   0—     (20,048)   0—      (19,486)   0—     (19,486)   0—   
               
 
  
 
  
 
  
 
 
Total net amounts of reported on the face of the consolidated balance sheets
(3)
  ¥12,377  ¥3,508  ¥16,349  ¥1,252   ¥11,879  ¥4,994  ¥12,575  ¥1,734 
               
 
  
 
  
 
  
 
 
Less: Additional amounts not offset in the consolidated balance sheets
(4)
                  
Financial instruments and
non-cash
collateral
   (10,507)   (2,381)   (8,980)   (1,067)    (9,370)   (3,372)   (9,114)   (1,524) 
Cash collateral
   (5)   0—     (40)   0—      (8)   0—     (12)   0—   
               
 
  
 
  
 
  
 
 
Net amount
  ¥1,865  ¥1,127  ¥7,329  ¥185   ¥2,501  ¥1,622  ¥3,449  ¥210 
               
 
  
 
  
 
  
 
 
 
  
Billions of yen
 
  
March 31, 2021
 
  
Assets
 
Liabilities
 
  
Reverse

repurchase

agreements
 
Securities

borrowing

transactions
 
Repurchase

agreements
 
Securities

lending

transactions
 
Total gross balance
(1)
  ¥31,568  ¥5,241  ¥34,154  ¥1,781 
Less: Amounts offset in the consolidated balance sheets
(2)
   (20,793)   0—     (20,794)   0—   
             
Total net amounts of reported on the face of the consolidated balance sheets
(3)
  ¥10,775  ¥5,241  ¥13,360  ¥1,781 
             
Less: Additional amounts not offset in the consolidated balance sheets
(4)
         
Financial instruments and
non-cash
collateral
   (9,390)   (3,211)   (9,448)   (1,488) 
Cash collateral
   (1)   0—     (1)   0—   
             
Net amount
  ¥1,384  ¥2,030  ¥3,911  ¥293 
             
 
(1)
IncludesInclude all recognized balances irrespective of whether they are transacted under a master netting agreement or whether Nomura has obtained sufficient evidence of enforceability of the master netting agreement. Amounts include transactions carried at fair value through election of the fair value option. As of March 31, 2020, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥627 billion and ¥6,356 billion, respectively. As of March 31, 2020, the gross balance of securities borrowing transactions
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability was ¥998 billion and ¥138 billion, respectively. As of March 31, 2021, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability wasamounted to ¥480 billion and ¥2,653 
billion, respectively. As of March 31, 2021, the gross balance of securities borrowing transactions and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
enforceability wasamounted to ¥1,947 billion and ¥213 billion, respectively. As of March 31, 2022, the gross balance of reverse repurchase agreements and repurchase agreements which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability amounted to ¥793 billion and ¥2,453 billion, respectively. As of March 31, 2022, the gross balance of securities borrowing transactions and securities lending transactions which were not transacted under master netting agreements or are documented under master netting agreements for which Nomura has not yet obtained sufficient evidence of enforceability amounted to ¥1,511 billion and ¥158 billion, respectively.
(2)
RepresentsRepresent amounts offset through counterparty netting under master netting andor similar agreements for which Nomura has obtained sufficient evidence of enforceability in accordance with ASC
210-20.
Amounts offset include transactions carried at fair value through election of the fair value option.
(3)
Reverse repurchase agreements and securities borrowing transactions are reported within
Collateralized agreements—agreements
—
Securities purchased under agreements to resell
and
Collateralized agreements—agreements
—
Securities borrowed
in the consolidated balance sheets, respectively. Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported under securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets.
(4)
RepresentsRepresent amounts which are not permitted to be offset on the face of the balance sheet in accordance with ASC
210-20
but which provide Nomura with the right of offset in the event of counterparty default. Amounts relating to agreements where Nomura has not yet obtained sufficient evidence of enforceability of such offsetting rights are excluded.
For information on offsetting of derivatives, see Note 3 “
Derivative instruments and hedging activities
”.
Maturity analysis of repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchase agreements and securities lending transactions by remaining contractual maturity of the agreement as of March 31, 2021.2021 and 2022. Amounts reported are shown prior to counterparty netting in accordance with ASC
210-20.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2021
   
March 31, 2021
 
  
Overnight

and open
(1)
   
Up to

30 days
   
30 - 90

days
   
90 days -

1 year
   
Greater

than 1 year
   
Total
   
Overnight

and open
(1)
   
Up to

30 days
   
30 - 90

days
   
90 days -

1 year
   
Greater

than 1 year
   
Total
 
Repurchase agreements
  ¥13,837   ¥16,452   ¥1,991   ¥1,590   ¥284   ¥34,154   ¥13,837   ¥16,452   ¥1,991   ¥1,590   ¥284   ¥34,154 
Securities lending transactions
   872    351    291    266    1    1,781    872    351    291    266    1    1,781 
                          
 
   
 
   
 
   
 
   
 
   
 
 
Total gross recognized liabilities
(2)
  ¥14,709   ¥16,803   ¥2,282   ¥1,856   ¥285   ¥35,935   ¥14,709   ¥16,803   ¥2,282   ¥1,856   ¥285   ¥35,935 
                          
 
   
 
   
 
   
 
   
 
   
 
 
 
  
Billions of yen
 
  
March 31, 2022
 
  
Overnight

and open
(1)
   
Up to

30 days
   
30 - 90

days
   
90 days -

1 year
   
Greater

than 1 year
   
Total
 
Repurchase agreements
  ¥12,266   ¥15,454   ¥2,220   ¥1,611   ¥510   ¥32,061 
Securities lending transactions
   992    242    200    277    23    1,734 
  
 
   
 
   
 
   
 
   
 
   
 
 
Total gross recognized liabilities
(2)
  ¥13,258   ¥15,696   ¥2,420   ¥1,888   ¥533   ¥33,795 
  
 
   
 
   
 
   
 
   
 
   
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(1)
Open transactions do not have an explicit contractual maturity date and are terminable on demand by Nomura or the counterparty.
(2)
Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets. The total gross recognized liabilities reported for repurchase agreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
Securities transferred in repurchase agreements and securities lending transactions
The following table presents an analysis of the total carrying value of liabilities recognized in the consolidated balance sheets for repurchase agreements and securities lending transactions by class of securities transferred by Nomura to counterparties as of March 31, 2021.2021 and 2022. Amounts reported are shown prior to counterparty netting in accordance with ASC
210-20.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2021
   
March 31, 2021
 
  
Repurchase

agreements
   
Securities

lending

transactions
   
Total
   
Repurchase

agreements
   
Securities

lending

transactions
   
Total
 
Equities and convertible securities
  ¥724   ¥1,600   ¥2,324   ¥724   ¥1,600   ¥2,324 
Japanese government, agency and municipal securities
   1,168    00    1,168    1,168    0    1,168 
Foreign government, agency and municipal securities
   27,531    8    27,539    27,531    8    27,539 
Bank and corporate debt securities
   1,926    117    2,043    1,926    117    2,043 
Commercial mortgage-backed securities (“CMBS”)
   6    0—      6    6    0—      6 
Residential mortgage-backed securities (“RMBS”)
(1)
   2,532    0—      2,532    2,532    0—      2,532 
Collateralized debt obligations (“CDOs”) and other
   223    0—      223    223    0—      223 
Investment trust funds and other
   44    56    100    44    56    100 
              
 
   
 
   
 
 
Total gross recognized liabilities
(2)
  ¥34,154   ¥1,781   ¥35,935   ¥34,154   ¥1,781   ¥35,935 
              
 
   
 
   
 
 
 
  
Billions of yen
 
  
March 31, 2022
 
  
Repurchase

agreements
   
Securities

lending

transactions
   
Total
 
Equities and convertible securities
  ¥384   ¥1,508   ¥1,892 
Japanese government, agency and municipal securities
   879    1    880 
Foreign government, agency and municipal securities
   26,436    17    26,453 
Bank and corporate debt securities
   2,322    175    2,497 
Commercial mortgage-backed securities (“CMBS”)
   1    0—      1 
Residential mortgage-backed securities (“RMBS”)
(1)
   1,846    0—      1,846 
Collateralized debt obligations (“CDOs”) and other
   157    0—      157 
Investment trust funds and other
   36    33    69 
  
 
   
 
   
 
 
Total gross recognized liabilities
(2)
  ¥32,061   ¥1,734   ¥33,795 
  
 
   
 
   
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
(1)
Includes ¥2,170 
¥2,170 
billion of U.S. government sponsored agency mortgage pass through securities and collateralized mortgage obligations.obligations as of March 31, 2021. Includes
¥1,404 
billion of U.S. government sponsored agency mortgage pass through securities and collateralized mortgage obligations as of March 31, 2022.
(2)
Repurchase agreements and securities lending transactions are reported within
Collateralized financing—financing
—
Securities sold under agreements to repurchase
and
Collateralized financing—financing
—
Securities loaned
in the consolidated balance sheets, respectively. Amounts reported for securities lending transactions also include transactions where Nomura lends securities and receives securities that can be sold or pledged as collateral. Nomura recognizes the securities received at fair value and a liability for the same amount, representing the obligation to return those securities. The liability is reported within
Other liabilities
in the consolidated balance sheets. The total gross recognized liabilities reported for repurchase agreements and securities lending transactions are consistent with the total gross balances reported in the offsetting disclosures above.
Collateral received by Nomura
The following table presents the fair value of securities received as collateral, securities borrowed with collateral and securities borrowed without collateral, which Nomura is permitted to sell or repledge, and the portion that has been sold or repledged as of March 31, 20202021 and 2021.2022.
 
   
Billions of yen
 
   
March 31
 
   
2020
   
2021
 
The fair value of securities received as collateral, securities borrowed as collateral and securities borrowed without collateral where Nomura is permitted by contract or custom to sell or repledge the securities
  ¥46,439   ¥50,466 
The portion of the above that has been sold (reported within
Trading liabilities
in the consolidated balance sheets) or repledged
        38,054         38,342 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Billions of yen
 
   
March 31
 
   
2021
   
2022
 
The fair value of securities received as collateral, securities borrowed as collateral and securities borrowed without collateral where Nomura is permitted by contract or custom to sell or repledge the securities
  ¥     50,466   ¥     48,234 
The portion of the above that has been sold (as reported within
Trading liabilities
in the consolidated balance sheets) or repledged
   38,342    36,146 
Collateral pledged by Nomura
Nomura pledges firm-ownedowned securities and other financial assets to collateralize repurchase transactions, other secured financings and derivative transactions. Pledged securities that can be sold or repledged by the transferee, including Gensaki Repo transactions, are reported in parentheses as
Securities pledged as collateral
within
Trading assets
and,
Non-trading
debt securities, Investments in equity securities
and
Investments in and advances to affiliated companies
in the consolidated balance sheets.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the carrying amounts of financial assets recognized in the consolidated balance sheets which have been pledged as collateral, primarily to stock exchanges and clearing organizations, without allowing the secured party the right to sell or repledge them by type of asset as of March 31, 20202021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Trading assets:
            
Equities and convertible securities
  ¥133,066   ¥239,393   ¥239,393   ¥368,235 
Government and government agency securities
   1,183,457    1,064,164    1,064,164    1,178,011 
Bank and corporate debt securities
   59,734    32,262    32,262    27,899 
Residential mortgage-backed securities (“RMBS”)
   2,826,613    1,790,395    1,790,395    868,183 
Collateralized debt obligations (“CDOs”) and other
(1)
   12,406    32,081    32,081    9,548 
Investment trust funds and other
   6,439    43,805    43,805    36,661 
          
 
   
 
 
  ¥4,221,715   ¥3,202,100   ¥3,202,100   ¥2,488,537 
          
 
   
 
 
Non-trading
debt securities(2)
   29    115,659    115,659    163,445 
Investments in and advances to affiliated companies(3)
  ¥2,760   ¥4,136   ¥4,136   ¥12,832 
 
(1)
Includes CLOs and ABS such as those secured on credit card loans, auto loans and student loans.
(2)
Non-trading
debt securities are primarily Japanese municipal securities.
(3)
Investments in and advances to affiliated companies primarily comprise shares in NRI. 
The following table presents the carrying amount of financial and
non-financial
assets recognized in the consolidated balance sheets, other than those disclosed above, which are subject to lien as of March 31, 20202021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Loans and receivables
  ¥55,051   ¥114,051   ¥114,051   ¥235,875 
Trading assets and private equity and debt investments
   1,393,517    1,344,361    1,344,361    1,416,279 
Office buildings, land, equipment and facilities
   5,258    5,076    5,076    4,841 
Non-trading
debt securities
   149,991    1,047    1,047    2,827 
Investments in and advances to affiliated companies
   0—      3 
Other
   77    5,823    5,823    497 
          
 
   
 
 
  ¥1,603,894   ¥1,470,358   ¥1,470,358   ¥1,660,322 
          
 
   
 
 
Assets in the above table were primarily pledged for secured borrowings, including other secured borrowings, collateralized borrowings of consolidated VIEs, trading balances of secured borrowings, and derivative transactions. See Note 11 “
Borrowings
” for further information regarding
trading balances of secured borrowings.borrowings
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
.
6. Securitizations and Variable Interest Entities:
Securitizations
Nomura utilizes special purpose entities (“SPEs”) to securitize commercial and residential mortgage loans, government agency and corporate securities and other types of financial assets. Those SPEs are incorporated as
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
stock companies, Tokumei kumiai (silent partnerships), Cayman special purpose companies (“SPCs”) or trust accounts. Nomura’s involvementinvolvements with these SPEs includes structuring SPEs, underwriting, distributing and selling debt instruments and beneficial interests issued by SPEs to investors. Nomura accounts for the transfer of financial assets in accordance with ASC 860. This statement requires that Nomura accounts for the transfer of financial assets as a sale when Nomura relinquishes control over the assets. ASC 860 deems control to be relinquished when the following conditions are met: (a) the assets have been isolated from the transferor (even in bankruptcy or other receivership), (b) the transferee has the right to pledge or exchange the assets received, or if the transferee is an entity whose sole purpose is to engage in securitization or asset-backed financing activities, the holders of its beneficial interests have the right to pledge or exchange the beneficial interests, and (c) the transferor has not maintained effective control over the transferred assets. Where Nomura may retainretains an interest in the financial assets, including residual interests in the SPEs. AnySPEs, any such interests are accounted formeasured at fair value and reported within
Trading assets
in Nomura’s consolidated balance sheets, with the change in fair value reported within
Revenue-Net
gain on trading
. Fair value for retained interests in securitized financial assets is determined by using observable prices; or in cases where observable prices are not available for certain retained interests, Nomura estimates fair value generally based on the present value of expected future cash flows using its best estimates of the key assumptions, including forecasted credit losses, prepayment rates, forward yield curves and discount rates commensurate with the risks involved. Nomura may also enter into derivative transactions in relation to the assets transferred to an SPE.
As noted above, Nomura may have continuing involvement with SPEs to which Nomura transferred assets. For the years ended March 31, 20202021 and 2021,2022, Nomura received cash proceeds from SPEs in new securitizations of ¥202¥297 billion and ¥297¥464 billion, respectively. Therespectively, and the associated gain on sale was ¥19 billion for the year ended March 31, 2021 and the amount was not significant for the year ended March 31, 2020.¥9 billion, respectively. For the years ended March 31, 20202021 and 2021,2022, Nomura received debt securities issued by these SPEs with an initial fair value of ¥1,769¥2,799 billion and ¥2,799¥1,890 billion, respectively, and cash inflows from third parties on the sale of those debt securities of ¥1,245¥2,564 billion and ¥2,564¥1,759 billion, respectively. The cumulative balance of financial assets transferred to SPEs with which Nomura has continuing involvement was ¥4,177¥5,323 billion and ¥5,323¥5,829 billion as of March 31, 20202021 and 2021,2022, respectively. Nomura’s retained interests were ¥163¥160 billion and ¥160¥131 billion as of March 31, 20202021 and 2021,2022, respectively. For the years ended March 31, 20202021 and 2021,2022, Nomura received cash flows of ¥24¥27 billion and ¥27¥39 billion, respectively, from the SPEs on the retained interests held in the SPEs.
Nomura does not provide any financial support to SPEs beyond its contractual obligations as of March 31, 20202021 and 2021.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the fair value of retained interests which Nomura has continuing involvement in SPEs and their classification in the fair value hierarchy, categorized by the type of transferred assets as of March 31, 20202021 and 2021.2022.
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2021
 
  
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
   
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
 
Government, agency and municipal securities
  ¥0—     ¥158   ¥0—     ¥158   ¥158   ¥0—     ¥
0  —
   ¥154   ¥
0  —
   ¥154   ¥154   ¥
0  —
 
Bank and corporate debt securities
   0—      0—      0—      0—      0—      0—      
0  —
    
0  —
    
0  —
    
0  —
    
0  —
    
0  —
 
CMBS and RMBS
   0—      0—      5    5    0    5    
0  —
    
0  —
    6    6    0    6 
                          
 
   
 
   
 
   
 
   
 
   
 
 
Total
  ¥0—     ¥158   ¥5   ¥163   ¥158   ¥5   ¥
0  —
   ¥154   ¥6   ¥160   ¥154   ¥6 
                          
 
   
 
   
 
   
 
   
 
   
 
 
 
  
Billions of yen
 
  
March 31, 2021
 
  
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
 
Government, agency and municipal securities
  ¥0—     ¥154   ¥0—     ¥154   ¥154   ¥0—   
Bank and corporate debt securities
   0—      0—      0—      0—      0—      0—   
CMBS and RMBS
   0—      0—      6    6    0    6 
                        
Total
  ¥0—     ¥154   ¥6   ¥160   ¥154   ¥6 
                        
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Billions of yen
 
   
March 31, 2022
 
   
Level 1
   
Level 2
   
Level 3
   
Total
   
Investment

grade
   
Other
 
Government, agency and municipal securities
  ¥
0—  
   ¥124   ¥
0—  
   ¥124   ¥124   ¥
0—  
 
Bank and corporate debt securities
   
0—  
    
0—  
    
0—  
    
0—  
    
0—  
    
0—  
 
CMBS and RMBS
   
0—  
    
0—  
    7    7    2    5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥
0—  
   ¥124   ¥7   ¥131   ¥126   ¥5 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
As of March 31, 2021 and 2022, predominantly all of the retained interests held by Nomura were valued using observable prices. The initial fair value of these retained interests are mostly level 2 in the fair value hierarchy.
The following table presents the type and carrying value of financial assets included within
Trading assets
and
Loans receivable
which have been transferred to SPEs but which do not meet the criteria for derecognition under ASC 860 as of March 31, 20202021 and 2021.2022. These transfers are accounted for as secured financing transactions and generally reported within
Long-term borrowings.
The assets are pledged as collateral of the associated liabilities and cannot be removed unilaterally by Nomura and the liabilities are
non-recourse
to Nomura.
 
  
Billions of yen
   
Billions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Assets
            
Trading assets
            
Loans
  ¥45   ¥106 
Loans for trading purposes
  ¥106   ¥19 
Loans receivable
   0—      203 
  
 
   
 
 
Total
  ¥   106   ¥   222 
          
 
   
 
 
Liabilities
            
Long-term borrowings
  ¥     45   ¥   106   ¥106   ¥222 
          
 
   
 
 
Variable Interest Entities (“VIEs”)
In the normal course of business, Nomura acts as a transferor of financial assets to VIEs, and underwriter, distributor, and seller of repackaged financial instruments issued by VIEs in connection with its securitization and equity derivative activities. Nomura retains, purchases and sells variable interests in VIEs in connection with its market-making, investing and structuring activities.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
If Nomura has an interest inpower to direct the activities of a VIE that provides Nomura with control overmost significantly impact the most significant activities ofVIE’s economic performance, and through Nomura’s interest in the VIE, andNomura has the right to receive benefits or the obligation to absorb losses that could be potentially significant to the VIE, Nomura is the primary beneficiary of the VIE and must consolidate the entity, provided that Nomura does not meet separate tests confirming that it is actingact as a fiduciary for other interest holders. Nomura’s consolidated VIEs include those that were created to market structured securities to investors by repackaging corporate convertible securities, mortgages and mortgage-backed securities. Certain VIEs used in connection with Nomura’s aircraft leasing business as well as other purposes are consolidated. Nomura also consolidates certain investment funds which are VIEs, and for which Nomura is the primary beneficiary.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The power to makedirect the most significant decisionsactivities may take a number of different forms in different types of VIEs. For transactions such as securitizations, investment funds, and CDOs, Nomura generally considers collateral management and servicing to represent the power to make the most significant decisions.decisions, unless such roles are deemed to be a fiduciary relationship. Accordingly, Nomura does not consolidate such types of VIEs for which it does not act as collateral manager or servicer unless Nomura has the unilateral right to replace the collateral manager or servicer or to require liquidation of the entity.
For many transactions, such as where VIEs are used for
re-securitizations
of residential mortgage-backed securities, there are no significant economic decisions made on an ongoing basis and no single investor has the unilateral ability to liquidate the VIE. In thesethose cases, Nomura focuses its analysis on decisions made prior tothe party who has the sole discretion in the initial closingdesign of the transaction,VIE, and considers factors such as the nature of the underlying assets held by the VIE, the involvementextent of third party investorsinvestors’ involvement in the design of the VIE, the size of initial third party investment and the amount and level of any subordination of beneficial interests issued by the VIE which will be held by Nomura and any third party investors. Nomura has sponsored numerous
re-securitization
transactions and in many cases has determined that it is not the primary beneficiary on the basis that control overpower to direct the most significant decisionsactivities relating to these entities are shared with third party investors. In some cases, however, Nomura has consolidated suchcertain VIEs for example, where it was determined that third party investors were not involved in the design of the VIEs, including where the size of third party investment was not significantinsignificant at inception of the transaction.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the classification of consolidated VIEs’ assets and liabilities in these consolidated financial statements as of March 31, 20202021 and 2021.2022. Most of these assets and liabilities are related to consolidated SPEsVIEs which securitize corporate convertible securities, mortgages and mortgage-backed securities. The assets of a consolidated VIE may only be used to settle obligations of that VIE. Creditors do not typically have any recourse to Nomura beyond the assets held in the VIEs.Nomura.
   
Billions of yen
 
   
March 31
 
   
2021
   
2022
 
Consolidated VIE assets
          
Cash and cash equivalents
  ¥13   ¥62 
Trading assets
          
Equities
   524    555 
Debt securities
   414    443 
CMBS and RMBS
   20    21 
Investment trust funds and other
   4    0—   
Derivatives
   1    1 
Private equity and debt investments
   21    4 
Office buildings, land, equipment and facilities
   51    10 
Other
   26    115 
   
 
 
   
 
 
 
Total
  ¥1,074   ¥1,211 
   
 
 
   
 
 
 
Consolidated VIE liabilities
          
Trading liabilities
          
Derivatives
   2    0 
Borrowings
          
Short-term borrowings
   74    95 
Long-term borrowings
   763    797 
Other
   2    6 
   
 
 
   
 
 
 
Total
  ¥841   ¥898 
   
 
 
   
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Billions of yen
 
   
March 31
 
   
2020
   
2021
 
Consolidated VIE assets
          
Cash and cash equivalents
  ¥10   ¥13 
Trading assets
          
Equities
   645    524 
Debt securities
   454    414 
CMBS and RMBS
   43    20 
Investment trust funds and other
   0    4 
Derivatives
   19    1 
Private equity and debt investments
   11    21 
Office buildings, land, equipment and facilities
   15    51 
Other
   24    26 
           
Total
  ¥1,221   ¥1,074 
           
Consolidated VIE liabilities
          
Trading liabilities
          
Derivatives
   19    2 
Borrowings
          
Short-term borrowings
   117    74 
Long-term borrowings
   830    763 
Other
   4    2 
           
Total
  ¥970   ¥841 
           
On a quarterly basis, Nomura continuously reassesses its initial evaluation of whether it is the primary beneficiary of a VIE based on current facts and circumstances as long as it has any continuing involvement with the VIE. This determination is based upon an analysisVIEs and evaluates the impact of the design of the VIE, including the VIE’s structure and activities, the power to make significant economic decisions held by Nomura and by other parties, and theany changes in governing documents and/or variable interests ownedheld by Nomura and other parties.
Nomura also holds variable interests in VIEs where Nomura is not the primary beneficiary. Nomura’s variable interests in such VIEs include senior and subordinated debt, residual interests, and equity interests associated with commercial and residential mortgage-backed and other asset-backed securitizations and structured financings, equity interests in VIEs which were formed primarily to acquire high yield leveraged loans and other lower investment grade debt obligations, residual interests in operating leases for aircraft held by VIEs, and loans and investments in VIEs that acquire operating businesses.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present the carrying amount of variable interests of unconsolidated VIEs and maximum exposure to loss associated with these variable interests as of March 31, 20202021 and 2021.2022. Maximum exposure to loss does not reflect Nomura’s estimate of the actual losses that could result from adverse changes, nor does it reflect the economic hedges Nomura enters into to reduce its exposure. The risks associated with VIEs in which Nomura is involved are limited to the amount recorded in the consolidated balance sheets and the amount of any undrawn commitments and financial guarantees.guarantees issued.
   
Billions of yen
 
   
March 31, 2021
 
   
Carrying amount of variable interests
   
Maximum exposure

to loss to

unconsolidated VIEs
 
   
Assets
   
Liabilities
 
Trading assets and liabilities
               
Equities
  ¥30   ¥
0—  
   ¥30 
Debt securities
   60    
0—  
    60 
CMBS and RMBS
   2,362    
0—  
    2,362 
Investment trust funds and other
   195    
0—  
    195 
Private equity and debt investments
   3    
0—  
    3 
Loans
   556    
0—  
    556 
Other
   19    
0—  
    19 
Commitments to extend credit and other
guarantees
   
0—  
    
0—  
    110 
               
Total
  ¥3,225   ¥
0—  
   ¥3,335 
   
 
 
   
 
 
   
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
  
Billions of yen
   
Billions of yen
 
  
March 31, 2020
   
March 31, 2022
 
  
Carrying amount of variable interests
   
Maximum exposure

to loss to

unconsolidated VIEs
   
Carrying amount of variable interests
   
Maximum exposure

to loss to

unconsolidated VIEs
 
  
Assets
   
Liabilities
   
Assets
   
Liabilities
 
Trading assets and liabilities
                  
Equities
  ¥35   ¥0—     ¥35   ¥26   ¥
0  —
   ¥26 
Debt securities
   73    0—      73    61    
0  —
    61 
CMBS and RMBS
   3,631    0—      3,631    1,432    
0  —
    1,432 
Investment trust funds and other
   170    0—      170    191    
0  —
    191 
Private equity and debt investments
   11    0—      11    22    
0  —
    22 
Loans
   835    0—      835    940    
0  —
    940 
Other
   11    0—      11    10    
0  —
    10 
Commitments to extend credit and other guarantees
   0—      0—      84    
—  
    
0  —
    256 
                        
Total
  ¥4,766   ¥0—     ¥4,850   ¥2,682   ¥
0  —
   ¥2,938 
              
 
   
 
   
 
 
 
  
Billions of yen
 
  
March 31, 2021
 
  
Carrying amount of variable interests
   
Maximum exposure

to loss to

unconsolidated VIEs
 
  
Assets
   
Liabilities
 
Trading assets and liabilities
         
Equities
  ¥30   ¥0—     ¥30 
Debt securities
   60    0—      60 
CMBS and RMBS
   2,362    0—      2,362 
Investment trust funds and other
   195    0—      195 
Private equity and debt investments
   3    0—      3 
Loans
   556    0—      556 
Other
   19    0—      19 
Commitments to extend credit and other guarantees
   0—      0—      110 
            
Total
  ¥3,225   ¥0—     ¥3,335 
            
The above does not
include
certain repurchase agreement financings provided to third parties or Nomura sponsored VIEs.
7. Financing receivables:
In the normal course of business, Nomura extends financing to clients primarily in the form of loan receivables, loan commitments and collateralized agreements such as reverse repurchase agreements and securities borrowing transactions. These financing receivables are recognized as assets on Nomura’s consolidated balance sheets at fair value or on amortized cost basis and provide a contractual right to receive money either on demand or on future fixed or determinable dates.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The carrying value of financing receivables measured on an amortized cost basis is adjusted for an allowance for current expected credit losses where appropriate. As of April 1, 2020 Nomura adopted new guidance for determination of such allowances defined by ASC 326 “
Financial Instruments
—
—Credit Losses
” (“ASC 326”) which requires recognition of allowances based on current expected credit losses rather incurred credit losses as required by previous authoritative guidance. See Note 1 “Basis“
Basis of accounting—New accounting
pronouncements
recently adopted”adopted
” in these consolidated financial statements for guidance on the impact of the current expected credit loss (“CECL”) impairment model introduced by ASC 326 on Nomura on initial adoption.
Collateralized agreements
Collateralized agreements consist of reverse repurchase agreements reported as Securities purchased under agreements to resell and securities borrowing transactions reported as Securities borrowed in the consolidated balance sheets, including those executed under Gensaki Repo agreements. Reverse repurchase agreements and securities borrowing transactions principally involve the buying of government and government agency securities from customers under agreements that also require Nomura to resell these securities to those customers, or borrowing these securities with cash and
non-cash
collateral. Nomura monitors the value of the underlying securities on a daily basis to the related receivables, including accrued interest, and requests or returns additional collateral when appropriate. Except for those where we apply the fair value options,option, reverse repurchase agreements are generally recognized in the consolidated balance sheets at the amount for which the securities were originally acquired with applicable accrued interest. Securities borrowing transactions are generally
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5
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
recognized in the consolidated balance sheets at the amount of cash collateral advanced. Allowances for current expected credit losses against collateralized agreements are not significant either because of our application of practical expedients permitted by ASC 326 based on the collateralization requirements and ongoing monitoring of the collateral levels andor the short expected life of the financial instruments.
Loans receivable
The key types of loans receivable recognized by Nomura are loans at banks, short-term secured margin loans, inter-bank money market loans and corporate loans.
Loans at banks include both retail and commercial secured loans and traditional unsecured loans mainly extended by Nomura Trust & Banking Co., Ltd. For bothWhere retail and commercial loans are secured by real estate or securities, Nomura is exposed to the risk of a decline in the value of the underlying collateral. Loans at banks also include unsecured commercial loans provided to investment banking clients for relationship purposes. For unsecured commercial loans, Nomura is exposed to risk of default of the counterparty, although these counterparties usually have high or good credit ratings. Where loans are secured by guarantees, Nomura is also exposed to the risk of default by the guarantor.
Short-term secured margin loans are margin loans provided to clients in connection with securities brokerage business in retail and wealth management services. These loans provide funding for clients in order to purchase securities. Nomura requests initial margin in the form of acceptable collateral securities or deposits against these loans and holds the purchased securities as collateral through the life of the loans. If the value of the securities declines by more than specified amounts, Nomura can make additional frequent margin calls in order to maintain a specified ratio of
loan-to-value
(“LTV”) ratio. These clients are required and reasonably expected to continue to replenish the amount of collateral. For these reasons, the risk to Nomura of providing thesecollateral as required by Nomura. Allowances for current expected losses against Short-term secured margin loans is limited.are therefore usually not significant.
Inter-bank money market loans are loans to financial institutions in the inter-bank money market, where overnight and
intra-day
financings are traded through money market dealers. The risk to Nomura of making these
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
loans is limited as only qualified financial institutions can participate in these markets and these loans are usually overnight or short-term in nature. Allowances for current expected losses against inter-bank money market loans are therefore usually not significant.
Corporate loans are primarily commercial loans provided to corporate clients except Loanexcluding those classified as Loans at banks. Corporate loans include loans secured by real estate or securities, unsecured commercial loans provided to investment banking clients for relationship purposes. The risk to Nomura of making these loans is similar to those risks arising from commercial loans reported in loans at banks.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present a summary of loans receivable reported within
Loans receivable
or
Investments in and advances Advances to affiliated companies
in the consolidated balance sheets as of March 31, 2020,2021, and 20212022 by portfolio segment.
 
  
Millions of yen
   
Millions of yen
 
  
March 31, 2020
   
March 31, 2021
 
  
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
   
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
 
Loans receivable
                  
Loans at banks
  ¥521,715   ¥—     ¥521,715   ¥605,200   ¥—     ¥605,200 
Short-term secured margin loans
   296,833    8,905    305,738    436,221    —      436,221 
Inter-bank money market loans
   865    —      865    1,289    —      1,289 
Corporate loans
   1,232,851    796,236    2,029,087    1,082,239    818,523    1,900,762 
              
 
   
 
   
 
 
Total loans receivable
  ¥2,052,264   ¥805,141   ¥2,857,405   ¥2,124,949   ¥818,523   ¥2,943,472 
              
 
   
 
   
 
 
Advances to affiliated companies
   1,000    —      1,000 
  
 
   
 
   
 
 
Total
  ¥2,125,949   ¥   818,523   ¥2,944,472 
  
 
   
 
   
 
 

   
Millions of yen
 
   
March 31, 2022
 
   
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
 
Loans receivable
               
Loans at banks
  ¥717,992   ¥—     ¥717,992 
Short-term secured margin loans
   442,600    —      442,600 
Inter-bank money market loans
   2,196    —      2,196 
Corporate loans
   1,206,349    1,210,590    2,416,939 
   
 
 
   
 
 
   
 
 
 
Total loans receivable
  ¥2,369,137   ¥1,210,590   ¥3,579,727 
   
 
 
   
 
 
   
 
 
 
Advances to affiliated companies
   1,000    —      1,000 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,370,137   ¥1,210,590   ¥3,580,727 
   
 
 
   
 
 
   
 
 
 
   
Millions of yen
 
   
March 31, 2021
 
   
Carried at

amortized cost
   
Carried at

fair value
(1)
   
Total
 
Loans receivable
               
Loans at banks
  ¥605,200   ¥0—     ¥605,200 
Short-term secured margin loans
   436,221    —
 
 
    436,221 
Inter-bank money market loans
   1,289    0—      1,289 
Corporate loans
   1,082,239    818,523    1,900,762 
                
Total loans receivable
  ¥2,124,949   ¥818,523   ¥2,943,472 
             
Advances to affiliated companies
  
1,000
   
0—
   
1,000
 
Total
 
¥
2,125,949
  
¥
818,523
  
¥
2,944,472
 
                
 
(1)
Includes loans receivable and loan commitments carried at fair value through election of the fair value option.
There were no significant purchases nor sales of loans receivable during the year ended March 31, 2020. During the same period, there were no significant reclassifications of loans receivable to trading assets.
There were no significant purchases nor sales of loans receivable during the year ended March 31, 2021. During the same period, there were no significant reclassifications of loans receivable to or from trading assets.
There were no significant purchases nor sales of loans receivable during the year ended March 31, 2022. During the same period, there were no significant reclassifications of loans receivable to or from trading assets.
Net unamortized deferred fees and costs related to loans receivable carried at amortized cost were immaterial as of March 31, 2021 and March 31, 2022.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Allowance for current expected credit losses
Following adoption of ASC 326 on April 1, 2020, managementManagement has established an allowance for current expected credit losses using the CECL impairment model against the following types of financial instruments, including financing receivables, which are not measured at fair value on a recurring basis, to reflect the net amount Nomura expects to collect:
 
•
Loans receivable and written unfunded loan commitments;
 
•
Cash deposits;
 
•
Collateralized agreements such as reverse repos and securities borrowing transactions;
 
•
Customer contract assets and receivables; and
 
•
Other receivables including margin receivables, security deposits, default fund contributions to central clearing counterparties and net investments in finance leases.
Current expected credit losses for an individual or portfolio of financial instrument are measured at each Nomura reporting date based on expected credit losses over the remaining expected life of the financial instruments that consider forecast of future economic conditions in addition to information about past events and current conditions. Key macroeconomic inputs to our weighted average forecasts of three years include GDP and credit spreads.
The risk of loss is considered, even when that risk of loss is remote. While management has based its estimate of the allowance for current expected credit losses on the best information available, future adjustments to the allowance may be necessary as a result of changes in the economic environment or variances between actual results and original assumptions.
Nomura has elected to exclude accrued interest receivable from the amortized cost basis of financial instruments used to measure expected credit losses. The amount of accrued interest receivable as of March 31, 2021 and March 31, 2022 was not significant.
The methodology used by Nomura to determine allowances for current expected credit losses in accordance with the CECL impairment model primarily depends on the nature of the financial instrument and whether certain practical expedients permitted by ASC 326 are applied by Nomura.
Financial instruments subject to the CECL impairment model are charged off when Nomura has deemed the loan or receivable as uncollectible, namely management believes there is no reasonable expectation of collecting future contractual cash flows and all commercially reasonable means of recovering outstanding principle and interest balances have been exhausted.
 
F-90 F-88
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table summarizes the methodology used for each significant type of financial instrument subject to the CECL impairment model and the key assumptions used which have impacted the measurement of current expected credit losses during the year ended March 31, 2021.
2022.
Financial instrument
  
Methodology to determine current expected credit losses
Loans, written loan commitments and certain deposits  
•  Full loss rate model developed by Nomura’s Risk department
 
•  Measures expected credit losses based on probability of default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) inputs.
 
•  PD inputs incorporate forward-looking scenarios used by Nomura for internal risk management and capital purposes.
 
•  Immediate reversion method used for periods beyond which reasonable and supportable forecast is not available.
 
•  For financial instruments which have defaulted or are probable of defaulting, expected credit losses measured using discounted cash flow analyses or, where the financial instrument is collateral dependent, based on any shortfall of fair value of the underlying collateral.
  
Collateralized agreements, short-term secured margin loans and cash prime brokerage loans  
•  For reverse repos and short-term secured margin loans and cash prime brokerage loans where frequent margining is required and the counterparty has ability to replenish margin, as permitted by a practical expedient provided by ASC 326 expected credit losses are limited to difference between carrying value of the reverse repo or margin loan and fair value of underlying collateral.
 
•  Securities borrowing transactions typically have very short expected lives and are collateralized and therefore expected credit losses are generally determined qualitatively to be insignificant based on historical experience and consistent monitoring of collateral.
  
Customer contract assets and receivables  
•  Expected credit losses typically based on ageing analysis where loss rates are applied to the carrying value based on historical experience, the current economic climate and specific information about the ability of the client to pay.
Prior to adoption of ASC 326, allowances for credit losses recognized against financial instruments measured at amortized cost were based on amounts which reflected management’s best estimate of probable losses incurred. The allowance for doubtful accounts comprised two components, namely a specific component for financial instruments which have been individually evaluated for impairment; and a general component for financial instruments which, while not individually evaluated for impairment, have been collectively evaluated for impairment based on historical loss experience. The specific component of the allowance reflects probable losses incurred within financial instruments which have been individually evaluated for impairment. Impairment was measured by adjusting the carrying value of the financial instrument to either the present value of expected future cash flows discounted at the financial instrument’s effective interest rate, an observable market price, or the fair value of the collateral if the financial instrument is collateral dependent.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The general component of the allowance was for financial instruments not individually evaluated for impairment and includes judgment about collectability based on available information at the balance sheet date and the uncertainties inherent in those underlying assumptions. The allowance was based on historical loss experience adjusted for qualitative factors such as current economic conditions.
The following table presents changes in the total allowance for doubtful accountsincurred credit losses for the years ended March 31, 2019 and 2020.2020 as determined using legacy U.S. GAAP guidance in effect prior to ASC 326. The total allowance for doubtful accountsincurred credit losses increased as of March 31, 2020 when compared to March 31, 2019 primarily as a result of specific impairments identified in March 2020 as a result of the
COVID-19
pandemic.
 
 
Millions of yen
  
Millions of yen
 
 
Year ended March 31, 2019
  
Year ended March 31, 2020
 
 Allowance for doubtful accounts   
Allowance
for
receivables

other than

loans
 
Total
allowance
for doubtful
accounts
  
Allowance for current expected credit losses
against loans
  
Allowance
against

receivables

other than

loans
 
Total
allowance
for current
expected
credit losses
 
 
Loans

at banks
 
Short-term

secured

margin

loans
 
Corporate

loans
 
Subtotal
  
Loans

at banks
 
Short-term

secured

margin

loans
 
Corporate

loans
 
Subtotal
 
Opening balance
 ¥1,140  ¥—    ¥417  ¥1,557  ¥1,957  ¥3,514  ¥1,052  ¥370  ¥868  ¥2,290  ¥1,879  ¥4,169 
Provision for credit losses
  7   364   434   805   30   835   512   —     7,125   7,637   1,451   9,088 
Charge-offs
  (95)  
 
—  
 
  (0)   (95)   (102)   (197)   —     —     —     —     (162)   (162) 
Other
(1)
 
 
—  
 
  6   17   23   (6)   17   —     (18)   (49)   (67)   (16)   (83) 
                   
 
  
 
  
 
  
 
  
 
  
 
 
Ending balance
 ¥1,052  ¥370  ¥868  ¥2,290  ¥1,879  ¥4,169 
Closing balance
 ¥1,564   ¥ 352  ¥  7,944  ¥  9,860  ¥ 3,152  ¥13,012 
                   
 
  
 
  
 
  
 
  
 
  
 
 
 
 
Millions of yen
 
 
Year ended March 31, 2020
 
 Allowance for doubtful accounts   
Allowance
for

receivables

other than

loans
 
Total
allowance
for doubtful
accounts
 
 
Loans

at banks
 
Short-term

secured

margin

loans
 
Corporate

loans
 
Subtotal
 
Opening balance
 ¥1,052  ¥370  ¥868  ¥2,290  ¥1,879  ¥4,169 
Provision for credit losses
  512  
 
—  
 
  7,125   7,637   1,451   9,088 
Charge-offs
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
  (162)   (162) 
Other
(1)
 
 
—  
 
  (18)   (49)   (67)   (16)   (83) 
                  
Ending balance
 ¥1,564  ¥352  ¥  7,944  ¥  9,860  ¥ 3,152  ¥13,012 
                  
 
(1)
IncludesPrimarily includes the effect of foreign exchange movements.movements and recoveries collected.

The following table presents changes in the allowance for current expected credit losses for the year ended March 31, 2021 and 2022 as determined using the CECL impairment model defined by ASC 326. The allowance increased as of March 2022 when compared to March 2021 primarily as a result of additional credit losses arising in connection with the U.S. Prime Brokerage Event in March 2021. See Note 23. “U.S. Prime Brokerage Event” for further information on this event.
  
Millions of yen
 
  
Year ended March 31, 2021
 
  
Allowance for current expected credit losses
against loans
  
Allowance
against

receivables

other than

loans
(3)
  
Total
allowance
for current
expected
credit losses
 
  
Loans

at banks
  
Short-term

secured

margin

loans
  
Corporate

loans
  
Subtotal
 
Opening balance prior to CECL adoption
(1)
  1,564   352   7,944   9,860   3,152   13,012 
Impact of CECL adoption
(2)
  232   —     1,738   1,970   2   1,972 
Opening balance after CECL adoption
  1,796   352   9,682   11,830   3,154   14,984 
Provision for credit losses
(4)
  (196)   —     38,211   38,015   1,060   39,075 
Charge-offs
  (318)   (363)   (0)   (681)   (1,600)   (2,281) 
Other
(5)
  —     11   92   103   1,903   2,006 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Closing balance
 ¥1,282  ¥—    ¥47,985  ¥49,267  ¥4,517  ¥53,784 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in the allowance for the year ended March 31, 2021 as determined using the CECL impairment model defined by ASC 326. The allowance increased significantly during the year primarily as a result of credit losses arising in connection with the U.S. Prime brokerage event in March 2021. See Note 23.
“U.S. Prime Brokerage Event”
for further information on this event.
 
  
Millions of yen
 
  
Year ended March 31, 2021
 
  
Allowance for doubtful accounts
  
Allowance
against

receivables

other than

loans
(2)
  
Total

allowance
for doubtful
accounts
 
  
Loans

at banks
  
Short-term

secured

margin

loans
  
Corporate

loans
  
Subtotal
 
Opening balance prior to CECL adoption
 ¥1,564  ¥352  ¥7,944  ¥9,860  ¥3,152  ¥13,012 
Impact of CECL adoption
(1)
  232  
 
—  
 
  1,738   1,970   2   1,972 
Opening balance after CECL adoption
  1,796   352   9,682   11,830   3,154   14,984 
Provision for credit losses
(3)
  (196)  
 
0—  
 
  38,211   38,015   1,060   39,075 
Charge-offs
  (318)   (363)   (0)   (681)   (1,600)   (2,281) 
Other
(4)
 
 
0—  
 
  11   92   103   1,903   2,006 
                         
Ending balance
 ¥1,282  ¥
0—  
 
 ¥47,985   ¥49,267  ¥4,517  ¥53,784 
                         
  
Millions of yen
 
  
Year ended March 31, 2022
 
  
Allowance for current expected credit losses
against loans
  
Allowance
against

receivables

other than

loans
(3)
  
Total
allowance
for current
expected
credit losses
 
  
Loans

at banks
  
Short-term

secured

margin

loans
  
Corporate

loans
  
Subtotal
 
Opening balance
  1,282   —     47,985   49,267   4,517   53,784 
Provision for losses
(4)
  1,161   —     11,079   12,240   113   12,353 
Charge-offs
  —     —     —     —     (1,231)   (1,231) 
Other
(
4
)
(5)
  (9)   —     3,289   3,280   (1,840)   1,440 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Closing balance
 ¥2,434  ¥ —     ¥62,353   ¥64,787   ¥1,559  ¥66,346 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
(1)
Closing balance recognized on March 31, 2020 as determined using legacy U.S. GAAP guidance in effect prior to the adoption of ASC 326.
(2)
The adjusted opening balance recognized on April 1, 2020 on adoption of the CECL impairment model under ASC 326.
(2)(3)
Includes amounts recognized against collateralized agreements, customer contract assets and receivables and other receivables.
(3)(4)
In March 2021, following the
Following default by thea U.S. client an additional allowance for doubtful accounts of ¥41,561 million was taken on the loansin connection with the client. See Note 23.
“U.S. Prime Brokerage Event in March 2021, a provision for losses of
¥41,561 
”million was recognized. During year ending March 2022, an additional provision for losses of
¥9,289 
million was recognized during the quarter ended June 30, 2021, which was subsequently partially offset by a release in the allowance of
 ¥2,535
million during the quarter ended March 31, 2022. See Note 23 “U.S. Prime Brokerage Event” for further information on this event. 
(4)(5)
IncludesPrimarily includes the effect of foreign exchange movements and recoveries collected.
Troubled debt restructurings
In the ordinary course of business, Nomura may choose to restructure a loan classified as held for investment either because of financial difficulties of the borrower, or simply as a result of market conditions or relationship reasons. A troubled debt restructuring (“TDR”) occurs when Nomura (as lender) for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that Nomura would not otherwise consider.
Expected credit losses for a loan being restructured under a TDR which only involve modification of the loan’s terms (rather than receipt of assets in full or partial settlement) is typically determined using a discounted cash flow analysis. Assets received in full or partial satisfaction of a loan in a TDR are recognized at fair value.
Discussions continue with various borrowers to modify the existing contractual terms of certain loans. These modifications where the borrower is deemed to be in financial difficulty and Nomura has, or expects to, grant a financial concession would typically be accounted for and reported as a TDR.
As of March 31, 2020, the amount of loans which were classified as impaired but against which no allowance for doubtful accounts had been recognized was not significant. For impaired loans with a related allowance, the amount of recorded investment and the total unpaid principal balance  were
 ¥14,678
 million. The related allowance was 
¥8,282 million.
The amounts of TDRs which occurred during the years ended March 31, 20202021 and 20212022 were not significant.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Nonaccrual and past due loans
Loans are placed on a nonaccrual status if interest is deemed uncollectible. Nomura policy is to define interest as being uncollectible if the borrower is determined to be in financial difficulty or an interest or principal payment on the loans is 90 days or more past due.
Where a loan is placed on a nonaccrual status, any accrued but unpaid interest receivable reversed and no further accrual of interest is permitted. Interest income is subsequent recognized when a cash payment is received from the borrower using the cash basis method.
Loans are generally only returned to an accrual status if the loan is brought contractually current, i.e., all overdue principal and interest amounts are paid. In limited circumstances, a loan which has not been brought contractually current will also be returned to an accrual status if all principal and interest amounts contractually due are reasonably assured of repayment within a reasonable period of time or there has been a sustained period of repayment performance by the borrower.
As of March 31, 2020, there were ¥14,658 million of loans which were placed on a nonaccrual status, primarily secured and
unsecured corporate loans. The amount of loans which were 90 days past due was not significant.
As of March 31, 2021, there were ¥204,404 
million of loans which were placed on a nonaccrual status, primarily secured corporate loans. Nomura uses, as a practical expedient, the fair value of the collateral when determining the allowance for doubtful accounts, for which repayment is expected to be provided substantially through the operation or sale of the collateral. Of the corporateCorporate loans on a
non-accrual
status theseinclude loans relaterelating to a U.S. client as ofin connection with the U.S. Prime Brokerage Event in March 31,2021 causing an increase of an allowance for doubtful accounts of ¥41,561 million to be recorded.2021. The amount of loans which were 90 days past due was not significant.
As of March 31, 2022, there were ¥62,289 million of loans which were placed on a nonaccrual status, primarily secured corporate loans. Corporate loans on a
non-accrual
status as of March 31, 2022 include loans relating to a U.S. client in connection with the U.S. Prime Brokerage Event in March 2021. The amount of loans which were 90 days past due but were not on a nonaccrual status was not significant.
Credit quality indicators
Nomura is exposed to credit risks deriving fromdue to a decline in the value of loans or a default caused by deterioration of creditworthiness or bankruptcy of the obligor.borrower. Nomura’s risk management framework for such credit risks is based on a risk assessment through an internal rating process, in depth
pre-financing
credit analysis of each individual loan and continuous post-financing monitoring of obligor’sthe borrower’s creditworthiness.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following tables present an analysis of each class of loans not carried at fair value using Nomura’s internal ratings or equivalent credit quality indicators applied by subsidiaries by years of origination as of March 31, 2021.2021 and 2022.
 
 
Millions of yen
  
Millions of yen
 
 
March 31, 2021
  
March 31, 2021
 
 
2021
 
2020
 
2019
 
2018
 
2017
 
2016 or

earlier
 
Revolving
 
Total
  
2021
 
2020
 
2019
 
2018
 
2017
 
2016 or

earlier
 
Revolving
 
Total
 
Secured loans at banks:
                 
AAA-BBB
 ¥54,179  ¥115,003  ¥17,106  ¥12,450  ¥4,240  ¥17,634  ¥
0—  
 
 ¥220,612  ¥54,179  ¥115,003  ¥17,106  ¥12,450  ¥4,240  ¥17,634  ¥0—    ¥220,612 
BB-CCC
  75,680   115,131   3,864   2,324  
 
0—  
 
  5,484  
 
0—  
 
  202,483   75,680   115,131   3,864   2,324   0—     5,484   0—     202,483 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
Others
(1)
 
 
0—  
 
  61,185  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  61,185   0—     61,185   0—     0—     0—     0—     0—     61,185 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total secured loans at banks
 ¥129,859  ¥291,319  ¥20,970  ¥14,774  ¥4,240  ¥23,118  ¥
0—  
 
 ¥484,280  ¥129,859  ¥291,319  ¥20,970  ¥14,774  ¥4,240  ¥23,118  ¥0—    ¥484,280 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Unsecured loans at banks:
                                
AAA-BBB
 ¥9,101  ¥22,955  ¥27,863  ¥17,563  ¥8,484  ¥34,719  ¥
0—  
 
 ¥120,685  ¥9,101  ¥22,955  ¥27,863  ¥17,563  ¥8,484  ¥34,719  ¥0—    ¥120,685 
BB-CCC
 
 
0—  
 
 
 
0—  
 
  235  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  235   0—     0—     235   0—     0—     0—     0—     235 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
Others
(1)
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
  0—     0—     0—     0—     0—     0—     0—     0—   
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total unsecured loans at banks
 ¥9,101  ¥22,955  ¥28,098  ¥17,563  ¥8,484  ¥34,719  ¥
0—  
 
 ¥120,920  ¥9,101  ¥22,955  ¥28,098  ¥17,563  ¥8,484  ¥34,719  ¥0—    ¥120,920 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Short-term secured margin loans:
                                
AAA-BBB
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—   
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
Others
(1)
  170,514   141  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  265,566   436,221   170,514   141   0—     0—     0—     0—     265,566   436,221 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total short-term secured margin loans
 ¥170,514  ¥141  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥265,566  ¥436,221  ¥170,514  ¥141  ¥0—    ¥0—    ¥0—    ¥0—    ¥265,566  ¥436,221 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Unsecured inter-bank money market loans:
                                
AAA-BBB
 ¥1,289  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥1,289  ¥1,289  ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥1,289 
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
Others
(1)
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
  0—     0—     0—     0—     0—     0—     0—     0—   
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total unsecured inter-bank money market loans
 ¥1,289  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥1,289  ¥1,289  ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥1,289 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Secured corporate loans:
                                
AAA-BBB
 ¥33,965  ¥261,182  ¥45,880  ¥9,817  ¥6,406  ¥27,672  ¥97  ¥385,019  ¥33,965  ¥261,182  ¥45,880  ¥9,817  ¥6,406  ¥27,672  ¥97  ¥385,019 
BB-CCC
  20,093   102,941   34,435   29,869   13,067   17,573   173,178   391,156   20,093   102,941   34,435   29,869   13,067   17,573   173,178   391,156 
CC-D(2)  197,859  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  197,859 
CC-D
(2)
  197,859   0—     0—     0—     0—     0—     0—     197,859 
Others
(1)
 
 
0—  
 
  39   40   11   30   4,697   428   5,245   0—     39   40   11   30   4,697   428   5,245 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total secured corporate loans
 ¥251,917  ¥364,162  ¥80,355  ¥39,697  ¥19,503  ¥49,942  ¥173,703  ¥979,279  ¥251,917  ¥364,162  ¥80,355  ¥39,697  ¥19,503  ¥49,942  ¥173,703  ¥979,279 
                         
 
  
 
  
 
  
 
  
 
  
 
  
��
 
  
 
 
Unsecured corporate loans:
                                
AAA-BBB
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—   
BB-CCC
  84  
 
0—  
 
  450  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  534   84   0—     450   0—     0—     0—     0—     534 
CC-D 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  0—     0—     0—     0—     0—     0—     0—     0—   
Others
(1)
  1   191   8   97,212  
 
0—  
 
  5,014  
 
0—  
 
  102,426 
Others
  1   191   8   97,212   0—     5,014   0—     102,426 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total unsecured corporate loans
 ¥85  ¥191  ¥458  ¥97,212  ¥
0—  
 
 ¥5,014  ¥
0—  
 
 ¥102,960  ¥85  ¥191  ¥458  ¥97,212  ¥0—    ¥5,014  ¥0—    ¥102,960 
Advances to affiliated companie
s
            
 
    
 
  
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Advances to affiliated companies  
AAA-BBB
 
 ¥ 
1,000
  
 ¥ 
0—  
  
 ¥ 
0—  
 
 ¥ 
 
0—  
 
 ¥ 
 
0—  
 
 ¥ 
 
0—  
  
 ¥ 
0—  
 
 
 ¥ 
1,000
  ¥1,000  ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥1,000 
BB-CCC
  
0—  
   
0—  
   
0—  
   
0—  
   
0—  
 
  
0—  
   
0—  
 
  
0—  
   0—     0—     0—     0—     0—     0—     0—     0—   
CC-D
  
0—  
   
0—  
   
0—  
   
0—  
   
0—  
 
  
0—  
   
0—  
 
  
0—  
   0—     0—     0—     0—     0—     0—     0—     0—   
Others(1)
  
0—  
   
0—  
   
0—  
   
0—  
   
0—  
 
  
0—  
   
0—  
 
  
0—  
 
Others  0—     0—     0—     0—     0—     0—     0—     0—   
Total advances to affiliated companies
 
 ¥ 
1,000
  
 ¥ 
0—  
  
 ¥ 
0—  
 
 ¥ 
 
0—  
 
 ¥ 
 
0—  
 
 ¥ 
 
0—  
  
 ¥ 
0—  
 
 
 ¥ 
1,000
  ¥1,000  ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥0—    ¥1,000 
                        
Total
 ¥563,765  ¥678,768  ¥129,881  ¥169,246  ¥32,227  ¥112,793  ¥439,269  ¥2,125,949  ¥563,765  ¥678,768  ¥129,881  ¥169,246  ¥  32,227  ¥112,793  ¥439,269  ¥2,125,949 
                         
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
(1)
Relate to collateralized exposures where a specified ratio of LTV is maintained.
(2)
Includes loans of ¥197,859 
million to a U.S. client in relation toconnection with the U.S. prime brokeragePrime Brokerage Event. See Note. 23
“U.S. Prime Brokerage Event”
for further information on this event.
 
F-95 
F-93
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
  
Millions of yen
 
  
March 31, 2022
 
  
2022
  
2021
  
2020
  
2019
  
2018
  
2017 or

earlier
  
Revolving
  
Total
 
Secured loans at banks:
                                
AAA-BBB
 ¥106,554  ¥126,834  ¥8,325  ¥17,308  ¥9,213  ¥12,729  ¥
0—  
 
 ¥280,963 
BB-CCC
  80,167   169,655   1,693   638   587   6,779   
0—  
   259,519 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
(1)
 
 
0—  
 
  82,304  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  82,304 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured loans at banks
 ¥186,721  ¥378,793  ¥10,018  ¥17,946  ¥9,800  ¥19,508  ¥
0—  
 
 ¥622,786 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured loans at banks:
                                
AAA-BBB
 ¥6,000  ¥18,175  ¥12,703  ¥20,565  ¥9,982  ¥25,841  ¥
0—  
 
 ¥93,266 
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
1,940
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
1,940
 
Others
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured loans at banks
 ¥6,000  ¥18,175  ¥12,703  ¥22,505  ¥9,982  ¥25,841  ¥
0—  
 
 ¥95,206 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Short-term secured margin loans:
                                
AAA-BBB
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
(1)
  169,195   23,238  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  250,167   442,600 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total short-term secured margin loans
 ¥169,195  ¥23,238  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥250,167  ¥442,600 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured inter-bank money market loans:
                                
AAA-BBB
 ¥2,196  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥2,196 
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured inter-bank money market loans
 ¥2,196  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥2,196 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Secured corporate loans:
                                
AAA-BBB
 ¥
0—  
 
 ¥52,545  ¥86,910  ¥20,710  ¥3,258  ¥52,496  ¥9,916  ¥225,835 
BB-CCC
  86,300   307,636   14,718   131,266   115,494   30,085   92,039   777,538 
CC-D
(2)
 
 
0—  
 
  57,524  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  57,524 
Others
(1)
  455   20   25   26   10   101   96   733 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total secured corporate loans
 ¥86,755  ¥417,725  ¥101,653  ¥152,002  ¥118,762  ¥82,682  ¥102,051  ¥1,061,630 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Unsecured corporate loans:
                                
AAA-BBB
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
BB-CCC
  11,621   20,516  
 
0—  
 
  1,989  
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  34,126 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
 
 
0—  
 
  438   191  
 
0—  
 
  109,959   5  
 
0—  
 
  110,593 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total unsecured corporate loans
 ¥11,621  ¥20,954  ¥191  ¥1,989  ¥109,959  ¥5  ¥
0—  
 
 ¥144,719 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Advances to affiliated companies
                                
AAA-BBB
 ¥
0—  
 
 ¥1,000  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥1,000 
BB-CCC
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
CC-D
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
Others
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
 
 
0—  
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total advances to affiliated companies
 ¥
0—  
 
 ¥1,000  ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥
0—  
 
 ¥1,000 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
 ¥462,488  ¥859,885  ¥124,565  ¥194,442  ¥248,503  ¥128,036  ¥352,218  ¥2,370,137 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
F-94
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(1)
Relate to collateralized exposures where a specified ratio of LTV is maintained.
(2)
Includes loans of ¥57,524 
million to a U.S. client in connection with the U.S. Prime Brokerage Event. See Note. 23
“U.S. Prime Brokerage Event”
for further information on this event.
The following table presents a definition of each of the internal ratings used in the Nomura Group.
 
Rating Range
  
Definition
AAA
  Highest credit quality. An obligor or facility has extremely strong capacity to meet its financial commitments. ‘AAA range’ is the highest credit rating assigned by Nomura. Extremely low probability of default.
  
AA
  Very high credit quality category. An obligor or facility has very strong capacity to meet its financial commitments. Very low probability of default but above that of ‘AAA range.’
  
A
  High credit quality category. An obligor or facility has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than those in higher-rated categories. Low probability of default but higher than that of ‘AA range.’
  
BBB
  Good credit quality category. An obligor or facility has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitments. Medium probability of default but higher than that of ‘A range.’
  
BB
  Speculative credit quality category. An obligor or facility is less vulnerable in the near term than other lower-ratings. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the inadequate capacity to meet its financial commitments. Medium to high probability of default but higher than that of ‘BBB range.’
  
B
  Highly speculative credit quality category. An obligor or facility is more vulnerable than those rated ‘BB range’, but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the issuer’s or obligor’s capacity or willingness to meet its financial commitments. High probability of default—more than that of ‘BB range.’
  
CCC
  Substantial credit risk. An obligor or facility is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments. Strong probability of default—more than that of ‘B range.’
  
CC
  Default category. An obligor or facility is currently highly vulnerable to nonpayment (default category).nonpayment.
  
C
  Default category. An obligor or facility is currently extremely vulnerable to nonpayment (default category).nonpayment.
  
D
  Failure of an obligor to make payments in full and on time of any financial obligations, markedly disadvantageous modification to a contractual term compared with the existing obligation, bankruptcy filings, administration, receivership, liquidation or other
winding-up
or cessation of business of an obligor or other similar situations.
Nomura reviews internal ratings at least once a year by using available credit information of obligors including financial statements and other information. Internal ratings are also reviewed more frequently for
high-risk
obligors or problematic exposures and any significant credit event of obligors will trigger an immediate credit review process.
 
F-96
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
8. Leases:
Nomura as lessor
Nomura leases office buildings and aircrafts in Japan and overseas either as head lessor or through subleases. These leases and subleases are primarily classified as operating leases. The related assets are stated at cost, net of accumulated depreciation, except for land, which is stated at cost in the consolidated balance sheets and reported within
Other assets-Office buildings, land, equipment and facilities.
The following table presents the types of assets which Nomura leases under operating leases:
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
  
Cost
   
Accumulated

depreciation
 
Net carrying

amount
   
Cost
   
Accumulated

depreciation
 
Net carrying

amount
   
Cost
   
Accumulated

depreciation
 
Net carrying

amount
   
Cost
   
Accumulated

depreciation
 
Net carrying

amount
 
Real estate
(1)
  ¥354   ¥(285)  ¥69   ¥354   ¥(288)  ¥66   ¥354   ¥(288)  ¥66   ¥354   ¥(292)  ¥62 
Aircraft
   16,071    (648)   15,423    39,736    (1,382)   38,354    39,736    (1,382)   38,354    10,373    (688)   9,685 
                        
 
   
 
  
 
   
 
   
 
  
 
 
Total
  ¥16,425   ¥(933)  ¥15,492   ¥40,090   ¥(1,670)  ¥38,420   ¥40,090   ¥(1,670)  ¥38,420   ¥10,727   ¥(980)  ¥9,747 
                        
 
   
 
  
 
   
 
   
 
  
 
 
 
(1)
Cost, accumulated depreciation and net carrying amounts include amounts relating to real estate utilized by Nomura.
Nomura recognized lease income of ¥2,292 million, ¥2,732 million, ¥1,878 million and ¥1,878¥3,653 million for the years ended March 31, 2019, 2020, 2021 and 2021,2022, respectively. These are included in the consolidated statements of income within
Revenue—Revenue
—Other
.
The following table presents an analysis of future undiscounted lease payments to be receivedreceivable in connection with noncancellable operating leases entered into by Nomura as lessor over the remaining lease term as of March 31, 2021.2022. Amounts in connection with finance leases were not significant.
 
   
Millions of yen
  
March 31, 20212022
   
Minimum lease payments

to be received
Years of receipt
     
Less than 1 year
  ¥3,0571,013 
1 to 2 years
   3,019986 
2 to 3 years
   2,992986 
3 to 4 years
   2,992986 
4 to 5 years
   2,992986 
More than 5 years
   20,6394,883 
   
 
Total
  ¥35,6919,840 
   
 
Nomura as lessee
Nomura enters into leases of office space, residential facilities for employees, motor vehicles, equipment and technology assets in the ordinary course of business in both Japan and overseas as lessee. These arrangements predominantly consist of operating leases. Separately Nomura subleases certain real estate and
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
arrangements predominantly consist of operating leases. Separately Nomura subleases certain real estate and equipment through operating lease arrangements. The total carrying values of
right-of-use
(“ROU”) assets recognized in connection with operating leases as of March 31, 20202021 and 20212022 were ¥170,782¥185,085 million and ¥185,085¥175,422 million, respectively. The total carrying values of ROU asset recognized in connection with finance leases as of March 31, 20202021 and 20212022 were not significant. These lease assets are reported within
Other assets-Office buildings, land, equipment and facilities
in the consolidated balance sheets.
The following table presents income and expense amounts recognized through the consolidated statements of income for leases where Nomura is acting as lessee for the year ended March 31, 2020, 2021 and 2021.2022. Amounts forrecognized in the consolidated statements of income in respect of finance lease cost, short-term lease cost, variable lease cost and net gains (losses) on qualifying sale and leaseback transactions were not significant to the consolidated statements of income forduring the years ended March 31, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2020
   
2021
   
2020
   
2021
   
2022
 
Lease expense:
               
Operating lease costs
  ¥48,475   ¥49,168   ¥48,475   ¥49,168   ¥47,643 
  
Other income and expenses:
               
Gross sublease income
(1)
  ¥5,377   ¥4,638   ¥5,377   ¥4,638   ¥3,464 
 
(1)
Gross sublease income represents income from subleases separate from lease payments made by Nomura on the head lease as lessee.
Lease cash flow information
Lease payments made in cash in connection with operating leases are classified as operating activity in the consolidated statements of cash flows. The initial recognition of ROU assets and lease liabilities on lease commencement date represents noncash transactions.
The following table presents cash payments made by Nomura as lessee which meet the definition of lease payments and therefore have been included in the measurement of operating lease liabilities recorded under operating cash flows and the total amount of ROU assets and lease liabilities recognized during the years ended March 31, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2020
   
2021
   
2020
   
2021
   
2022
 
Operating cash flows for operating leases
  ¥47,212   ¥47,584   ¥47,212   ¥47,584   ¥46,565 
ROU assets recognized in connection with new operating leases
  ¥18,026   ¥41,279   ¥18,026   ¥41,279   ¥32,208 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Maturity analysis of lease liabilities
The following table presents an analysis of future undiscounted lease payments under operating leases entered into by Nomura as lessee over the remaining lease term as of March 31, 20212022 and also represents a reconciliation between total of such lease payments and the discounted carrying value of operating lease liabilities recognized in the consolidated balance sheets as of March 31, 2021.2022. Finance lease liabilities were not significant as of March 31, 2021.2022. These lease liabilities are reported within
Other liabilities
in the consolidated balance sheets.
 
   
Millions of yen
 
   
March 31, 20212022
 
   
Operating leases
 
Years of payment
     
Less than 1 year
  ¥42,41144,493 
1 to 2 years
   33,58232,034 
2 to 3 years
   27,12025,850 
3 to 4 years
   24,39523,507 
4 to 5 years
   22,55719,254 
More than 5 years
   68,65263,902 
   
 
Total undiscounted lease payments
  ¥218,717209,040 
Less: Impact of discounting
   (11,84510,909) 
   
 
Lease liabilities as reported in the consolidated balance sheets
  ¥206,872198,131 
   
 
The following table presents the weighted-average discount rate used to measure lease liabilities and the weighted-average remaining lease term of operating leases as of March 31, 20202021 and 2021.2022.
 
     
   
Year ended March 31
   
2020
  
2021
   
Operating leases
  
Operating leases
Weighted-average discount rate used to measure lease liabilities
  2.2%  1.4%
Weighted-average remaining lease term
  
7.7
 years		  
7.6
 years
   
Year ended March 31
   
2021
  
2022
   
Operating leases
  
Operating leases
Weighted-average discount rate used to measure lease liabilities
  1.4%  1.4%
Weighted-average remaining lease term
  7.6 years  7.2 years
9. Business combinations:
On
April 1, 2020, Nomura acquired 100% of Greentech Capital, LLC
(“Greentech”), a leading M&A advisory boutique in sustainable technology and infrastructure in the United States. The acquisition of Greentech comprises an initial cash payment and additional contingent payments based on future performance of the company. The transaction has been accounted for as a business combination under ASC 805 “Business combinations”“
Business combinations
” and consideration for the purchase as used to determine goodwill was
¥12,389 
¥12,389 million which includes the estimated fair value of contingent payments accounted for as contingent consideration on acquisition date. Changes in the fair value of contingent consideration are recognized in the consolidated statements of income until the contingency is resolved. Contingent payments linked to future employment of employees of Greentech are recognized in the consolidated statements of income as compensation expense over the relevant service period and when payment of those amounts becomes probable. The operating results and cash flows of Greentech was reflected to Nomura’s consolidated financial statements from April 1, 2020. The assets acquired and liabilities assumed as of the acquisition date were not material to Nomura’s consolidated balance sheet.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
10. Other assets—Office buildings, land, equipment and facilities and Other / Other liabilities:
Office buildings, land, equipment and facilities
The following table presents a breakdown of owned and leased office buildings, land, equipment and facilities as of March 31, 2021 and 2022.
   
Millions of yen
 
   
March 31
 
   
2021
   
2022
 
Land
  ¥39,233   ¥39,118 
Office buildings
   76,725    60,025 
Equipment and facilities
   59,614    31,895 
Software
   103,385    104,609 
Construction in progress
   407    7,978 
Operating lease ROU assets
   185,085    175,422 
   
 
 
   
 
 
 
Total
  ¥464,449   ¥419,047 
   
 
 
   
 
 
 
Depreciation and amortization charges of depreciable assets are reported within
Non-interest
expenses—Information processing and communications
in the amount of ¥47,653 million, ¥49,343 million, and ¥46,111 million, and in
Non-interest
expenses—Occupancy and related depreciation
in the amount of ¥15,930 million, ¥14,503 million, and ¥13,412 million for the years ended March 31, 2020, 2021 and 2022, respectively.
As of March 31, 2021, Nomura has classified buildings with a carrying value of ¥12,311 
million as being held for sale and reported within Other assets—Office buildings, land, equipment and facilities in the consolidated balance sheet. Held-for-sale assets are carried at the lower of the carrying amount and fair value less cost to sell. During the year ended March 31, 2021, no gain or loss associated with the sale of held-for-sale assets was recognized through earnings. The sale was subsequently completed during the quarter ended June 30, 2021 with no material gain or loss recognized through earnings. 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other assets—Other / Other liabilities
The following table presents components of
Other assets—assets
—Other
and
Other liabilities
in the consolidated balance sheets as of March 31, 20202021 and 2021.2022.
 
    
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Other assets—Other:
      
Other assets
—
Other:
      
Securities received as collateral
  ¥290,269   ¥399,975   ¥399,975   ¥166,352 
Goodwill and other intangible assets
   17,783    29,040    29,040    30,007 
Deferred tax assets net
   13,431    30,433    30,433    15,562 
Investments in equity securities for other than operating purposes
(1)
   141,855    270,246    270,246    249,448 
Prepaid expenses
   16,262    18,741    18,741    17,165 
Other
   347,422    300,997    300,997    295,052 
          
 
   
 
 
Total
  ¥827,022   ¥1,049,432   ¥1,049,432   ¥773,586 
          
 
   
 
 
Other liabilities:
            
Obligation to return securities received as collateral
  ¥290,269   ¥399,975   ¥399,975   ¥166,352 
Accrued income taxes
   16,362    60,275    60,275    34,158 
Other accrued expenses and provisions(2)
   396,560    424,961    424,961    457,511 
Other
(2)(3)
   331,257    353,956    353,956    362,204 
          
 
   
 
 
Total
  ¥1,034,448   ¥1,239,167   ¥1,239,167   ¥1,020,225 
          
 
   
 
 
 
(1)
Include
s
Includes marketable and
non-marketable
equity securities held for other than trading or operating purposes. These investments comprise of listed equity securities and unlisted equity securities of ¥
32,545
¥30,912 million and ¥
109,310
¥239,334 million respectively, as of March 31, 2020,2021, and ¥
30,912
¥13,572 million and ¥¥235,877 
239,334
million respectively, as of March 31, 2021.2022. In principle, these securities are carried at fair value, with changes in fair value recognized and reported within
Revenue—Other
in the consolidated statements of income.
It also includes equity securities without a readily determinable fair
 value
of
¥
65,365
¥65,365 
million as of March 31, 2021. 2021 and 2022 respectively.
(2)
As
Includes a resultliability of adopting ASU 2016-02
 ¥62,889 
million and ¥76,866 million as of April 1, 2019, operating lease liabilities are presented through
Other liabilities—Other
. See Note 8 “Leases” for further information.
It also includes a total liability
of
¥
62,889
millionMarch 31, 2021 and 2022 respectively, in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings where loss is considered probable and the amount of such loss can be reasonably estimated. See Note 21 20
“
Commitments, contingencies and guaranteesguarantees”
for further information. 
(3)
Operating lease liabilities are presented through
Other liabilities
—Other. See Note 8 “
Leases
” for further information.
Goodwill
 is recognized upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired. Subsequent to initial recognition, goodwill is not amortized but is tested for impairment during the fourth quarter of each fiscal year, or more often if events or circumstances, such as adverse changes in the business climate, indicate there may be impairment.
Impairment testing of goodwill is inherently subjective and often requires management judgment to determine when to perform an impairment test, whether qualitatively the fair value of a reporting unit exceeds its carrying value and also to estimate the fair value of a reporting unit when a quantitative impairment test is required.
An annual goodwill impairment test was performed in the quarter ended March 31, 2021.2021 and 2022. Whilst determination of fair value of the reporting unit was more subjective because of the impact of the
COVID-19
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
pandemic, the estimated fair value of the reporting unit is expected to exceed carrying value and therefore no impairment loss was recognized.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents changes in goodwill, which are reported in the consolidated balance sheets within
Other assets—assets
—
Other
for the years ended March 31, 20202021 and 2021.2022.
 
 
Millions of yen
  
Millions of yen
 
 
Year ended March 31, 2020
  
Year ended March 31, 2021
 
 
Beginning of year
 
Changes during year
 
End of year
  
Beginning of year
 
Changes during year
 
End of year
 
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
 
Acquisition
 
Impairment
 
Other
(1)
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
  
Gross

carrying

amount
 
Accumulated

Impairment
 
Net

carrying

amount
 
Acquisition
(2)
 
Impairment
 
Other
(1)
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
 
Wholesale
 ¥92,814  ¥(92,814)  ¥0—    ¥0—    ¥0—    ¥0—    ¥92,814  ¥(92,814)  ¥0—    ¥92,814  ¥(92,814)  ¥0—    ¥12,078  ¥0—    ¥402  ¥105,294  ¥(92,814)  ¥12,480 
Other
  474   0—     474   0—     0—     (2)   472   0—     472   472   0—     472   189   0—     4   665   0—     665 
                            
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
 ¥93,288  ¥(92,814)  ¥474  ¥0—    ¥0—    ¥(2)  ¥93,286  ¥(92,814)  ¥472  ¥93,286  ¥(92,814)  ¥472  ¥12,267  ¥0—    ¥406  ¥105,959  ¥(92,814)  ¥13,145 
                            
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
  
 
Millions of yen
  
Millions of yen
 
 
Year ended March 31, 2021
  
Year ended March 31, 2022
 
 
Beginning of year
 
Changes during year
 
End of year
  
Beginning of year
 
Changes during year
 
End of year
 
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
 
 
Acquisition
(2)
 
 
Impairment
 
Other
(1)
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
  
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
 
Acquisition
 
Impairment
 
Other
(1)
 
Gross

carrying

amount
 
Accumulated

Impairment
 
Net
carrying

amount
 
Wholesale
 ¥92,814  ¥(92,814)  ¥0—    ¥12,078  ¥0—    ¥402  ¥105,294  ¥(92,814)  ¥12,480  ¥105,294  ¥(92,814)  ¥12,480  ¥0—    ¥0—    ¥1,260  ¥106,554  ¥(92,814)  ¥13,740 
Other
  472   0—     472   189   0—     4   665   0—     665   665   0—     665   0—     0—     2   667   0—     667 
                            
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Total
 ¥93,286  ¥(92,814)  ¥472  ¥12,267  ¥0—    ¥406  ¥105,959  ¥(92,814)  ¥13,145  ¥105,959  ¥(92,814)  ¥13,145  ¥0—    ¥0—    ¥1,262  ¥107,221  ¥(92,814)  ¥14,407 
                            
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
(1)
Includes currency translation adjustments.
(2)
For the year ended March 31, 2021, Nomura recognized goodwill as a result of acquiring
100% of the ownership interests in Greentech Capital, LLC
which has been allocated in its entirety to the Wholesale division for segmental reporting and reporting unit
purposes
. purposes. See Note 9 “
“
Business Combination”Combination
”
for further information.
During the quarterfiscal year ended March 31, 2021 and 2022, management considered but determined the
COVID-19
pandemic did not indicate that certain finite-lived intangible assets were impaired. As a result, a formal impairment test over the relevant asset groups which include these intangible assets was not required.
The following table presents finite-lived intangible assets by type as of March 31, 20202021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31, 2020
   
March 31, 2021
   
March 31, 2021
   
March 31, 2022
 
  
Gross

carrying

amount
   
Accumulated

amortization
 
Net carrying

amount
   
Gross

carrying

amount
   
Accumulated

amortization
 
Net carrying

amount
   
Gross

carrying

amount
   
Accumulated

amortization
 
Net
carrying

amount
   
Gross

carrying

amount
   
Accumulated

amortization
 
Net

carrying

amount
 
Client relationships
  ¥63,331   ¥(55,342)  ¥7,989   ¥64,357   ¥(57,680)  ¥6,677   ¥64,357   ¥(57,680)  ¥6,677   ¥67,492   ¥(61,715)  ¥5,777 
Other
   999    (373)   626    1,842    (1,234)   608    1,842    (1,234)   608    2,000    (1,522)   478 
                        
 
   
 
  
 
   
 
   
 
  
 
 
Total
  ¥64,330   ¥(55,715)  ¥8,615   ¥66,199   ¥(58,914)  ¥7,285   ¥66,199   ¥(58,914)  ¥7,285   ¥69,492   ¥(63,237)  ¥6,255 
                        
 
   
 
  
 
   
 
   
 
  
 
 
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Amortization expenses for the years ended March 31, 2019, 2020, 2021 and 20212022 were ¥2,504 million, ¥1,662 million, ¥2,296 million and ¥2,296¥1,717 million, respectively. Estimated amortization expenses for the next five years are shown below.
 
  
Millions of yen
  
Millions of yen
 
Year ending March 31
  
Estimated

amortization expense
  
Estimated

amortization expense
 
2022
   ¥6,021 
2023
    186   ¥324 
2024
    182    200 
2025
    179    197 
2026
    179    113 
2027
   73 
The amounts of indefinite-lived intangibles, which primarily includes trademarks, were ¥8,696¥8,609 million and ¥8,609¥9,345 million as of March 31, 20202021 and 2021,2022, respectively.
An annual impairment test was performed in the quarter ended March 31, 2021 and 2022 against these intangibles. Whilst determination of fair value of these intangibles was more subjective because of the impact of the
COVID-19
pandemic, the estimated fair value of each intangible exceeded carrying value and therefore no impairment loss was recognized.
Nomura recognizes an obligation related to restoration of the existing rental buildings at the time of leaving, as Asset Retirement Obligations (“ARO”) on real estate leasehold contracts.
The following table presents changes in ARO, which are reported in the consolidated balance sheets within
Other liabilities—Other
for the years ended March 31, 20202021 and 2021.2022.
 
   
Millions of yen
 
   
March 31
 
   
2020
  
2021
 
Balance at beginning of year
  ¥5,758  ¥6,625 
Liabilities incurred during the current period
   979   1,846 
Liabilities settled during the current period   (112)   (97) 
          
Revision in estimated cash flows
(1
)
  
0—
   
6,111
 
Balance at end of period
  ¥       6,625  ¥     14,485 
          
   
Millions of yen
 
   
March 31
 
   
2021
  
2022
 
Balance at beginning of year
  ¥6,625  ¥14,485 
Liabilities incurred during the current period
   1,846   319 
Liabilities settled during the current period
   (97)   (564) 
Revision in estimated cash flows
(1)
   6,111   0—   
   
 
 
  
 
 
 
Balance at end of period
  ¥14,485  ¥14,240 
   
 
 
  
 
 
 
 
(1)
During the fiscal year ended March 31, 2021, as a result of the rights conversion of the Tokyo Nihonbashi district redevelopment project, the estimate of future cash flows for the ARO associated with our properties has been changed.
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
11. Borrowings:
The following table presents short-term and long-term borrowings of Nomura as of March 31, 20202021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Short-term borrowings
(1)
:
            
Commercial paper
  ¥525,124   ¥460,014   ¥460,014   ¥131,915 
Bank borrowings
   565,130    294,052    294,052    205,857 
Other
   396,479    614,032    614,032    712,369 
          
 
   
 
 
Total
  ¥1,486,733   ¥1,368,098   ¥1,368,098   ¥1,050,141 
          
 
   
 
 
Long-term borrowings:
            
Long-term borrowings from banks and other financial institutions
(2)
  ¥2,929,313   ¥2,878,676   ¥2,878,676   ¥3,196,144 
Bonds and notes issued
(3)
:
            
Fixed-rate obligations:
            
Japanese yen denominated
   832,589    583,148    583,148    765,412 
Non-Japanese
yen denominated
   1,376,346    1,917,166    1,917,166    2,486,305 
Floating-rate obligations:
            
Japanese yen denominated
   744,275    876,844    876,844    917,362 
Non-Japanese
yen denominated
   242,612    327,595    327,595    329,876 
Index / Equity-linked obligations:
            
Japanese yen denominated
   899,765    906,332    906,332    942,585 
Non-Japanese
yen denominated
   696,041    361,916    361,916    350,672 
          
 
   
 
 
   4,791,628    4,973,001    4,973,001    5,792,212 
          
 
   
 
 
Subtotal
   7,720,941    7,851,677    7,851,677    8,988,356 
          
 
   
 
 
Trading balances of secured borrowings
   54,724    123,335    123,335    269,950 
          
 
   
 
 
Total
  ¥7,775,665   ¥7,975,012   ¥7,975,012   ¥9,258,306 
          
 
   
 
 
 
(1)
Includes secured borrowings of ¥170,290 million as of March 31, 2020 and ¥55,569 million as of March 31, 2021.2021 and ¥92,580 million as of March 31, 2022.
(2)
Includes secured borrowings of ¥72,543 million as of March 31, 2020 and ¥118,106 million as of March 31, 2021.2021 and ¥79,843 million as of March 31, 2022.
(3)
Includes secured borrowings of ¥774,319 million as of March 31, 2020 and ¥788,618 million as of March 31, 2021.2021 and ¥761,620 million as of March 31, 2022.
Trading balances of secured borrowings
These are liabilities recognized when a transfer of a financial asset does not meet the criteria for sales accounting under ASC 860 and therefore the transaction is accounted for as a secured borrowing. These borrowings are part of Nomura’s trading activities intended to generate profits from the distribution of financial products secured by those financial assets.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Long-term borrowings consisted of the following:
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Debt issued by the Company
  ¥2,873,634   ¥3,003,810   ¥3,003,810   ¥3,679,955 
Debt issued by subsidiaries—guaranteed by the Company
   2,541,554    2,398,932    2,398,932    2,124,904 
Debt issued by subsidiaries—not guaranteed by the Company
(1)
   2,360,477    2,572,270    2,572,270    3,453,447 
          
 
   
 
 
Total
  ¥7,775,665   ¥7,975,012   ¥7,975,012   ¥9,258,306 
          
 
   
 
 
 
(1)
Includes trading balances of secured borrowings.
As of March 31, 2020, fixed-rate long-term borrowings mature between 2020 and 2067 at interest rates ranging from 0.00% to 24.40%. Excluding perpetual subordinated debts, floating-rate obligations, which are generally based on LIBOR, mature between 2020 and 2050 at interest rates ranging from 0.00% to 5.00%. Index / Equity-linked obligations mature between 2020 and 2050 at interest rates ranging from 0.00% to 39.90%.
As of March 31, 2021, fixed-rate long-term borrowings mature between 2021 and 2067 at interest rates ranging from 0.00% to 24.40%. Excluding perpetual subordinated debts, floating-rate obligations, which are generally based on LIBOR, mature between 2021 and 2051 at interest rates ranging from 0.00% to 8.01%. Index / Equity-linked obligations mature between 2021 and 2051 at interest rates ranging from 0.00% to 43.80%
As of March 31, 2022, fixed-rate long-term borrowings mature between 2022 and 2067 at interest rates ranging from 0.00% to 30.09%. Excluding perpetual subordinated debts, floating-rate obligations, which are generally based on
T
IBOR
 and LIBOR
, mature between 2022 and 2051 at interest rates ranging from 0.00% to 7.74%. Index / Equity-linked obligations mature between 2022 and 2052 at interest rates ranging from 0.00% to 42.30%.
Certain borrowing agreements contain provisions whereby the borrowings are redeemable at the option of the borrower at specified dates prior to maturity and include various equity-linked or other index-linked instruments.
Nomura enters into swap agreements to manage its exposure to interest rates and foreign exchange rates. Principally, debt securities and notes issued are effectively converted to LIBOR-basedTokyo OverNight Average rate and Secured Overnight Financing Rate-based floating rate obligations through such swap agreements. The carrying value of the long-term borrowings includes adjustments to reflect fair value hedges.
Following table presents the effective weighted-average interest rates of borrowings, including the effect of fair value hedges as of March 31, 20202021 and 2021.2022.
 
  
March 31
   
March 31
 
  
2020
 
2021
   
2021
 
2022
 
Short-term borrowings
   0.72%   0.58%    0.58%   1.26% 
Long-term borrowings
   1.17%   0.82%    0.82%   1.09% 
Fixed-rate obligations
   1.11%   0.96%    0.96%   1.25% 
Floating-rate obligations
   1.37%   0.88%    0.88%   1.04% 
Index / Equity-linked obligations
   0.80%   0.30%    0.30%   0.79% 
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Maturities of long-term borrowings
The following table presents the aggregate annual maturities of long-term borrowings, including adjustments related to fair value hedges and liabilities measured at fair value, as of March 31, 2021:2022:
 
Year ending March 31
  
Millions of yen
   
Millions of yen
 
2022
  ¥463,710 
2023
   779,485   ¥456,663 
2024
   671,945    904,738 
2025
   1,027,469    1,180,692 
2026
   1,347,842    1,402,216 
2027 and thereafter
   3,561,226 
2027
   870,856 
2028 and thereafter
   4,173,191 
      
 
 
Subtotal
   7,851,677    8,988,356 
      
 
 
Trading balances of secured borrowings
   123,335    269,950 
      
 
 
Total
  ¥7,975,012   ¥   9,258,306 
      
 
 
Borrowing facilities
As of March 31, 20202021 and 2021,2022, Nomura had unutilized borrowing facilities of ¥NaN¥0nil and ¥NaN, respectivel
y
.¥0nil, respectively.
Subordinated borrowings
As of March 31, 20202021 and 2021,2022, subordinated borrowings were ¥318,200¥354,500 million and ¥354,500¥414,500 million, respectively.
12. Earnings per share:
Basic and diluted earnings per share (“EPS”) are presented on the face of the consolidated statements of income. Basic EPS is calculated by dividing net income (loss) attributable to NHI shareholders by the weighted average number of the Company’s common shares outstanding during the year. The calculation of diluted EPS is similar to basic EPS, except that the weighted average number of the Company’s common shares is adjusted to reflect all dilutive instruments where the Company’s common shares are potentially deliverable during the year. In addition, net income (loss) attributable to NHI shareholders is adjusted for any change in income or loss that would result from the assumed conversion of dilutive instruments issued by subsidiaries and affiliates.
 
F-105
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents a reconciliation of the amounts and the numbers used in the calculation of net income (loss) attributable to NHI shareholders per share (basic and diluted) for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen

except per share data presented in yen
   
Millions of yen

except per share data presented in yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
   
2021
   
2020
   
2021
   
2022
 
Basic—
                 
Net income (loss) attributable to NHI shareholders
  ¥(100,442)  ¥216,998   ¥153,116 
Net income attributable to NHI shareholders
  ¥216,998   ¥153,116   ¥142,996 
             
 
   
 
   
 
 
Weighted average number of shares outstanding
   3,359,564,840   3,202,369,845    3,055,525,640    3,202,369,845    3,055,525,640    3,063,524,091 
             
 
   
 
   
 
 
Net income (loss) attributable to NHI shareholders per share
  ¥(29.90)  ¥67.76   ¥50.11 
Net income attributable to NHI shareholders per share
  ¥67.76   ¥50.11   ¥46.68 
             
 
   
 
   
 
 
Diluted—
                 
Net income (loss) attributable to NHI shareholders
  ¥(100,525)  ¥216,890   ¥153,064 
Net income attributable to NHI shareholders
  ¥216,890   ¥153,064   ¥142,861 
             
 
   
 
   
 
 
Weighted average number of shares outstanding
   3,359,566,740   3,276,510,404    3,147,338,609    3,276,510,404    3,147,338,609    3,158,708,013 
             
 
   
 
   
 
 
Net income (loss) attributable to NHI shareholders per share
  ¥(29.92)  ¥66.20   ¥48.63 
Net income attributable to NHI shareholders per share
  ¥66.20   ¥48.63   ¥45.23 
             
 
   
 
   
 
 
Net income (loss) attributable to NHI shareholders was adjusted to reflect the decline in Nomura’s equity share of earnings of subsidiaries and affiliates for the years ended March 31, 2019, 2020, 2021 and 20212022 arising from options to purchase common shares issued by subsidiaries and affiliates.
The weighted average number of shares used in the calculation of diluted EPS reflects the increase in potential issuance of the Company’s common shares arising from stock-based compensation plans by the Company and affiliates, which would have minimal impact on EPS for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
Antidilutive stock options and other stock-based compensation plans to purchase 104,496,000, 15,452,900, 12,398,500 and 12,398,5009,716,800 of the Company’s common shares were not included in the computation of diluted EPS for the years ended March 31, 2019, 2020, 2021 and 2021,2022, respectively.
Subsequent Events
On May 17, 2021,19, 2022, the Company adopted a resolution to grant Restricted Stock Units (“RSUs”). See Note 14 “
Deferred compensation awards
” for further information.
On April 26, 2022, the Company adopted a resolution to set up a share buyback program. See Note 17 “
Shareholders’ equity
” for further information.
13. Employee benefit plans:
Nomura provides various pension plans and other post-retirement benefits which cover certain eligible employees worldwide. In addition, Nomura provides health care benefits to certain active and retired employees through its Nomura Securities Health Insurance Society (“NSHIS”).

 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Defined benefit pension plans—
The Company and certain subsidiaries in Japan (“Japanese entities”) have contributory funded benefit pension plans for eligible employees. The benefits are paid as annuity payments subsequent to retirement or as
lump-sum
payments at the time of retirement based on a combination of years of service, age at retirement and employee’s choice. The benefits under the plans are calculated based upon position, years of service and reason for retirement. In addition to the plans described above, certain Japanese entities also have unfunded
lump-sum
payment plans. Under these plans, employees with at
least
two years
of service are generally entitled to
lump-sum
payments upon termination of employment. The benefits under the plans are calculated based upon position, years of service and the reason for retirement. Nomura’s funding policy is to contribute annually the amount necessary to satisfy local funding standards. In December 2008, certain contributory funded benefit pension plans and unfunded
lump-sum
payment plans were amended and “Cash balance pension plans” were introduced. Participants receive an annual benefit in their cash balance pension plan accounts, which is computed based on compensation of the participants, adjusted for the changes in market interest rate.
In April 2020, certain Japanese entities amended their pension plans. Certain defined benefit pension plans and unfunded
lump-sum
payment plans were either closed for additional funding or abolished. Defined contribution pension plans and cash balance pension plans have replaced them for future contributions.
Certain overseas subsidiaries have various local defined benefit plans covering certain employees. Nomura recognized an asset for surplus pension benefits for these plans amounting to ¥13,949¥8,912 million and ¥8,912¥7,911 million as of March 31, 20202021 and 2021,2022, respectively.
Net periodic benefit cost
The following table presents the components of net periodic benefit cost for defined benefit plans of Japanese entities for the years ended March 31, 2019, 2020, 2021 and 2021.2022. Nomura’s measurement date is March 31 for defined benefit plans of Japanese entities.
 
      
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Service cost
  ¥11,270  ¥12,079  ¥6,721   ¥12,079  ¥6,721  ¥6,452 
Interest cost
   2,180   1,766   1,786    1,766   1,786   2,042 
Expected return on plan assets
   (6,068)   (6,038)   (5,826)    (6,038)   (5,826)   (6,055) 
Amortization of net actuarial losses
   3,831   5,654   5,519    5,654   5,519   3,955 
Amortization of prior service cost
   (1,059)   (1,137)   (1,521)    (1,137)   (1,521)   (1,599) 
            
 
  
 
  
 
 
Net periodic benefit cost
  ¥10,154  ¥12,324  ¥6,679   ¥12,324  ¥6,679  ¥4,795 
            
 
  
 
  
 
 
Prior service cost is amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized over the average remaining service period of active participants, which is 14 years.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Benefit obligations and funded status
The following table presents a reconciliation of changes in projected benefit obligation (“PBO”) and the fair value of plan assets, as well as a summary of the funded status of Japanese entities’ plans as of, and for the years ended March 31, 20202021 and 2021.2022.

 
    
  
Millions of yen
   
Millions of yen
 
  
As of or for the year
ended March 31
   
As of or for the
year ended March 31
 
  
2020
 
2021
   
2021
 
2022
 
Change in projected benefit obligation:
          
Projected benefit obligation at beginning of year
  ¥315,423  ¥303,523   ¥303,523  ¥295,810 
Service cost
   12,079   6,721    6,721   6,452 
Interest cost
   1,766   1,786    1,786   2,042 
Actuarial gain
   (5,642)   (3,593)    (3,593)   1,433 
Benefits paid
   (13,301)   (12,656)    (12,656)   (12,683) 
Amendments of pension benefit plans
   (6,818)   —   
Acquisition, divestitures and other
   16   29    29   (15) 
         
 
  
 
 
Projected benefit obligation at end of year
  ¥303,523  ¥295,810   ¥295,810  ¥293,039 
         
 
  
 
 
Change in plan assets:
          
Fair value of plan assets at beginning of year
  ¥232,885  ¥225,744   ¥225,744  ¥234,747 
Actual return on plan assets
   (2,934)   19,126    19,126   5,464 
Employer contributions
   5,584   825    825   815 
Benefits paid
   (9,791)   (10,948)    (10,948)   (9,565) 
         
 
  
 
 
Fair value of plan assets at end of year
  ¥225,744  ¥234,747   ¥234,747  ¥231,461 
         
 
  
 
 
Funded status at end of year
   (77,779)   (61,063)    (61,063)   (61,578) 
         
 
  
 
 
Amounts recognized in the consolidated balance sheets
  ¥(77,779)  ¥(61,063)   ¥(61,063)  ¥(61,578) 
         
 
  
 
 
The accumulated benefit obligation (“ABO”) was ¥303,523¥295,810 million and ¥295,810¥293,039 million as of March 31, 20202021 and 2021,2022, respectively.
In April 2020, defined contribution pension plans and cash balance pension plans were adopted for future contributions following the amendments of pension benefit plans. Certain contributory defined benefit pension plans were closed for additional funding and will be managed within the accumulated funds. Unfunded
lump-sum
payment plans were abolished and transferred to cash balance plans with the calculated amount of
lump-sum
retirement payment as of the amendment date.
 
F-108
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents the PBO, ABO and fair value of plan assets for Japanese entities’ plans with ABO and PBO in excess of plan assets as of March 31, 20202021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Plans with ABO in excess of plan assets:
            
PBO
  ¥77,779   ¥61,063   ¥61,063   ¥62,457 
ABO
   77,779    61,063    61,063    62,457 
Fair value of plan assets
   0—      0—      0—      0—   
Plans with PBO in excess of plan assets:
            
PBO
  ¥77,779   ¥61,063   ¥61,063   ¥62,457 
ABO
   77,779    61,063    61,063    62,457 
Fair value of plan assets
   0—      0—      0—      0—   
The following table presents
pre-tax
amounts of Japanese entities’ plans deferred in
Accumulated other comprehensive income (loss)
that have not yet been recognized as components of net periodic benefit cost during the year ended March 31, 2021.2022.
 
   
Millions of yen
   
For the year ended

March 31, 20212022
Net actuarial loss
  ¥84,66682,734 
Net prior service cost
   (9,6818,114)
   
 
Total
  ¥74,98574,620 
   
 
Pre-tax
amounts of Japanese entities’ plans in accumulated other comprehensive income which are expected to be recognized as components of net periodic benefit cost over the next fiscal year are as follows.
 
   
Millions of yen
   
For the year ending

March 31, 20222023
Net actuarial loss
  ¥3,9553,818 
Net prior service cost
   (1,6261,665)
   
 
Total
  ¥2,3292,153 
   
 
Assumptions
The following table presents the weighted-average assumptions used to determine projected benefit obligations of Japanese entities’ plans as of March 31, 20202021 and 2021.2022.
 
  
March 31
   
March 31
 
  
2020
 
2021
   
2021
 
2022
 
Discount rate
   0.6%   0.7%    0.7%   0.8% 
Rate of increase in compensation levels
   0.3%   0.3%    0.3%   0.3% 
Interest crediting rate
  
3.0
%
  
2.9
%   2.9%   2.9% 
 
F-109
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the weighted-average assumptions used to determine the net periodic benefit cost of Japanese entities’ plans as of March 31, 2019, 2020, 2021 and 2021.2022.
 

  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Discount rate
   0.8%   0.6%   0.6%    0.6%   0.6%   0.7% 
Rate of increase in compensation levels
   1.7%   1.6%   0.3%    1.6%   0.3%   0.3% 
Expected long-term rate of return on plan assets
   2.6%   2.6%   2.6%    2.6%   2.6%   2.6% 
Interest crediting rate
  
3.3
%
  
3.3
%
  
3.0
%   3.3%   3.0%   2.9% 
Nomura generally determines the discount rates for its defined benefit plans by referencing indices for long-term, high-quality debt securities and ensuring that the discount rate does not exceed the yield reported for those indices after adjustment for the duration of the plans’ liabilities.
Nomura uses the expected long-term rate of return on plan assets to compute the expected return on assets. Nomura’s approach in determining the long-term rate of return on plan assets is primarily based on historical financial market relationships that have existed over time with the presumption that this trend will generally remain constant in the future.
Plan assets
Plan assets are managed with an objective to generate sufficient long-term value in order to enable future pension payouts. While targeting a long-term rate of return on plan assets, Nomura aims to minimize short-term volatility by managing the portfolio through diversifying risk. Based on this portfolio policy, the plan assets are invested diversely.
The plan assets of domestic plans target to invest 15% 15
%
in equities (including private equity investments), 44% 44
%
in debt securities, 25% 25
%
in life insurance company general accounts, and 16% 16
%
in other investments. Investment allocations are generally reviewed and revised at the time of the actual revaluation that takes place every five years or when there is a significant change in the portfolio assumptions.
For details of the levels of inputs used to measure the fair value of plan assets, see Note 2 “
Fair value measurementsmeasurements.
.”
F-110 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present information about the fair value of plan assets of Japanese entities’ plans as of March 31, 20202021 and 20212022 within the fair value hierarchy.
   
Millions of yen
 
   
March 31, 2021
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2021
 
Pension plan assets:
                    
Private equity and pooled investments
(1)
  ¥0—     ¥614   ¥33,384   ¥33,998 
Japanese government securities
   21,047    0—      0—      21,047 
Investment trust funds and other
(2)(3)
   0—      24,581    36,335    60,916 
Life insurance company general accounts
   0—      72,106    0—      72,106 
Other assets
   0—      35,857    0—      35,857 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥21,047   ¥133,158   ¥69,719   ¥   223,924 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Millions of yen
 
   
March 31, 2020
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2020
 
Pension plan assets:
                    
Private equity and pooled investments
(1)
  
¥
0—  
 
  ¥1,901   ¥23,465   ¥25,366 
Japanese government securities
   23,464   
 
0—  
 
  
 
0—  
 
   23,464 
Investment trust funds and other
(2)(3)
  
 
0—  
 
   22,027    41,616    63,643 
Life insurance company general accounts
  
 
0—  
 
   66,363   
 
0—  
 
   66,363 
Other assets
  
 
0—  
 
   40,508   
 
0—  
 
   40,508 
                     
Total
  ¥23,464   ¥130,799   ¥65,081   ¥219,344 
                     
  
   
Millions of yen
 
   
March 31, 2021
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2021
 
Pension plan asset
s
:
                    
Private equity and pooled investments
(1)
  
¥
0—  
 
  ¥614   ¥33,384   ¥33,998 
Japanese government securities
   21,047   
 
0—   
 
  
 
0—   
 
   21,047 
Investment trust funds and other
(2)(3)
  
 
0—  
 
   24,581    36,335    60,916 
Life insurance company general accounts
  
 
0—  
 
   72,106   
 
0—   
 
   72,106 
Other assets
  
 
0—  
 
   35,857   
 
0—   
 
   35,857 
                     
Total
  ¥21,047   ¥133,158   ¥69,719   ¥223,924 
                     
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Millions of yen
 
   
March 31, 2022
 
   
Level 1
   
Level 2
   
Level 3
   
Balance as of

March 31,
2022
 
Pension plan assets:
                    
Private equity and pooled investments
(1)
  ¥0—      ¥740   ¥29,081   ¥29,821 
Japanese government securities
   20,469    0—       0—       20,469 
Investment trust funds and other
(2)(3)
   0—       19,842    27,575    47,417 
Life insurance company general accounts
   0—       73,314    0—       73,314 
Other assets
   0—       33,575    0—       33,575 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥20,469   ¥127,471   ¥56,656   ¥    204,596 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes corporate type equity investments.
(2)
Includes mainly
p
rimar
i
ly
debt investment funds. Hedge funds and real estate funds are also included.
(3)
Certain assets that are measured at fair value using net asset value per share as a practical expedient have not been classified in the fair value hierarchy. As of March 31, 20202021 and 2021,2022, the fair values of these assets were
¥6,401¥10,823 million and ¥10,823¥26,865 million, respectively.
The fair value of plan assets of
non-Japanese
entities’ plans as of March 31, 2020 was ¥1,766 million, ¥1,522 million and ¥37,703 million which were classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, respectively. The fair value of plan assets of
non-Japanese
entities’ plans as of March 31, 2021 was ¥1,543 million, ¥2,192 million and ¥39,572 million which were classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, respectively.
F-111 
Table The fair value of Contentsplan assets of
non-Japanese
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
entities’ plans as of March 31, 2022 was ¥1,543 million, ¥2,181 million and ¥36,129 million which were classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, respectively.
See Note 2 “
Fair value measurements
” for further information regarding how Nomura estimates fair value for specific types of financial instruments.
The following tables present information about plan assets of Japanese entities’ plans for which Nomura has utilized significant Level 3 valuation inputs to estimate fair value.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31, 2020
     
Year ended March 31, 2021
   
  
Balance

as of

April 1,

2019
   
Unrealized
and realized
gains / (loss)
 
Purchases /

sales and

other

settlement
 
Balance

as of

March 31,

2020
   
Balance

as of

April 1,

2020
   
Unrealized

and realized

gains / (loss)
   
Purchases /

sales and

other

settlement
 
Balance

as of

March 31,

2021
 
Private equity and pooled investments
  ¥3,823   ¥(4,403)  ¥24,045  ¥23,465   ¥23,465   ¥11,225   ¥(1,306)  ¥33,384 
Investment trust funds and other
   50,560    (3,262)   (5,682)   41,616    41,616    2,925    (8,206)   36,335 
                
 
   
 
   
 
  
 
 
Total
  ¥54,383   ¥(7,665)  ¥18,363  ¥65,081   ¥65,081   ¥14,150   ¥(9,512)  ¥69,719 
                
 
   
 
   
 
  
 
 
 
  
Millions of yen
 
  
Year ended March 31, 2021
   
  
Balance

as of

April 1,

2020
   
Unrealized

and
 
realized

gains /
(
loss
)
 
Purchases /

sales and

other

settlement
 
Balance

as of

March 31,

2021
 
Private equity and pooled investments
  ¥23,465   ¥11,225  ¥(1,306)  ¥33,384 
Investment trust funds and other
   41,616    2,925   (8,206)   36,335 
              
Total
  ¥65,081   ¥14,150  ¥(9,512)  ¥69,719 
              
   
Millions of yen
 
   
Year ended March 31, 2022
    
   
Balance

as of

April 1,

2021
   
Unrealized

and realized

gains / (loss)
  
Purchases /

sales and

other

settlement
  
Balance

as of

March 31,

2022
 
Private equity and pooled investments
  ¥33,384   ¥1,374  ¥(5,677)  ¥29,081 
Investment trust funds and other
   36,335    (532)   (8,228)   27,575 
   
 
 
   
 
 
  
 
 
  
 
 
 
Total
  ¥69,719   ¥842  ¥(13,905)  ¥56,656 
   
 
 
   
 
 
  
 
 
  
 
 
 

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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The
 fair value of Level 3 plan assets of
non-Japanese
entities’ plans, mainly consisting of annuities, was ¥37,703¥
39,572
 million and ¥39,572¥
36,129
 million as of March 31, 20202021 and 2021,2022, respectively. The amount of unrealized profit (loss) of Level 3 assets was ¥2,509 ¥
(2,039)
million and ¥(2,039) ¥
(4,060)
million as of March 31, 20202021 and 2021,2022, respectively. The amounts of gains and losses, purchases and sales other than above, transfers between Level 1 or Level 2 and Level 3 relating to these assets during the years ended March 31, 20202021 and 20212022 were not significant.
Cash Flows
Following the amendments of pension benefit plans in Japanese entities, certain contributory funded benefit pension plans were closed for additional funding and will be managed within the accumulated funds.
The following table presents the expected benefit payments of Japanese entities’ plans during the next five fiscal years and in aggregate for the five fiscal years thereafter.
 
Year ending March 31
  
Millions of yen
 
2022
  ¥13,659 
2023
   13,252 
2024
   13,953 
2025
   14,671 
2026
   14,098 
2027-2031
   63,079 
F-112 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Year ending March 31
  
Millions of yen
 
2023
  ¥  14,517 
2024
   14,394 
2025
   15,159 
2026
   14,528 
2027
   13,993 
2028-2032
   62,226 
Defined contribution pension plans—
In addition to defined benefit pension plans, the Company, NSC and other Japanese and
non-Japanese
subsidiaries have defined contribution pension plans.
Nomura contributed ¥3,614 million, ¥3,585 million, ¥6,478 million and ¥6,478¥6,709 million to defined contribution pension plans for Japanese entities’ plans for the years ended March 31, 2019, 2020, 2021 and 2021,2022, respectively.
The contributions to overseas defined contribution pension plans were ¥9,293 million, ¥8,497 million, ¥8,035 million and ¥8,035¥9,215 million for the years ended March 31, 2019, 2020, 2021 and 2021,2022, respectively.
Health care benefits—
The Company and certain subsidiaries provide certain health care benefits to both active and retired employees through NSHIS. The Company and certain subsidiaries also sponsor certain health care benefits to retired employees (“Special Plan”) and who participate in the Special Plan on a
pay-all
basis, i.e., by requiring a retiree contribution based on the estimated per capita cost of coverage. The
Special Plan is a multi-employer post-retirement plan because it is jointly administered by NSHIS and the Japanese government, and the funded status of it is not computed separately. Therefore, although the Company and certain subsidiaries contribute some portion of the cost of retiree health care benefits not covered through retiree contributions, the Company and certain subsidiaries do not reserve for future costs. The health care benefit costs, which are equivalent to the required contribution, amounted to ¥9,828 million, ¥9,308 million, ¥9,463 million and ¥9,463 ¥10,035 
million for the years ended March 31, 2019, 2020, 2021 and 2021,2022, respectively.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14. Deferred compensation awards:
Nomura
issues deferred compensation awards to senior management and employees, which are linked to the price of the Company’s common stock, in order to retain and motivate key staff.
These stock-based compensation awards comprise Restricted Stock Unit (“RSU”) awards, Plan A and Plan B Stock Acquisition Right (“SAR”) awards, Notional Stock Unit (“NSU”) awards, and Collared Notional Stock Unit (“CSU”) awards. SAR Plan A awards are awards of stock options while RSU awards, SAR Plan B awards, NSU awards and CSU awards are analogous to awards of restricted common stock. The Company also issues other deferred compensation awards, namely Notional Indexed Unit (“NIU”) awards which are linked to a world stock index quoted by Morgan Stanley Capital International.
Certain deferred compensation awards include “Full Career Retirement” (“FCR”) provisions which permit recipients of the awards to continue to vest in the awards upon voluntary termination of employment if certain criteria based on corporate title and length of service within Nomura are met. The requisite service period for these awards ends on the earlier of the contractual vesting date and the date that the recipients become eligible for or claim FCR.
Unless indicated below, deferred compensation awards are generally reduced, forfeited or clawed back in the event of termination of employment, material restatements of financial statements, material conduct issues, material damage to Nomura’s business or reputation, material downturns in the performance of the Nomura group and/or a material failure of risk management.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
RSU awards
The Company introduced RSU awards in the fiscal year ended March 31, 2018, and granted the first RSU awards in May 2018. For each RSU award, one common stock of the Company is delivered. The awards generally have a graded vesting period over
three
years with an extending vesting period of up to
seven
years for certain senior management and employees in order to meet local regulatory requirements based on the role they perform within Nomura.
The grant date fair value per award is determined using the price of the Company’s common stock.
The following table presents activity relating to RSU awards for the year ended March 31, 2021.2022.
 
  
Outstanding

(number of Nomura

shares)
 
Weighted-average

grant date fair

value per share
  
Weighted-average

remaining life

until expiry

(years)
  
Outstanding

(number of Nomura

shares)
 
Weighted-average

grant date fair

value per share
   
Weighted-average

remaining life

until expiry

(years)
 
Outstanding as of March 31, 2020
    63,339,600  ¥447     1.0 
Outstanding as of March 31, 2021
   115,287,730  ¥427    1.0 
Granted
    78,054,800   418        64,439,400   507    
Forfeited
    (1,695,510)  431        (9,223,711)   468    
Delivered
    (24,411,160)  447        (48,384,029)                427    
              
 
  
 
    
Outstanding as of March 31, 2021
    115,287,730  ¥427     1.0 
Outstanding as of March 31, 2022
   122,119,390  ¥466    1.0 
              
 
  
 
    
The
weighted-average grant date fair value per award for the year ended March 31, 20202021 and 20212022 was ¥365¥418 and ¥418,¥507, respectively.
The total intrinsic value of RSU awards vested during the year ended March 31, 20212022 was ¥10,327¥28,076 million. The total of 9,000,34729,972,792 shares was delivered during the year ended March 31, 20212022 and its intrinsic value was ¥10,360¥28,704 million. The aggregate intrinsic value of RSU awards outstanding as of March 31, 20212022 was ¥67,028¥62,916 million.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As
 of March 
31 2021,
,
2022
, total unrecognized compensation cost relating to RSU awards was ¥8,192¥
8,700
 million which is expected to be recognized over a weighted average period of
1.8
years.
SAR Plan A awards
The Company issues SAR Plan A awards linked to the price of the Company’s common stock pursuant to several stock option plans. These awards vest and are exercisable into the Company’s common stock approximately two years after grant date and expire approximately seven years after grant date. The exercise price is generally not less than the fair value of the Company’s common stock on grant date. These awards are subject to the above reduction and forfeiture provisions but are not subject to claw back.
The grant date fair value of SAR Plan A awards is estimated using a Black-Scholes option-pricing model and using the following assumptions:
Expected volatilities based on historical volatility of the Company’s common stock;
Expected dividend yield based on the current dividend rate at the time of grant;
Expected lives of the awards determined based on historical experience; and
Expected risk-free interest rate based on Japanese Yen swap rate with a maturity equal to the expected lives of the options.
F-114 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The weighted-average grant date fair value of SAR Plan A awards granted during the years ended March 31, 2019 was ¥79 per share. There was no
 S
AR Plan A award granted during the year ended March 31, 2020 and 2021. The weighted-average assumptions used in each of these years were as follows.
   
Year ended March 31
 
   
2019
  
2020
  
2021
 
Expected volatility
   33.30%   0—  %   0—  % 
Expected dividends yield
   3.67%   0—  %   0—  % 
Expected lives (in years)
   4.5   0—      0—    
Risk-free interest rate
   0.10%   0—  %   0—  % 
The following table presents activity relating to SAR Plan A awards for the year ended March 31, 2021.
   
Outstanding

(number of Nomura

shares)
 
Weighted-average

exercise price
  
Weighted-average

remaining life

until expiry

(years)
Outstanding as of March 31, 2020
    15,452,900   ¥704     3.1 
Granted
    0—      0—         
Exercised
    (350,600)   586       
Forfeited
    (28,600)   653       
Expired
    (2,675,200)   821       
                  
Outstanding as of March 31, 2021
    12,398,500   ¥682     2.6 
                  
Exercisable as of March 31, 2021
    12,398,500   ¥682     2.6 
                  
The total intrinsic value of SAR Plan A awards exercised during the years ended March 31, 2019, 2020 and 2021 was ¥241 million, ¥139 million and ¥29 million, respectively.
The aggregate intrinsic value of SAR Plan A awards outstanding and exercisable as of March 31, 2021 was both ¥19 million, respectively.
As of March 31, 2021, total unrecognized compensation cost relating to SAR Plan A awards was ¥0nil
. The total fair value of SAR Plan A awards which vested during the years ended March 31, 2019, 2020 and 2021 was
¥
000nil
, respectively.
SAR Plan B awards
The Company issues SAR Plan B awards linked to the price of the Company’s common stock pursuant to several stock unit plans. These awards vest and are exercisable into the Company’s common stock, have an exercise price of ¥1 per share and graded vesting generally over three years with certain longer vesting or holding periods where required under local regulations.
The grant date fair value of SAR Plan B awards is determined using the price of the Company’s common stock.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents activity relating to SAR Plan B awards for the year ended March 31, 2021.2022. No new SAR Plan B awards have been granted since April 1, 2018.
 
  
Outstanding

(number of Nomura

shares)
 
Weighted-average

grant date fair

value per share
  
Weighted-average

remaining life

until expiry

(years)
  
Outstanding

(number of Nomura

shares)
 
Weighted-average

grant date fair

value per share
   
Weighted-average

remaining life

until expiry

(years)
 
Outstanding as of March 31, 2020
    22,338,900  ¥517     3.4 
Outstanding as of March 31, 2021
   12,967,100  ¥509    2.7 
Granted
    0—     0—         
 
—  
 
 
 
—  
 
   
Exercised
    (8,966,200)  532        (3,697,000)   535    
Forfeited
    (95,500)  474       
 
—  
 
 
 
—  
 
   
Expired
    (310,100)  457        (1,356,300)   397    
              
 
  
 
    
Outstanding as of March 31, 2021
    12,967,100  ¥509     2.7 
Outstanding as of March 31, 2022
   7,913,800  ¥516    2.3 
              
 
  
 
    
Exercisable as of March 31, 2021
    11,073,000  ¥514     2.1 
Exercisable as of March 31, 2022
   6,831,500  ¥526    1.8 
              
 
  
 
    
The total intrinsic value of SAR Plan B awards exercised during the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥8,896 million, ¥7,640 million, ¥4,878 million and ¥4,878¥2,547 million, respectively.
The aggregate intrinsic value of SAR Plan B awards outstanding and exercisable as of March 31, 20212022 was ¥7,526¥4,069 million and ¥6,427¥3,513 million, respectively.
As of March 31, 2021,2022, total unrecognized compensation cost relating to SAR Plan B awards was ¥7¥1 million which is expected to be recognized over a weighted average period of 1.31.7 years. The total fair value of SAR Plan B awards which vested during the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥10,757 million, ¥4,309 million, ¥1,784 million and ¥1,784¥467 million, respectively.
Total
compensation expense recognized within
Non-interest
expenses—expenses
—
Compensation and benefits
in the consolidated statements of income relating to RSU SAR Plan A, and SAR Plan B awards for the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥21,814 million, ¥12,694 million, ¥28,251 million and ¥28,251¥27,941 million, respectively.
Cash received from the exercise of SAR Plan A and SAR Plan B awards during the year ended March 31, 20212022 was ¥214¥11 million and the tax benefit realized from exercise of these awards was ¥438¥206 million.
Total related tax benefits recognized in the consolidated statements of income relating to RSU SAR Plan A and SAR Plan B awards for the years ended March 31, 2019, 2020, 2021 and 202
1
2022 were ¥90 million, ¥13 million, and ¥¥0nil
0nil
million and ¥0nil million,
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
respectively. The
dilutive effect of outstanding deferred compensation plans is included in the weighted average number of shares outstanding used in diluted EPS computations. See Note 12
“Earnings per share”
for further information.
NSU and CSU awards
NSU and CSU awards are cash-settled awards linked to the price of the Company’s common stock. NSU awards replicate the key features of SAR Plan B awards described above but are settled in cash rather than exercisable into the Company’s common stock. CSU awards are similar to NSU awards but exposure to movements in the price of the Company’s common stock is subject to a cap and floor. Both types of award have graded vesting periods generally over
three years
with certain longer vesting periods where required by local regulations.
F-116 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of NSU and CSU awards are determined using the price of the Company’s common stock.
The following table presents activity related to NSU and CSU awards for the year ended March 31, 2021.2022. No new CSU awards have been granted since
April 1, 2018.
 
  
NSUs
 
CSUs
  
NSUs
 
CSUs
 
  
Outstanding

(number of units)
 
Stock

price
 
Outstanding

(number of units)
 
Stock

price
  
Outstanding

(number of units)
 
Stock

price
 
Outstanding

(number of units)
 
Stock

price
 
Outstanding as of March 31, 2020
    21,098,829  ¥445   2,801,656  ¥611 
Outstanding as of March 31, 2021
   19,951,962  ¥539   1,867,400  ¥636 
Granted
    16,527,516   435(1)   0—     0—      11,528,713   575(1)  
 
0—  
 
 
 
0—  
 
Vested
    (17,470,375)  482(2)   (934,256)  617(2)    (12,555,940)   577(2)   (929,732)   601(2) 
Forfeited
    (204,008)    0—        (926,410)     (512)   
                
 
  
 
  
 
  
 
 
Outstanding as of March 31, 2021
    19,951,962  ¥539(3)   1,867,400  ¥636(3) 
Outstanding as of March 31, 2022
   17,998,325  ¥445(3)   937,156  ¥606(3) 
                
 
  
 
  
 
  
 
 
 
(1)
Weighted-average price of the Company’s common stock used to determine number of awards granted.
(2)
Weighted-average price of the Company’s common stock used to determine the final cash settlement amount of the awards.
(3)
The price of the Company’s common stock used to remeasure the fair value of the remaining outstanding unvested awards as of March 31, 2021.2022.
Total compensation expense recognized within
Non-interest
expenses—expenses
—
Compensation and benefits
in the consolidated statements of income relating to NSU and CSU awards for the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥5,077 million, ¥4,639 million, ¥8,043 million and ¥8,043
¥4,566 million, respectively.
Total unrecognized compensation cost relating to NSU awards, based on the fair value of these awards as of March 31, 2021,2022, was ¥645¥280 million, which is expected to be recognized through the consolidated statements of
income over a remaining weighted-average period of 1.1 years. The total fair value of NSU awards which vested during the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥11,481 million, ¥9,980 million, ¥8,426 million and ¥8,426¥7,247 million, respectively.
Total unrecognized compensation cost relating to CSU awards, based on the fair value of these awards as of March 31, 2021,2022, was ¥59¥0nil million which is expected to be recognized through the consolidated statements of income over a remaining weighted-average period of 1.6 years.
.
 The total fair value of CSU awards which vested during the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥6,282 million, ¥3,445 million, ¥576 million and ¥576¥559 million, respectively.
NIU awards
In addition to the stock-based compensation awards described above, Nomura also grants NIU awards to senior management and employees. NIU awards are cash-settled awards linked to a world stock index quoted by Morgan Stanley Capital International, with graded vesting periods generally over three years with certain longer vesting periods where required by local regulations.
The fair value of NIU awards is determined using the price of the index.
F-117 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents activity relating to NIU awards for the year ended March 31, 2021. No new NIU awards have been granted since
April 1, 2018.
Total
   
Outstanding

(number of units)
 
Index price
(1)
Outstanding as of March 31, 2020
    839,954   $5,339 
Granted
    0—    0— 
Vested
    (265,887)   5,814(2) 
Forfeited
    0—      
            
Outstanding as of March 31, 2021
    574,067   $8,400(3) 
            
(1)
The price of each unit is determined using 1/1000th of the index price.
(2)
Weighted-average index price used to determine the final cash settlement amount of the awards.
(3)
Index price used to remeasure the total fair value of the remaining outstanding unvested awards as of March 31, 2021.
Total compensation expense recognized within
Non-interest
expenses—Compensation and benefits
in the consolidated statements of income relating to NIU awards for the year ended March 31, 2019, 2020 and 2021 was ¥1,731 million, ¥237 million and ¥235 million, respectively.
Total unrecognized compensation cost relating to NIU awards, based on the fair value of these awards as of March 31, 2021, was ¥50 million which is expected to be recognized through the consolidated statements of income over a remaining weighted-average period of 1.7 years. The total fair value of NIU awards which vested during the years ended March 31, 2019, 2020 and 2021 was ¥5,091 million, ¥2,795 million and ¥164 million, respectively.
Total tax benefits recognized in the consolidated statements of income for compensation expense relating to NSU, CSU and NIUCSU awards for the years ended March 
31 2019,
,
2020
,
2021
and 2021
2022
were ¥220¥
168
 million, ¥168¥
205
 million and ¥205¥
125
 million, respectively.
Subsequent events
On May 17, 2021,19, 2022, the Company passed a resolution to grant RSU awards to certain senior management and employees. Total of 64,439,400100,057,000 RSU awards have been granted which generally have a graded vesting period from
one
to
three
years with an extending vesting period of up to
seven
years for certain senior management and employees in order to meet local regulatory requirements based on the role they perform within Nomura.
In June 202
1On May 25, 2022, Nomura
, Nomura
also granted NSU awards to senior management and employees in countries where RSU awards are less favorably treated from tax or other perspectives. These NSU awards have a total grant date fair value of ¥5¥6 billion and vesting periods of up to seven years.
15. Restructuring initiatives:
Nomura continues to experience a major structural shift such as a breakdown of the traditional investment banking business model, advances in digitization, and demographic shifts due to the shrinking population and aging society in Japan. To respond to the changing environment created by these shifts, Nomura implemented various restructuring initiatives during the year ended March 31, 2019 to swiftly reengineer its business platforms and change its business approach in order to achieve sustainable growth in any business environment. In particular, Nomura has restructured its management reporting framework to eliminate the concept of regions to
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
minimize duplication between businesses and region, reduce the number of corporate functions, downscale unprofitable and low growth businesses and reduce its activities in EMEA. During the year ended March 31, 202
1
, this restructuring initiative is completed.
As a result of these initiatives, Nomura recognized ¥10,348 million of severance costs reported within
Non-interest
expenses—Compensation and benefits
in the consolidated statements of income during the year ended March 31, 2019 and within Nomura’s Wholesale and Other segments. As of March 31, 2019, these costs were reported as liabilities within
Other liabilities
in the consolidated statements of financial position. Liabilities relating to these restructuring costs (including currency translation adjustments) were ¥507 million as of March 31, 2020 and ¥9,305 million were settled during the year ended March 31, 2020.
Nomura also recognized ¥4,390 million of branch consolidation costs reported within
Non-interest
expenses—Occupancy and related depreciation
in the consolidated statements of income during the year ended March 31, 2020 and within Nomura’s Retail and Other segments. As of March 31, 2020, ¥813 million were reported as liabilities within
Other liabilities.
During the year ended March 31, 2021, no material costs associated with the restructuring initiative were recorded in the consolidated statement of income.
16. Income taxes:
The following table presents components of
Income tax expense
reported in the consolidated statements of income for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Current:
              
Domestic
  ¥26,725  ¥42,099  ¥73,534   ¥42,099  ¥73,534  ¥69,661 
Foreign
   8,720   10,706   17,853    10,706   17,853   7,323 
            
 
  
 
  
 
 
Subtotal
   35,445   52,805   91,387    52,805   91,387   76,984 
            
 
  
 
  
 
 
Deferred:
              
Domestic
   28,183   (23,512)   (19,567)    (23,512)   (19,567)   1,561 
Foreign
   (6,618)   (399)   (1,546)    (399)   (1,546)   1,545 
            
 
  
 
  
 
 
Subtotal
   21,565   (23,911)   (21,113)    (23,911)   (21,113)   3,106 
            
 
  
 
  
 
 
Total
  ¥57,010  ¥28,894  ¥70,274   ¥28,894  ¥70,274  ¥80,090 
            
 
  
 
  
 
 
The income tax benefit recognized from operating losses for the years ended March 31, 2019, 2020, 2021 and 20212022 was ¥246 million, ¥1,195 million, ¥97 million and ¥97¥6,007 million, respectively, which is included within deferred income tax expense above.

The
 Company and its wholly-owned domestic subsidiaries have adopted the consolidated tax filing system permitted under Japanese tax law. The consolidated tax filing system only imposes a national tax.
The effective statutory tax rate applicable to Nomura in Japan was approximately 31% as of March 31, 2019, 2020, 2021 and 2021,2022, respectively.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On March 27, 2020, the “Act to partially revise the Income Tax Act and Others” (Act No.8 of 2020) was enacted, effective for fiscal years beginning on or after April 1, 2022. As a result of the Act, the existing Consolidated Taxation system in Japan will be replaced with the Group Tax Sharing system. The Company does not expect any significant impact on its net deferred tax liabilities on adoption of the Act.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
On December 22, 2017, the Tax Cuts and Jobs Act (“the Act”) was enacted in the United States which significantly changes U.S. income tax law, including reducing the U.S. federal corporate income tax rate to 21%, broadening the U.S. tax base, introducing a territorial tax system and one time repatriation tax on U.S. entities for previously deferred earnings of
non-U.S.
investees, allowing full expensing of certain property assets and imposing certain additional taxes on payments made from U.S. entities to foreign related parties. As a result, Nomura recognized a reduction of ¥2,776 million in deferred tax liabilities and deferred tax expense during the fiscal year ended March 31, 2018. As a result of finalizing calculations around the impact from changes in certain assumptions and interpretations made by Nomura, certain actions to be taken by Nomura and additional guidance released by the U.S. tax authorities and other bodies after April 1, 2018, Nomura did not make any material adjustments to this estimate during the fiscal year ended March 31, 2019.
Foreign
 subsidiaries are subject to income taxes of the countries in which they operate. The relationship between income tax expense and pretax accounting income (loss) is affected by a number of items, including various tax credits, certain revenues not subject to income taxes, certain expenses not deductible for income tax purposes, changes in deferred tax valuation allowance and different enacted tax rates applicable to foreign subsidiaries.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents a reconciliation of the effective income tax rate reflected in the consolidated statements of income to Nomura’s effective statutory tax rate for the years ended March 31, 2019, 2020, 2021 and 2021.2022. The effective tax rate presented in the following table represents total income tax expense for the year as a percentage of
Income (loss) before income taxes
. For the years ended March 31, 2020 and 2021, where Nomura recognized
Income before income taxes
for the years, reconciling items which increase
Income tax expense
and therefore increase Nomura’s effective tax rate are shown as positive amounts. Conversely, reconciling items which reduce
Income tax expense
and reduce Nomura’s effective tax rate are shown as negative amounts. For the year ended March 31, 2019, Nomura recognized
Loss before income taxes
and consequently, reconciling items shown in the table which increase
Income tax expense
are presented as negative amounts and reconciling items which reduce
Income tax expense
are presented as positive amounts.
 
  
Year ended March 31
   
Year ended March 31
 
  
    2019    
 
    2020    
 
    2021    
   
2020
   
2021
   
2022
 
Nomura’s effective statutory tax rate
   31.0%   31.0%   31.0%    31.0%    31.0%    31.0% 
Impact of:
                
Changes in deferred tax valuation allowances(3)
   (58.3)   (0.3)   8.7    (0.3)    8.7    18.0 
Additional taxable income
   (2.9)   0.6   0.7    0.6    0.7    1.0 
Non-deductible
expenses
(1)
   (110.3)   2.9   7.1    2.9    7.1    5.1 
Non-taxable
income
(2)(1)
   16.8   (23.5)   (4.5)    (23.5)    (4.5)    (2.9) 
Dividends from foreign subsidiaries
   0.0   0.1   0.0    0.1    0.0    0.0 
Tax effect of undistributed earnings of foreign subsidiaries
   (2.8)   0.2   0.0    0.2    0.0    0.1 
Different tax rate applicable to income (loss) of foreign subsidiaries
   (19.8)   (0.9)   (4.0)    (0.9)    (4.0)    0.0 
Effect of changes in foreign tax laws(3)
   0.5   (0.9)   1.1    (0.9)    1.1    (14.4) 
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates
(3)(2)
   5.4   (0.1)   (8.7)    (0.1)    (8.7)    0.0 
Other
   (10.8)   2.5   (0.9)    2.5    (0.9)    (2.6) 
            
 
   
 
   
 
 
Effective tax rate
   (151.2)%   11.6%   30.5%    11.6%    30.5%    35.3% 
            
 
   
 
   
 
 
 
(1)
Non-deductible
expenses
during the year ended March 31, 2019 includes approximately ¥21 billion relating to goodwill impairment losses (which increased Nomura’s effective tax rate by 56.3%) and approximately ¥13 billion relating to litigation provisions and settlements (which increased Nomura’s effective tax rate by 34.0%).
(2)
Non-taxable
income
during the year ended March 31, 2020 includes approximately ¥53 billion of the tax effect from
non-taxable
dividend income from affiliated Nomura companies, including deemed dividend (which decreased Nomura’s effective tax rate by 21.2%).
(3)(2)
Tax benefit recognized on the outside basis differences for investment in subsidiaries and affiliates
during the year ended March 31, 2021 of approximately ¥21 billion (which decreased Nomura’s effective tax rate by 9.1%) arises from the recognition of deferred tax assets from the decision and commitment of Nomura management to liquidate a certain wholly-owned subsidiary within Nomura in the foreseeable future. The valuation allowances of ¥3 billion have been recognized against these deferred tax assets, the impact of which are reported in
Changes in deferred tax valuation allowances
for the same period.
(3)
Finance Act 2021, enacted on June
 10,
2021, increases the headline U.K. corporation tax rate from
 19%
to 25% on
April
 1
,
2023. Deferred ta
x
assets and liabilities as of the balance sheet date are calculated by reference to the most appropriate enacted rates as of March
 31,
2022. As a result of the change in closing deferred tax rate, Nomura recognized a movement in
Effect of changes in foreign tax laws
of ¥36 billion (which decreased Nomura’s effective tax rate by 16.0%), which was offset by a movement in Changes in deferred tax valuation allowances of ¥36 billion (which increased Nomura’s effective tax rate by 16.0%) during the year ended March 31, 2022. 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The
 following table presents the significant components of deferred tax assets and liabilities as of March 31, 20202021 and 2021,2022, before offsetting of amounts which relate to the same
tax-paying
component within a particular tax jurisdiction.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
 
2021
   
2021
 
2022
 
Deferred tax assets
          
Depreciation, amortization and valuation of fixed assets
  ¥19,932  ¥22,770   ¥22,770  ¥30,441 
Investments in subsidiaries and affiliates
   1,209   20,220    20,220   21,390 
Valuation of financial instruments
   77,054   73,905    73,905   102,021 
Accrued pension and severance costs
   24,356   19,947    19,947   20,492 
Other accrued expenses and provisions
   51,566   60,280    60,280   79,061 
Operating losses
   308,504   353,326    353,326   370,481 
Lease liabilities
   47,680   52,251    52,251   49,060 
Other
   9,394   15,011    15,011   15,425 
         
 
  
 
 
Gross deferred tax assets
   539,695   617,710    617,710   688,371 
Less
—
Valuation allowances
   (388,411)   (428,014)    (428,014)   (466,145) 
         
 
  
 
 
Total deferred tax assets
   151,284   189,696    189,696   222,226 
         
 
  
 
 
Deferred tax liabilities
          
Investments in subsidiaries and affiliates
   89,630   85,636    85,636   91,040 
Valuation of financial instruments
   52,780   40,807    40,807   85,301 
Undistributed earnings of foreign subsidiaries
   2,423   2,486    2,486   2,745 
Valuation of fixed assets
   9,497   23,521    23,521   23,962 
Right-of-use
assets
   47,438   51,671    51,671   48,519 
Other
   2,992   5,546    5,546   7,044 
         
 
  
 
 
Total deferred tax liabilities
   204,760   209,667    209,667   258,611 
         
 
  
 
 
Net deferred tax assets (liabilities)
  ¥(53,476)  ¥(19,971)   ¥(19,971)  ¥(36,385) 
         
 
  
 
 
After offsetting deferred tax assets and liabilities which relate to the same
tax-paying
component within a particular tax jurisdiction, net deferred tax assets reported within
Other assets—assets
—
Other
in the consolidated balance sheets were ¥13,431¥30,433 million and ¥30,433¥15,562 million as of March 31, 20202021 and 2021,2022, respectively and net deferred tax liabilities reported within
Other liabilities
in the consolidated balance sheets were ¥66,907¥50,404 million and ¥50,404¥51,947 million as of March 31, 20202021 and 2021,2022, respectively.
As of March 31, 2021,2022, no deferred tax liabilities have been
recognized
for undistributed earnings of foreign subsidiaries totaling ¥18,305¥
19,027
 million which are not expected to be remitted in the foreseeable future. It is not practicable to determine the amount of income taxes payable in the event all
such foreign earnings are repatriated.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents
changes
in total valuation allowances established against deferred tax assets for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
   
2022
 
Balance at beginning of year
  ¥444,916  ¥388,411   ¥428,014 
Net change during the year
   (56,505)
(1)
 		  39,603
(2) 
   38,131
(3) 
   
 
 
  
 
 
   
 
 
 
Balance at end of year
  ¥388,411  ¥428,014   ¥466,145 
   
 
 
  
 
 
   
 
 
 
   
Millions of yen
 
   
Year ended March 31
 
   
2019
   
2020
  
2021
 
Balance at beginning of year
  ¥422,280   ¥444,916  ¥388,411 
Net change during the year
   22,636(1)    (56,505)
(2)
 		  39,603(3) 
               
Balance at end of year
  ¥444,916   ¥388,411  ¥428,014 
               
(1)
Primarily includes an increase of ¥11,843 million of valuation allowances of certain foreign subsidiaries mainly due to an increase in valuation allowances related to operating loss carryforwards, partially offset by a decrease of valuation allowances related to accrued expenses and provisions, an increase of ¥6,265 million related to Japanese subsidiaries and the Company because of an increase in valuation allowances related to operating loss carryforwards recognized in the current year, an increase of ¥14,976 million of valuation allowances related to Japanese subsidiaries and the Company as a result of changes in the expected realization of deferred tax assets, and a reduction of ¥10,448 million of valuation allowances related to expiration of operating loss carryforwards. In total, ¥22,636 million of allowances increased for the year ended March 31, 2019.
(2)
Primarily includes a reduction of ¥59,330 million of valuation allowances of certain foreign subsidiaries mainly by expiration of loss carryforwards, an increase of ¥11,462 million of valuation allowances mainly due to a decrease of valuation of financial instruments, and a reduction of ¥8,637 million related to Japanese subsidiaries and the Company mainly by utilization of loss carryforwards. In total, ¥56,505 million of allowances decreased for the year ended March 31, 2020.
(3)(2)
Primarily includes an increase of ¥48,883
 million of valuation allowances of certain foreign subsidiaries mainly due to an increase in valuation allowances related to operating loss carryforwards, a reduction of
¥5,871
million of valuation allowances mainly due to an increase in valuation of financial instruments, and a reduction of
¥3,409 
¥3,409 million of valuation allowances related to Japanese subsidiaries and the Company mainly due to an increase of valuation of financial instruments and a decrease of accrued pension and severance costs. In total, ¥39,603 million of allowances increased for the year ended March 31, 2021.
¥39,603
(3)
Primarily includes an increase of ¥51,706
 million of valuation allowances of certain foreign subsidiaries mainly due to an increase in operatin
g
loss carryforwards, and a reduction of
¥13,575 
million of valuation allowances related to Japanese subsidiaries and the Company mainly due to a decrease of operating loss carryforwards. In total,
¥38,131 
million of allowances increased for the year ended March 31, 2021. 2022.
As of March 31, 2021,2022, total operating loss carryforwards were ¥1,963,798¥2,039,600 million, which included ¥596,946¥545,946 million relating to the Company and domestic subsidiaries, ¥549,481 ¥624,763 
million relating to foreign subsidiaries in the United Kingdom, ¥536,563 U.K.,
¥568,273 
million relating to foreign subsidiaries in the United States, ¥260,091U.S.,
 ¥272,066 million relating to foreign subsidiaries in Hong Kong, and ¥20,717¥28,552 million relating to foreign subsidiaries in other tax jurisdictions. Of this total amount, ¥1,001,867¥1,101,276 million can be carried forward indefinitely, ¥846,194¥838,753 million expires by March 31, 20302031 and ¥115,737
¥99,571 million expires in later fiscal years. These numbers are presented before offset with any uncertain tax position discussed later.
In determining the amount of valuation allowances to be established as of March 31, 2021,2022, Nomura considered all available positive and negative evidence around the likelihood that sufficient future taxable income will be generated to realize the deferred tax assets in the relevant tax jurisdiction of the Company, its domestic subsidiaries and foreign subsidiaries. In Japan and other tax jurisdictions where domestic and foreign subsidiaries have experienced cumulative operating losses in recent years, these losses provided the most verifiable negative evidence available and outweigh positive evidence.
While Nomura has considered certain future tax planning strategies as a potential source of future taxable income, no such strategies have been relied upon as positive evidence resulting in a reduction of valuation
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
allowances in any major tax jurisdiction in which Nomura operates as of March 31, 2019, 2020, 2021 and 2021.2022. In addition, valuation allowances have not been reduced in any of these periods as a result of changing the weighting applied to positive or negative evidence in any of the major tax jurisdictions in which Nomura operates.
F-119
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The determination of whether deferred tax assets will be realized, and therefore whether a valuation allowance is required, is inherently subjective and often requires management judgment around the future profitability of Nomura entities, an interpretation of tax rules by courts and regulatory authorities and tax examinations by taxing authorities, and the appropriate weighting of positive and negative evidence around the likelihood that sufficient future taxable income will be generated to realize deferred tax assets in the relevant tax jurisdiction. Although estimating future taxable income was increasingly subjective due to uncertainty in future profitability of Nomura as a result of the
COVID-19
pandemic, it did not result in a significant impact on the determination of realization of deferred tax assets as of March 31, 202
0assets.
.
Nomura’s unrecognized tax benefits were ¥4,367 million and ¥35,774 
million as of March 31, 2021. If2021 and 2022 respectively. Out of the balance as of March 31, 2022,
¥6,273 million, if recognized, these net benefits would favorably impact the effective tax rate in the future periods. The remaining balance would not favorably impact the effective tax rate as it is expected to increase operating loss carryforwards and corresponding valuation allowance. The total amount of unrecognized tax benefits was not significant as of March 31, 2019 and 2020. The movement of the gross amounts in unrecognized tax benefits during the year ended March 31, 2022 was an increase of ¥31,406 million of which ¥29,501 million is presented as a reduction to the deferred tax asset for a utilization of net operating loss carryforward. There were also no significant movements of the gross amounts in unrecognized tax benefits for the years ended March 31, 2020 and 2021. There were also no significant movements of the amount of interest and penalties recognized due to unrecognized tax benefits during the years ended March 31, 2019, 2020, 2021 and 2021.2022. Nomura is under regular examination by the Japanese National Tax Agency and other taxing authorities in the major jurisdictions in which Nomura operates. Nomura regularly assesses the likelihood of additional assessments in each tax jurisdiction and the impact on the consolidated financial statements. It is reasonably possible that there may be an increase or decrease in unrecognized tax benefits within 12 months of March 31, 20212022 depending on the outcome of the examinations. Quantification of an estimated range cannot be made at this time due to the uncertainty of the potential outcomes. However, Nomura does not expect that any change in the gross balance of unrecognized tax benefits would have a material effect on its financial condition.
Nomura operates in multiple tax jurisdictions, and faces audits from various taxing authorities regarding many issues including, but not limited to, transfer pricing, the deductibility of certain expenses, foreign tax credits and other matters.
The table below presents information regarding the earliest year in which Nomura remains subject to examination in the major jurisdictions in which Nomura operates as of March 31, 2021.2022. Under Hong Kong Special Administrative Region tax law, the statute of limitation does not apply if an entity incurs taxable losses and is therefore not included in the table.
 
Jurisdiction
  
Year
   
Year
 
Japan
   2016(1)    2017(1) 
United Kingdom
   2016    2016 
United States
   2018    2019 
 
(1)
The earliest year in which Nomura remains subject to examination for transfer pricing issues is 2015.
(1) The earliest year in which Nomura remains subject to examination for transfer pricing issues is 2016.
 
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
17.16. Other comprehensive income (loss):
The following tables present changes in
Accumulated other comprehensive income (loss)
for the years ended March 31, 20202021 and 2021.2022.
 
  
Millions of yen
  
Millions of yen
 
  
For the year ended March 31, 2020
  
For the year ended March 31, 2021
 
  
Balance at

beginning

of year
 
Other

comprehensive

income (loss)

before

reclassifications
 
Reclassifications out of

accumulated other

comprehensive

income (loss)
 
Net change

during the

year
 
Balance at

end of year
  
Balance at

beginning

of year
 
Other

comprehensive

income (loss)

before

reclassifications
 
Reclassifications out of

accumulated other

comprehensive

income (loss)
 
Net change

during the

year
 
Balance at

end of year
 
Cumulative translation adjustments
   ¥17,833  ¥(44,730) ¥623  ¥(44,107) ¥(26,274)  ¥(26,274)  ¥47,673  ¥(3,083)  ¥44,590  ¥18,316 
Pension liability adjustment
(1)
    (71,107)  4,528      4,008   8,536   (62,571)   (62,571)   16,140   2,954   19,094   (43,477) 
Own credit adjustments
(2)
    24,224   39,517   (1,001)  38,516   62,740    62,740   (65,741)   (9,982)   (75,723)   (12,983) 
                   
 
  
 
  
 
  
 
  
 
 
Total
   ¥(29,050) ¥(685) ¥3,630  ¥2,945  ¥(26,105)  ¥(26,105)  ¥(1,928)  ¥(10,111)  ¥(12,039)  ¥(38,144) 
                   
 
  
 
  
 
  
 
  
 
 
   
Millions of yen
 
   
For the year ended March 31, 2022
 
   
Balance at

beginning

of year
  
Other

comprehensive

income (loss)

before

reclassifications
  
Reclassifications out of

accumulated other

comprehensive

income (loss)
  
Net change

during the

year
  
Balance at

end of year
 
Cumulative translation adjustments
  ¥18,316  ¥118,574  ¥22  ¥118,596  ¥136,912 
Pension liability adjustment
(1)
   (43,477)   (2,156)   1,830   (326)   (43,803) 
Own credit adjustments
(2)
   (12,983)   46,816   1,031   47,847   34,864 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Total
  ¥(38,144)  ¥163,234  ¥   2,883   ¥166,117  ¥127,973 
   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
(1)
See Note 13 “
Employee benefit plans
” for further information.
(2)
See Note 2 “
Fair value measurements
” for further information.
   
Millions of yen
   
For the year ended March 31, 2021
   
Balance at

beginning

of year
 
Other

comprehensive

income (loss)

before

reclassifications
 
Reclassifications out of

accumulated other

comprehensive

income (loss)
 
Net change

during the

year
 
Balance at

end of year
Cumulative translation adjustments
   ¥(26,274)  ¥47,673   ¥(3,083)  ¥44,590   ¥18,316 
Pension liability adjustment
(1)
    (62,571)   16,140    2,954    19,094    (43,477)
Own credit adjustments
(2)
    62,740    (65,741)   (9,982)   (75,723)   (12,983)
                           
Total
   ¥(26,105)  ¥(1,928)  ¥(10,111)  ¥(12,039)  ¥(38,144)
                           
 
(1)
See Note 13 “
Employee benefit plans
” for further information.
(2)
See Note 2 “
Fair value measurements
” for further information.
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following tables present significant reclassifications out of
Accumulated other comprehensive income (loss)
for the years ended March 31, 20202021 and 2021.2022.
 
 
Millions of yen
  
Millions of yen
 
For the year ended March 31
  
For the year ended March 31
 
2020
 
2021
 
Affected line items in consolidated
statements of income
  
2021
 
2022
  
Affected line items in consolidated
statements of income
 
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Cumulative translation adjustments:
        
 ¥(886) ¥3,083  
Revenue—Other /
Non-interest
expenses—Other
  ¥3,083  ¥(21)  Revenue
—
Other /
Non-interest
expenses
—
Other
  263   —    Income tax expense   —     (1)  Income tax expense
          
 
  
 
   
  (623)  3,083  Net income (loss)   3,083   (22)  Net income (loss)
          
 
  
 
   
  0—     —    Net income attributable to noncontrolling interests   —     0—    Net income attributable to noncontrolling interests
          
 
  
 
   
 ¥(623) ¥3,083  
Net income (loss)
attributable to NHI
shareholders
  ¥3,083  ¥(22)  Net income (loss) attributable to NHI shareholders
          
 
  
 
   
  
 
Millions of yen
  
Millions of yen
 
For the year ended March 31
  
For the year ended March 31
 
2020
 
2021
 
Affected line items in consolidated
statements of income
  
2021
 
2022
  
Affected line items in consolidated
statements of income
 
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Pension liability adjustment:
��             
 ¥(5,792) ¥(4,167) 
Non-interest
expenses—Compensation
and benefits /
Revenue—Other
  ¥(4,167)  ¥(2,585)  
Non-interest
expenses
—
Compensation and benefits /
Revenue
—
Other
  1,784   1,213  Income tax expense   1,213   755  Income tax expense
          
 
  
 
   
  (4,008)  (2,954) Net income (loss)   (2,954)   (1,830)  Net income (loss)
          
 
  
 
   
  0—     —    Net income attributable to noncontrolling interests   —     0—    Net income attributable to noncontrolling interests
          
 
  
 
   
 ¥(4,008) ¥(2,954) 
Net income (loss)
attributable to NHI
shareholders
  ¥(2,954)  ¥(1,830)  Net income (loss) attributable to NHI shareholders
          
 
  
 
   
 
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Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
  
Millions of yen
  
For the year ended March 31
  
2020
 
2021
 
Affected line items in consolidated
statements of income
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Reclassifications out of

accumulated other

comprehensive income (loss)
Own credit adjustments:
            
   ¥1,132   ¥12,134  
Revenue—Net gain on
trading
    (131)   (2,152) Income tax expense
             
     1,001    9,982  Net income (loss)
             
    0—      —    Net income attributable to noncontrolling interests
             
   ¥1,001   ¥9,982  
Net income (loss)
attributable to NHI
shareholders
             
   
Millions of yen
   
For the year ended March 31
   
2021
  
2022
  
Affected line items in consolidated
statements of income
   
Reclassifications out of

accumulated other

comprehensive income (loss)
  
Reclassifications out of

accumulated other

comprehensive income (loss)
 
Own credit adjustments:
           
   ¥12,134  ¥(1,161)  Revenue
—
Net gain on trading
    (2,152)   130  Income tax expense
   
 
 
  
 
 
   
    9,982   (1,031)  Net income (loss)
   
 
 
  
 
 
   
    —     0—    Net income attributable to noncontrolling interests
   
 
 
  
 
 
   
   ¥9,982  ¥(1,031)  Net income (loss) attributable to NHI shareholders
   
 
 
  
 
 
   
18.17. Shareholders’ equity:
The following table presents changes in shares of the Company’s common stock outstanding for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Number of Shares
  
Number of Shares
 
  
Year ended March 31
  
Year ended March 31
 
  
2019
 
2020
 
2021
  
2020
 
2021
 
2022
 
Common stock outstanding at beginning of year
   3,392,937,486   3,310,800,799   3,038,587,493   3,310,800,799   3,038,587,493   3,063,155,434 
Decrease of common stock by cancellation of treasury stock
   (150,000,000)   —     (260,000,000)   —     (260,000,000)   —   
Common stock held in treasury:
             
Repurchases of common stock
   (100,020,867)   (299,381,781)   (20,129)   (299,381,781)   (20,129)   (80,020,237) 
Sales of common stock
   180   390   353   390   353   345 
Common stock issued to employees
   17,894,000   27,168,085   24,587,717   27,168,085   24,587,717   34,682,592 
Cancellation of treasury stock
   150,000,000   —     260,000,000   —     260,000,000   —   
Other net change in treasury stock
   (10,000)   —     —     —     —     (14,122) 
           
 
  
 
  
 
 
Common stock outstanding at end of year
   3,310,800,799   3,038,587,493   3,063,155,434   3,038,587,493   3,063,155,434   3,017,804,012 
           
 
  
 
  
 
 
The amount available for dividends and acquisition of treasury stock is subject to restrictions imposed by the Companies Act. Additional
paid-in
capital and retained earnings include amounts which the Companies Act prohibits for the use of dividends and acquisition of treasury stock. As of March 31, 2019, 2020, 2021 and 2021,2022, the amounts available for distributions were ¥1,209,861 million, ¥1,297,560 million, ¥1,232,753 million and ¥1,232,753¥1,315,738 million, respectively. These amounts are based on the amounts recorded in the Company’s unconsolidated financial statements maintained in accordance with accounting principles and practices prevailing in Japan. U.S. GAAP adjustments incorporated in these consolidated financial statements but not recorded in the Company’s unconsolidated financial statements have no effect on the determination of the amounts available for distributions under the Companies Act.
Dividends on the Company’s common stock per share for the years ended March 31, 2020, 2021 and 2022 were ¥20.0, ¥35.0 and ¥22.0, respectively.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Dividends on the Company’s common stock per share were ¥6.0 for
During the year ended March 31, 2021, due to the cancellation of treasury stock on December 1, 2020, total number of issued shares and treasury stock decreased by 260,000,000 shares, respectively.
On June 18, 2019, ¥20.0the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to
300,000,000
shares, (b) total value of shares authorized for repurchase is up to ¥
150,000
 million and (c) the year ended share buyback will run from
June 19, 2019
to
March 31, 2020 and ¥35.0 for
. Under this repurchase program, the year ended March 31, 2021.Company repurchased
299,362,300
shares of common stock at a cost of ¥
150,000
 million.
On April 26, 2018,October 29, 2021, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 100,000,00080,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥70,000¥50,000 million and (c) the share buyback will run from MayNovember 16, 20182021 to March 29, 2019.31, 2022. Under this repurchase program, the Company repurchased 100,000,00080,000,000 shares of common stock at a cost of ¥51,703¥39,639 million.
On June 18, 2019, the board of directors approved a repurchase program of Nomura Holdings common stock in accordance with Article
459-1
of the Companies Act of Japan as follows: (a) total number of shares authorized for repurchase is up to 300,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥150,000 million and (c) the share buyback will run from June 19, 2019 to March 31, 2020. Under this repurchase program, the Company repurchased 299,362,300 shares of common stock at a cost of ¥150,000 million.
During the year ended March 31, 2019, due to the cancellation of treasury stock on December 17, 2018, total number of issued shares and treasury stock decreased by 150,000,000 shares, respectively.
During the year ended March 31, 2021, due to the cancellation of treasury stock on December 1, 2020, total number of issued shares and treasury stock decreased by 260,000,000 shares, respectively.

In addition to the above, the change in common stock held in treasury includes the change in common stock issued to employees under stock-based compensation plans, common stock held by affiliated companies, common stock sold to enable shareholders to hold round lots of the 100 share minimum tradable quantity
(adding-to-holdings
requests) or common stock acquired to create round lots or eliminate odd lots.
19.
Subsequent Events
On April 26, 2022, the board of directors approved a resolution to set up a share buyback program, pursuant to the Company’s articles of incorporation set out in accordance with Article 459-1 of the Companies Act as follows: (a) total number of shares authorized for repurchase is up to 50,000,000 shares, (b) total value of shares authorized for repurchase is up to ¥30 billion and (c) the share buyback program will run from May 17, 2022, to March 31, 2023 (excluding the ten business days following the announcement of quarterly operating results).
18. Regulatory requirements:
In April 2011, the Company has been assigned as Final Designated Parent Company who must calculate a consolidated capital adequacy ratio and since then, our consolidated capital adequacy ratio has been calculated based on Capital Adequacy Notice on Final Designated Parent Company. The Capital Adequacy Notice on Final Designated Parent Company has been revised in line with Basel 2.5 and Basel III and Nomura has calculated a Basel
III-based
consolidated capital adequacy ratio since March 2013.
In accordance with Article 2 of the Capital Adequacy Notice on Final Designated Parent Company, Nomura’s consolidated capital adequacy ratio is calculated based on the amounts of common equity Tier 1 capital, Tier 1 capital, total capital, credit risk-weighted assets, market risk and operational risk. As of March 31, 20202021 and March 31, 2021,2022, the Company was in compliance with common equity Tier1Tier
1 capital ratio, Tier 1 capital ratio and consolidated capital adequacy ratio requirements set out in the Capital Adequacy Notice on Final Designated Parent Company, etc. The required level (including applicable minimum consolidated capital buffer) as of March 31, 2021 2022
was 7.52%7.51% for the common equity Tier 1 capital ratio, 9.02%9.01% for the Tier 1 capital ratio and 11.02%11.01% for the consolidated capital adequacy ratio.
Under the Financial Instruments and Exchange Act (“FIEA”), NSC and NFPS are subject to the capital adequacy rules of the FSA. These rules requires the maintenance of a capital adequacy ratio, which is defined as
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
the ratio of adjusted capital to a quantified total of business risk, of not less than 120%.
Adjusted
capital is defined as net worth (which includes shareholders’ equity, net unrealized gains and losses on securities held,
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
reserves and subordinated debt) less illiquid assets. Business risks are divided into three categories: (1) market risks, (2) counterparty risks, and (3) basic risks. Under these rules, there are no restrictions on the operations of the companies provided that the resulting net capital adequacy ratio exceeds 120%. As of March 31, 20202021 and 2021,2022, the capital adequacy ratio of NSC exceeded 120%. Also, as of March 31, 20202021 and 2021,2022, the capital adequacy ratio of NFPS also exceeded 120%.

In connection with providing brokerage, clearing, asset management and wealth management services to clients, Nomura maintains segregated accounts to hold financial assets such as cash and securities on behalf of its clients. These accounts are typically governed by stringent statutory or regulatory rules in the relevant jurisdiction where the accounts are maintained in order to protect the clients from loss.
As of March 31, 20202021 and 2021,2022, the total amount of segregated client cash recognized as an asset in
Deposits with stock exchanges and other segregated cash
in the consolidated balance sheets was ¥112,245¥92,477 million and ¥92,477 ¥113,052
million, respectively. As of March 31, 20202021 and 2021,2022, the total amount of segregated securities recognized as assets in
Trading assets
and
Collateralized agreements
in the consolidated balance sheets was ¥901,180¥1,080,260 million and ¥1,080,260¥1,103,395 million, respectively.
In the U.S., Nomura Securities International, Inc. (“NSI”) is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a futures commission merchant with the Commodity Futures Trading Commission (“CFTC”). NSI is also regulated by self-regulatory organizations, such as the Financial Industry Regulatory Authority (“FINRA”) and the Chicago Mercantile Exchange Group. NSI is subject to the SEC’s Uniform Net Capital Rule (“Rule
15c3-1”)
and other related rules, which require net capital, as defined under the alternative method, of not less than the greater of $1,000,000 or 2% of aggregate debit items arising from client transactions. NSI is also subject to CFTC Regulation 1.17 which requires the maintenance of net capital of 8% of the total risk margin requirement, as defined, for all positions carried in client accounts and nonclient accounts or $1,000,000,
whichever is greater. NSI is required to maintain net capital in accordance with the SEC, CFTC, or other various exchange requirements, whichever is greater. Another U.S. subsidiary, Nomura Global Financial Products Inc. (“NGFP”) is registered as an OTC Derivatives Dealer under the Securities Exchange Act of 1934. NGFP is subject to Rule
15c3-1
registered with CFTC as a Swap Dealer on October 6, 2021 and applies Appendix F. NGFP is required to maintain net capital of $20,000,000 in accordanceregistered with the SEC.Securities and Exchange Commission (“SEC”) as a Security Based Swap Dealer on November 1, 2021. NGFP calculates capital under SEC rule 18a-1 and CFTC rule 23.101 and requires the greater of
$20,000,000, 2% of the SEC risk margin amount or 2% of the CFTC risk margin amount. Another U.S. subsidiary, Instinet, LLC (“ILLC”) is a broker-dealer registered with the SEC and is a member of FINRA. Further, ILLC is an introducing broker registered with the CFTC and a member of the National Futures Association and various other exchanges. ILLC is subject to Rule
15c3-1
which requires the maintenance of minimum net capital, as defined under the alternative method, equal to the greater of $1,000,000, 2% of aggregate debit items arising from client transactions, or the CFTC minimum requirement. Under CFTC rules, ILLC is subject to the greater of the following when determining its minimum net capital requirement: $45,000 minimum net capital required as a CFTC introducing broker; the amount of adjusted net capital required by a futures association of which it is a member; and the amount of net capital required by Rule
15c3-1(a).
As of March 31, 20202021 and 2021,2022, NSI, NGFP and ILLC were in compliance with relevant regulatory capital related requirements.
In Europe, Nomura Europe Holdings plc (“NEHS”) is subject to consolidated regulatory supervision by the Prudential Regulation Authority (“U.K. PRA”). as a U.K. Parent Financial Holding Company. The regulatory consolidation is produced in accordance with the requirements established under the Capital Requirements DirectiveFinancial Services and the Capital Requirements Regulation which came into effect on January 1, 2014. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. In addition, Nomura Bank International plc (“NBI”), another subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis and Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany, is
 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Markets Act 2000, U.K. Capital Requirements Regulations and the PRA Rulebook. Nomura International plc (“NIP”), the most significant of NEHS’ subsidiaries, acts as a securities brokerage and dealing business. NIP is also regulated by the U.K. PRA and has minimum capital adequacy requirements imposed on it on a standalone basis. As a
non-U.S.
swap dealer and securities based swap dealer NIP is also subject to the regulations of the CFTC and SEC under the Dodd Frank Act. In addition, Nomura Bank International plc (“NBI”), another subsidiary of NEHS, is also regulated by the U.K. PRA on a standalone basis. NEHS also has a number of European domiciled subsidiaries including Nomura Financial Products Europe GmbH (“NFPE”), a Nomura subsidiary domiciled in Germany which is regulated by the German regulator (“BaFin”). and is subject to the EU Capital Requirements Regulation and local German regulations and Banque Nomura France (“BNF”), a Nomura subsidiary domiciled in France which is regulated by the French regulator (“ACPR”) and is also subject to the EU Capital Requirements Regulation and local French regulations. As of March 31, 20202021 and 2021,2022, NEHS, NIP, NBI, NFPE and NFPEBNF were in compliance with relevant regulatory capital related requirements.
In Asia, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Singapore Ltd (“NSL”) are regulated by their local respective regulatory authorities. NIHK is licensed by the Securities and Futures Commission in Hong Kong to carry out regulated activities including dealing and clearing in securities and futures contracts, advising on securities, futures contracts and corporate finance and wealth management. Activities of NIHK, including its branch in Taiwan, are subject to the Securities and Futures (Financial Resources) Rules which require it, at all times, to maintain liquid capital at a level not less than its required liquid capital. Liquid capital is the amount by which liquid assets exceed ranking liabilities. Required liquid capital is calculated in accordance with provisions laid down in the Securities and Futures (Financial Resources) Rules. NSL is a licensed merchant bank with an Asian Currency Unit (“ACU”) license governedregulated by the Monetary Authority of Singapore (“MAS”). NSL carries out its ACU regulated activities including, among others, securities brokerage and dealing business. NSL is regulated and has minimum capital adequacy requirements imposed on it on a standalone basis by the MAS in Singapore. NIHK and NSL have been compliant with relevant regulatory capital related requirements.
20.19. Affiliated companies and other equity-method investees:
Nomura’s significant affiliated companies and other equity-method investees include Nomura Research Institute, Ltd. (“NRI”) and Nomura Real Estate Holdings, Inc. (“NREH”).
NRI
NRI develops and manages computer systems and provides research services and management consulting services. One of the major clients of NRI is Nomura.
Nomura has tendered to the self-tender offer made by NRI. Upon the settlement on August 21, 2019, Nomura has sold 101,889,300 ordinary shares it held at ¥159,966 million to NRI. NRI remains an equity method affiliate of NHI. As a result of the transaction, a gain of ¥73,293 million was recognized in earnings within
Revenue
—
Other
during the year end
ed
March 31, 2020.
Nomura has sold 14,105,000 ordinary shares it held at ¥50,002 million to NRI in response to its own share repurchase through
off-floor
trading
(ToSTNeT-3)
on June 22, 2021. As a result of the transaction, a gain of ¥36,249 million was recognized in earnings within
Revenue—Other
during the year endingended March 31, 2020.2022.
Further, Nomura has sold 15,000,000 ordinary shares it held at ¥57,870 
million to third parties, through block trades on March 23, 2022. As a result of the transaction, a gain of
¥42,798 million was recognized in earnings within
Revenue—Other
during the year ended March 31, 2022. NRI remains an equity method affiliate of NHI.
As of March 31, 2020, Nomura’s ownership of NRI was 
28.8% and the remaining balance of equity method goodwill included in the carrying value of the investment was ¥61,310 million.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2021, Nomura’s ownership of NRI was 28.6% and the remaining balance of equity method goodwill included in the carrying value of the investment was ¥60,572 million.
As of March 31, 2022, Nomura’s ownership of NRI was 24.5% and the remaining balance of equity method goodwill included in the carrying value of the investment was ¥57,633 million.
NREH
NREH is the holding company of the Nomura Real Estate Group which is primarily involved in the residential property development, leasing, investment management as well as other real estate-related activities.
Nomura recognized an impairment loss of ¥47,661 
million against its investment in NREH
during
the year ended March 31, 2021. ConsideringBased on the period and extent to which the NREH share price, and therefore fair value of the investment in NREH was below carrying value, Nomura determined the impairment was other-than-temporary and therefore an impairment loss was recognized. The loss was classified within
Non-interest
expenses—Other
in the consolidated statements of income.
As of March 31, 2020, Nomura’s ownership of NREH was 35.9% and the remaining balance of equity method goodwill included in the carrying value of the investment was ¥11,012 million.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2021, Nomura’s ownership of NREH was 36.1%
and the difference between the carrying amount of the equity method investment and the underlying equity in net assets was
¥37,140
¥37,140 million as a result of an excess of the underlying equity in net assets over fair value of the investment.
As of March 31, 2022, Nomura’s ownership of NREH was 36.6% and the difference between the carrying amount of the equity method investment and the underlying equity in net assets was ¥36,910 million as a result of an excess of the underlying equity in net assets over fair value of the investment.
Summary financial information—
The following tables present summarized financial information for significant affiliated companies of Nomura (including those elected for the fair value option) as of March 31, 20202021 and 2021,2022, and for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
   
Millions of yen
 
   
March 31
 
   
2020
   
2021
 
Total assets
  ¥2,559,985   ¥2,769,294 
Total liabilities
   1,669,132    1,788,704 
   
Millions of yen
 
   
March 31
 
   
2021
   
2022
 
Total assets
  ¥2,769,294   ¥3,009,394 
Total liabilities
   1,788,704    1,984,043 
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
   
2020
   
2021
(1)
   
2020
   
2021
   
2022
 
Net revenues
  ¥963,824   ¥1,017,860   ¥909,616   ¥1,017,860   ¥   909,616   ¥1,041,000 
Non-interest
expenses
   794,264    791,403    737,200    791,403    737,200    786,391 
Net income attributable to the companies
   122,440    155,567    124,163    155,567    124,163    179,706 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present a summary of balances and transactions with affiliated companies and other equity-method investees as of March 31, 2020 and 2021 and for2022, and during the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
Investments in affiliated companies
  ¥   367,641   ¥   363,393   ¥   363,393   ¥   363,281 
Advances to affiliated companies
  
—
   
1,000
    1,000    1,000 
Other receivables from affiliated comp
a
nies
(1)
   25,074    21,817 
Other receivables from affiliated companies
(1)
   21,817    24,754 
Other payables to affiliated companies
(1)
   27,648    26,344    26,344    30,617 
 
(1)
As a result of adopting ASU
2016-02
as of April 1, 2019, ROU assets and operating lease liabilities are included by ¥23,733
¥20,793
mil
million and ¥20,793
¥23,899
mil
million as of March 31,
2020 2021 and 20212022 respectively.
 
   
Millions of yen
 
   
Year ended March 31
 
   
2019
   
2020
   
2021
 
Revenues
  ¥1,986   ¥3,833   ¥2,240 
Non-interest
expenses
     44,073         46,335      50,753 
Purchase of software, securities and tangible assets
   13,515    17,716    14,407 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
   
Millions of yen
 
   
Year ended March 31
 
   
2020
   
2021
   
2022
 
Revenues
  ¥3,833   ¥2,240   ¥2,660 
Non-interest
expenses
        46,335         50,753         50,004 
Purchase of software, securities and tangible assets
   17,716    14,407    12,760 
The following table presents the aggregate carrying amount and fair value of investments in affiliated companies and other equity-method investees for which a quoted market price is available as of March 31, 20202021 and 2021.2022.
 
   
Millions of yen
 
   
March 31
 
   
2020
   
2021
 
Carrying amount
  ¥   357,751   ¥   340,909 
Fair value
   511,667    768,389 
   
Millions of yen
 
   
March 31
 
   
2021
   
2022
 
Carrying amount
  ¥   340,909   ¥   341,935 
Fair value
   768,389    772,243 
The following table presents equity in earnings of equity-method investees, including those above and dividends from equity-method investees for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
   
2020
   
2021
   
2020
   
2021
   
2022
 
Equity in earnings of equity-method investees
(1)
  ¥  32,014   ¥     32,109   ¥  26,812   ¥     32,109   ¥     26,812   ¥     32,083 
Dividends from equity-method investees
   12,971    11,767    11,096    11,767    11,096    11,848 
 
(1)
Equity in earnings of equity-method investees is reported within
Revenue-Other
in the consolidated statements of income.
21.20. Commitments, contingencies and guarantees:
Commitments—
Credit and investment commitments
In connection with its banking and financing activities, Nomura provides commitments to extend credit which generally have fixed expiration dates. In connection with its investment banking activities, Nomura enters into agreements with clients under which Nomura commits to underwrite securities that may be issued by the
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
clients. As a member of certain central clearing counterparties, Nomura is committed to provide liquidity facilities through entering into reverse repo transactions backed by government and government agency debt securities with those counterparties in a situation where a default of another clearing member occurs. The outstanding commitments under these agreements are included below inas commitments to extend credit.
Nomura has commitments to invest in various partnerships and other entities and also has commitments to provide financing for investments related to these partnerships. The outstanding commitments under these agreements are included inbelow as commitments to invest.
The following table presents a summary of the key types of outstanding commitments provided by Nomura as of March 31, 20202021 and 2021.2022.
 
   
Millions of yen
 
   
March 31, 2020
  
March 31, 2021
 
Commitments to extend credit
         
Liquidity facilities to central clearing counterparties
  ¥1,288,774  ¥1,400,076 
Other commitments to extend credit
   958,659   901,867 
          
Total
  ¥2,247,433  ¥2,301,943 
          
Commitments to invest
  ¥15,278  ¥136,367 
   
Millions of yen
 
   
March 31, 2021
   
March 31, 2022
 
Commitments to extend credit
          
Liquidity facilities to central clearing counterparties
  ¥1,400,076   ¥1,135,695 
Other commitments to extend credit
   901,867    877,156 
   
 
 
   
 
 
 
Total
  ¥2,301,943   ¥2,012,851 
   
 
 
   
 
 
 
Commitments to invest
  ¥136,367   ¥32,286 
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Maturity profile of these commitments as of March 31, 2022:
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
Millions of yen
 
   
Total

contractual

amount
   
Years to maturity
 
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Commitments to extend credit
                         
Liquidity facilities to central clearing counterparties
  ¥1,135,695   ¥1,135,695   ¥
0—  
   ¥
0—  
   ¥
0—  
 
Other commitments to extend credit
   877,156    219,139    269,828    163,515    224,674 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  ¥2,012,851   ¥1,354,834   ¥269,828   ¥163,515   ¥224,674 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Commitments to invest
  ¥32,286   ¥149   ¥4,102   ¥6,175   ¥21,860 
As of March 31, 2021, these commitments had the following maturities:
   
Millions of yen
 
   
Total

contractual

amount
   
Years to maturity
 
   
Less than

1 year
   
1 to 3

years
   
3 to 5

years
   
More than

5 years
 
Commitments to extend credit
                         
Liquidity facilities to central clearing counterparties
  ¥1,400,076   ¥1,400,076   ¥
—  
   ¥
—  
   ¥
—  
 
Other commitments to extend credit
   901,867    106,684    198,334    204,430    392,419 
                          
Total
  ¥2,301,943   ¥1,506,760   ¥198,334   ¥204,430   ¥392,419 
                          
Commitments to invest
  ¥136,367   ¥111,576   ¥2,339   ¥4,338   ¥18,114 
The contractual amounts of these commitments to extend credit represent the maximum amounts at risk but only ifassuming the contracts are fully drawn upon, should all the counterparties default, and assuming the value of any existingall collateral or credit mitigations becomes worthless. The total contractual amount of these commitments may not represent actual future cash requirementsoutflows since the commitments may expire without being drawn upon. The credit risk associated with these commitments varies depending on the clients’ creditworthiness and the value and quality of collateral held. Nomura evaluates each client’s creditworthiness on a
case-by-case
basis. The amount of collateral obtained, if deemed necessary by Nomura upon extension of credit, is based on credit evaluation of the counterparty.
Other commitments
Purchase obligations for goods or services that include payments for construction-related, advertising, and computer and telecommunications maintenance agreements amounted to ¥126,949 million as of March 31, 2020 and ¥121,604 million as of March 31, 2021.2021 and ¥98,214 million as of March 31, 2022.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of March 31, 2021,2022, these purchase obligations had the following maturities:
 
   
Millions of yen
 
   
Total
   
Years of payment
 
   
Less than

1 year
   
1 to 2

years
   
2 to 3

years
   
3 to 4

years
   
4 to 5

years
   
More than

5 years
 
Purchase obligations
  ¥121,604   ¥30,120   ¥15,511   ¥10,856   ¥1,578   ¥63,071    ¥468 
   
Millions of yen
 
   
Total
   
Years of payment
 
   
Less than

1 year
   
1 to 2

years
   
2 to 3

years
   
3 to 4

years
   
4 to 5

years
   
More than

5 years
 
Purchase obligations
  ¥98,214   ¥14,012   ¥15,254   ¥3,398   ¥1,774   ¥63,623   ¥153 
Above table includes the commitment to purchase parts of the redeveloped real estate in Tokyo Nihonbashi district from the redevelopment
association.

Nomura has commitments under resale and repurchase agreements including amounts in connection with collateralized agreements and collateralized financing. These commitments amounted to ¥1,969¥
1,725
 billion for resale agreements and ¥677 ¥
1,533
 billion for repurchase agreements as of March 
31
,
2021
and ¥
1,565
 billion for resale agreements and ¥
2,673
billion for repurchase agreements as of March 31, 2020 and ¥1,7252022. 
Nomura has commitments to purchase notes held by our clients. These commitments amounted to ¥15 billion for resale agreements and ¥1,533 billion for repurchase agreements as of March 31, 2021.2022.
In Japan, there is a market in which participants lend and borrow debt and equity securities without collateral to and from financial institutions. Under these arrangements, Nomura had obligations to return debt and equity securities borrowed without collateral of ¥928¥824 billion and ¥824¥1,219 billion as of March 31, 20202021 and 2021,2022, respectively.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As a member of various securities clearing houses and exchanges, Nomura may be required to assume a certain share of the financial obligations of another member who may default on its obligations to the clearing house or the exchange. These guarantees are generally required under the membership agreements. To mitigate these risks, exchanges and clearing houses often require members to post collateral. The potential for Nomura to make payments under such guarantees is deemed remote
.
remote.
Contingencies—
Investigations, lawsuits and other legal proceedings
In the normal course of business as a global financial services entity, Nomura is involved in investigations, lawsuits and other legal proceedings and, as a result, may suffer loss from any fines, penalties or damages awarded against Nomura, any settlements Nomura chooses to make to resolve a matter, and legal and other advisory costs incurred to support and formulate a defense.
The ability to predict the outcome of these actions and proceedings is inherently difficult, particularly where claimants are seeking substantial or indeterminate damages, where investigations and legal proceedings are at an early stage, where the matters present novel legal theories or involve a large number of parties, or which take place in foreign jurisdictions with complex or unclear laws.
The Company regularly evaluates each legal proceeding and claim on a
case-by-case
basis in consultation with external legal counsel to assess whether an estimate of possible loss or range of loss can be made, if recognition of a liability is not appropriate. In accordance with ASC 450
“
ContingenciesContingencies”
” (“(“ASC 450”), the Company recognizes a liability for this risk of loss arising on each individual matter when a loss is probable and the amount of such loss or range of loss can be reasonably estimated. The amount recognized as a liability is reviewed at least quarterly and is revised when further information becomes available. If these criteria are not met for an individual matter, such as if an estimated loss is only reasonably possible rather than probable, no liability is recognized. However, where a material loss is reasonably possible, the Company will disclose details
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
of the legal proceeding or claim below. Under ASC 450 an event is defined as reasonably possible if the chance of the loss to the Company is more than remote but less than probable. As of March 31, 2021 and 2022, a total liability of ¥62,889 million and ¥76,866 million has been recognized, respectively, and reported within
the consolidated balance sheets within
Other liabilities
in respect of outstanding and unsettled investigations, lawsuits and other legal proceedings (excluding claims with no legal proceedings as of March 31, 2021 and 2022) where loss is considered probable and the amount of such loss can be reasonably estimated. Total expenses recognized through earnings during the year ended March 31, 2021 and 2022 in connection with these matters waswere ¥41,131 million and ¥63,338 million, respectively, which has been reported within the consolidated statements of income within
Non-interest
expenses—Other.Other
.
The most significant actions and proceedings against Nomura are summarized below. The Company believes that, based on current information available as of the date of these consolidated financial statements, the ultimate resolution of these actions and proceedings will not be material to the Company’s financial condition. However, an adverse outcome in certain of these matters could have a material adverse effect on the consolidated statements of income or cash flows in a particular quarter or annual period.
For certain of the significant actions and proceedings, the Company is currently able to estimate the amount of reasonably possible loss, or range of reasonably possible losses, in excess of amounts recognized as a liability (if any) against such cases. These estimates are based on current information available as of the date of these consolidated financial statements and include, but are not limited to, the specific amount of damages or claims against Nomura in each case. As of June 25, 2021,24, 2022, for those cases where an estimate of the range of reasonably possible losses can be made, the Company estimates that the total aggregate reasonably possible maximum loss in excess of amounts recognized as a liability (if any) against these cases is approximately ¥48¥61 billion.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For certain other significant actions and proceedings, the Company is unable to provide an estimate of the reasonably possible loss or range of reasonably possible losses because, among other reasons, (i) the proceedings are at such an early stage there is not enough information available to assess whether the stated grounds for the claim are viable; (ii) damages have not been identified by the claimant; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant legal issues to be resolved that may be dispositive, such as the applicability of statutes of limitations; (vi) there are novel or unsettled legal theories underlying the claims and/or (vii) a judgment has been made against Nomura but detailed reasons for the basis for the judgment and how the amount of the judgment has been determined have not yet been received.
Nomura will continue to cooperate with regulatory investigations and to vigorously defend its position in the ongoing actions and proceedings set out below, as appropriate.
In January 2008, Nomura International plc (“NIP”) was served with a tax notice issued by the tax authorities in Pescara, Italy alleging breaches by NIP of the U.K.-Italy Double Taxation Treaty of 1998 (“Tax Notice”). The alleged breaches relate to payments to NIP of tax credits on dividends on Italian shares. The Tax Notice not only denies certain payments to which NIP claims to be entitled but also seeks reimbursement of approximately EUR 33.8 million, plus interest, already refunded. NIP continues vigorously to challenge the Pescara Tax Court’s decisions in favorhas exhausted all avenues of appeal following a judgment of the local tax authorities.Italian Supreme Court dismissing NIP’s appeal in July 2021.
Similar claims have been made by the tax authorities against IBJ Nomura Financial Products (UK) PLC (“IBJN”) a group company which has been in members’ voluntary liquidation since 2000. An Italian Supreme Court judgment in June 2019 confirmed that tax credit refunds of approximately EUR 38 million, plus interest, were payable by IBJN to the Italian tax authorities.
In October 2010 and June 2012, two actions were brought against NIP, seeking recovery of payments allegedly made to NIP by Fairfield Sentry Ltd. and Fairfield Sigma Ltd. (collectively, “Fairfield Funds”), which
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
are now in liquidation and were feeder funds to Bernard L. Madoff Investment Securities LLC (in liquidation pursuant to the Securities Investor Protection Act in the U.S. since December 2008) (“BLMIS”). The first suit was brought by the liquidators of the Fairfield Funds. It was filed on October 5, 2010 in the Supreme Court of the State of New York, but was subsequently removed to the United States Bankruptcy Court for the Southern District of New York. The second suit was brought by the Trustee for the liquidation of BLMIS (“Madoff Trustee”). NIP was added as a defendant in June 2012 when the Madoff Trustee filed an amended complaint in the United States Bankruptcy Court for the Southern District of New York. Both actions seek to recover approximately $35 million.million plus interest.
Certain of the Company’s subsidiaries in the U.S. securitized residential mortgage loans in the form of residential mortgage-backed securities (“RMBS”). These subsidiaries did not generally originate mortgage loans, but purchased mortgage loans from third-party loan originators (“originators”). In connection with such purchases, these subsidiaries received loan level representations from the originators. In connection with the securitizations, the relevant subsidiaries provided loan level representations and warranties of the type generally described below, which mirror the representations the subsidiaries received from the originators.
The loan level representations made in connection with the securitization of mortgage loans were generally detailed representations applicable to each loan and addressed characteristics of the borrowers and properties. The representations included, but were not limited to, information concerning the borrower’s credit status, the
loan-to-value
ratio, the owner occupancy status of the property, the lien position, the fact that the loan was originated in accordance with the originator’s guidelines, and the fact that the loan was originated in compliance with applicable laws. Certain of the RMBS issued by the subsidiaries were structured with credit protection provided to specified classes of certificates by monoline insurers.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
With respect to certain of the RMBS issued from 2005 to 2007, the relevant subsidiaries received claims demanding the repurchase of certain loans from trustees of various securitization trusts, made at the instance of one or more investors, or from certificate insurers. The total original principal amount of loans for which repurchase claims were received by the relevant subsidiaries within six years of each securitization is $3,203 million. The relevant subsidiaries summarily rejected any demand for repurchase received after the expiration of the statute of limitations applicable to breach of representation claims. For those claims received within six years, the relevant subsidiaries reviewed each claim received, and rejected those claims believed to be without merit or agreed to repurchase certain loans for those claims that the relevant subsidiaries determined to have merit. In several instances, following the rejection of repurchase demands, investors instituted actions through the trustee alleging breach of contract from 2011 to 2014. The breach of contract claims that were brought within the
six-year
statute of limitations for breach of contract actions have survived motions to dismiss and discovery was completed and Notes of Issue were filed. Following a decision from the claimsNew York Court of Appeals in a similar proceeding, however, the court has agreed to reopen discovery in four actions and has not set a date for completion. Three actions have completed discovery and are now in the expert discoverypretrial motion phase of litigation in the Supreme Court of the State of New York. These claims involve substantial legal, as well as factual, uncertaintyThe Company has been engaged in efforts to resolve the actions outside of Court, which has resulted in the recording of additional expenses and provisions during the Company cannot provide an estimate of probable loss or reasonably possible loss at this time.fiscal year.
A monoline insurer, Ambac Assurance Corp (“Ambac”), brought an action in April 2013 against Nomura Credit & Capital, Inc. (“NCCI”) and Nomura Holding America Inc. (“NHA”) alleging breach of contract with respect to representations concerning specific loan characteristics and fraud in the inducement of the insurance contract based on misrepresentations concerning the loans for two trusts insured by Ambac. The court dismissed all claims against NHA, and the claims against NCCI are continuing in the Supreme Court of the State of New York and arediscovery has now in the expert discovery phasebeen completed.
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In November 2011, NIP was served with a claim filed by the Madoff Trustee in the United States Bankruptcy Court for the Southern District of New York. This is a clawback action similar to claims filed by the Madoff Trustee against numerous other institutions. The Madoff Trustee alleges that NIP received redemptions from the BLMIS feeder fund, Harley International (Cayman) Limited in the six years prior to December 11, 2008 (the date proceedings were commenced against BLMIS) and that these are avoidable and recoverable under the U.S. Bankruptcy Code and New York law. The amount that the Madoff Trustee is currently seeking to recover from NIP is approximately $21 million.$24.4 
million plus interest.

In March 2013, Banca Monte dei Paschi di Siena SpA (“MPS”) issued a claim in the Italian Courts against (1) two former directors of MPS and (2) NIP. MPS alleged that the former directors improperly caused MPS to enter into certain structured financial transactions with NIP in 2009 (“Transactions”) and that NIP acted fraudulently and was jointly liable for the unlawful conduct of MPS’s former directors. MPS claimed damages of not less than EUR
1.1
 billion.
In March 2013, NIP commenced a claim against MPS in the English Courts. The claim was for declaratory relief confirming that the Transactions remained valid and contractually binding. MPS filed and served its defence and counterclaim to these proceedings in March 2014. MPS alleged in its counterclaim that NIP was liable to make restitution of a net amount of approximately EUR 1.5 billion, and sought declarations regarding the illegality and invalidity of the Transactions.
On September 23, 2015, NIP entered into a settlement agreement with MPS to terminate the Transactions. NIP believes that the Transactions were conducted legally and appropriately, and does not accept the allegations made against it or admit any wrongdoing. Taking into account the views of relevant European financial authorities and the advice provided by external experts, NIP considered it to be in its best interests to reach a settlement in relation to this matter. As part of the agreement, the Transactions were unwound at a discount of EUR 440 million in favour of MPS and the civil proceedings between MPS and NIP in Italy and England,
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
respectively, will no longer be pursued. Pursuant to the settlement agreement MPS and NIP applied to the Italian Courts to discontinue the proceedings brought by MPS against NIP. These proceedings have since been discontinued.
In April 2013, an investigation was commenced by the Public Prosecutor’s office in Siena, Italy, into various allegations against MPS and certain of its former directors, including in relation to the Transactions. The investigation was subsequently transferred to the Public Prosecutor of Milan. On April 3, 2015, the Public Prosecutor’s office in Milan issued a notice concluding its preliminary investigation. The Public Prosecutor was seeking to indict MPS, three individuals from MPS’s former management, NIP and two former NIP employees for, among others, the offences of false accounting and market manipulation in relation to MPS’s previous accounts. The preliminary hearing at which the Milan criminal court considered whether or not to grant the indictment concluded on October 1, 2016, the Judge ordering the trial of all individuals and banks involved except for MPS (which entered into a plea bargaining agreement with the Public Prosecutor). The trial commenced in December 2016. As part of these proceedings, a number of civil claimants have been permitted to bring damages claims against a number of entities and individuals, including NIP.
On November 8, 2019, the court delivered its oral verdict, finding two former employees of NIP guilty of false accounting, market manipulation and obstructing the supervisory activities of CONSOB and that NIP had breached Italian corporate liability legislation. In so doing it imposed a fine of EUR 3.45 million on NIP as well as ordering confiscation of EUR 88 million. On May 12, 2020, the court issued the detailed reasoning for the verdict (including the rationale for the penalties imposed). NIP has appealed the decision to the Milan Court of Appeal. On May 6, 2022, the Milan Court of Appeal delivered its oral verdict, overturning the first instance
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
judgment and acquitting the two former employees of NIP of all charges. The penalties will notcourt also overturned the first instance judgment in respect of NIP and quashed the EUR 3.45 million fine and EUR 88 million confiscation order imposed on NIP. The detailed reasoning for the verdict is expected to be enforceable until all appeals have been concluded.filed within 90 days, following which the decision may be appealed to the Italian Supreme Court.
In addition, NIP is involved in a number of separate civil or administrative matters relating to the Transactions including those described further below.
In July 2013, a claim was issued against former directors of MPS, and NIP, by the shareholder group Fondazione Monte dei Paschi di Siena (“FMPS”). The grounds of the FMPS claim were similar to those on 
which the MPS claim was founded and the level of damages sought by FMPS was not less than EUR
315.2
 million. In
September 2020
, NIP, without admitting any wrongdoing, entered into a settlement agreement with FMPS pursuant to which FMPS waived its claim against NIP. NIP and FMPSThe proceedings have applied to the court to discontinue the proceedings brought against NIP.since been discontinued.
In January 2018, a claim before the Italian Courts brought by two claimants, Alken Fund Sicav (on behalf of two Luxembourg investment funds Alken Fund European Opportunities and Alken Fund Absolute Return Europe) and Alken Luxembourg S.A (the funds’ management company) (collectively referred to as “Alken”) was served on NIP. The claim iswas made against NIP, MPS, four MPS former directors and a member of MPS’s internal audit board, and seekssought monetary damages of approximately EUR 434 million plus interest on the basis of allegations similar to those made in the MPS and FMPS claims, as well as
non-monetary
damages in an amount left to be quantified by the Judge. In July 2021, the court rejected all of Alken’s claims. In February 2022, Alken appealed the decision to the Milan Court of Appeal.
In May 2019, a claim before the Italian Courts brought by York Global Finance Offshore BDH (Luxembourg) Sàrl and a number of seemingly related funds was served on NIP. The claim is made against NIP, MPS, two MPS former directors and a member of MPS’s internal audit board, and seeks monetary damages of approximately EUR 186.7 million plus interest on grounds similar to those in the MPS and FMPS claims, as well as
non-monetary
damages in an amount left to be quantified by the Judge.
Additionally, NIP was served by the Commissione Nazionale per le Società e la Borsa (“CONSOB”, the Italian financial regulatory authority) with a notice commencing administrative sanction proceedings for market
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
manipulation in connection with the Transactions. In relation to the Transactions, the notice named MPS, three individuals from MPS’s former management and two former NIP employees as defendants, whereas NIP was named only in its capacity as vicariously liable to pay any fines imposed on the former NIP employees. On May 22, 2018 CONSOB issued its decision in which it levied EUR 100,000 fines in relation to each of the two former NIP employees. In addition, CONSOB decided that the two employees did not meet the necessary Italian law integrity requirements to perform certain senior corporate functions, for a period of three months and six months respectively. NIP was vicariously liable to pay the fines imposed on its former employees. NIP paid the fines and appealed the decision to the Milan Court of Appeal. In December 2020, the Court of Appeal annulled the CONSOB decision against NIP. CONSOB has appealed the Court of Appeal’s decision to the Italian Supreme Court
.
Court.
In June 2016 and August 2016, Nomura International (Hong Kong) Limited (“NIHK”) and Nomura Special Investments Singapore Pte Limited (“NSIS”) were respectively served with a complaint filed in the Taipei District Court against NIHK, NSIS and certain individuals by Cathay United Bank, Co., Ltd., Taiwan Cooperative Bank Ltd., Chang Hwa Commercial Bank Ltd., Taiwan Business Bank Ltd., KGI Bank and Hwatai Bank Ltd. (collectively, “Syndicate Banks”). The Syndicate Banks’ complaint relates to a $60 million syndicated
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
term loan to a subsidiary of Ultrasonic AG that was arranged by NIHK, and made by the Syndicate Banks together with NSIS. The Syndicate Banks’ allegations in the complaint include allegations that NIHK failed to comply with its fiduciary duties to the lenders as the arranger of the loan and the Syndicate Banks seek to recover approximately $48 
$48 
million in damages andplus interest. The Syndicate Banks’ claims are dismissed by the Taipei District Court on June 2, 2022. 
In March 2017, certain subsidiaries of American International Group, Inc. (“AIG”) commenced proceedings in the District Court of Harris County, Texas against certain entities and individuals, including Nomura Securities International, Inc. (“NSI”), in connection with a 2012 offering of $750 million of certain project finance notes, of which $92 
million allegedly were purchased by AIG. AIG allegeshad alleged violations of the Texas Securities Act based on material misrepresentations and omissions in connection with the marketing, offering, issuance and sale of the notes and seeks rescission of the purchases or compensatory damages. The action was resolved in a confidential settlement in March 2022. 

On May 
20
,
2021
, NIP and the Company were named as addressees in a decision issued by the European Commission in which NIP, the Company and various other third party banks have been found to have infringed EU competition law in connection with their activity in the primary and secondary markets for European Government Bonds (“EGB”). The European Commission found that the infringement consisted of anticompetitive agreements and/or concerted practices in the EGB sector in breach of EU competition law and fined NIP and the Company approximately EUR
129.6
 million. In
August 2021
, NIP and the Company appealed the decision. The fine has been provisionally paid, as is required, pending the outcome of NIP and the Company’s appeal.
NIP and NSI have been served withare defendants in a class action complaint filed in the United States District Court for the Southern District of New York alleging violations of U.S. antitrust law in relation to the alleged manipulation of the primary and secondary markets for EGB.
Additionally, NIP and NSI are also defendants in a separate class action complaint filed in the United States DistrictToronto Registry Office of the Federal Court for the Southern District of New YorkCanada alleging violations of U.S. antitrustCanadian competition law relating to the alleged manipulation of the secondary trading market for supranational,
sub-sovereign
and agency bonds. Additionally, NIP and NSI are defendants in a similar class action complaint filed in the Toronto Registry Office of the Federal Court of Canada alleging violations of Canadian competition law.
Nomura is responding to requests for information from governmental authoritiesthe U.S. Commodity Futures Trading Commission (“CFTC”) in relation to swap trading related to bond issuances.issuances, as well as the use of
non-Nomura
approved messaging platforms for business communications. On February 1, 2021, the U.S. Commodity Futures Trading CommissionCFTC filed a civil enforcement action against a Nomura employee and charged him with violating the anti-fraud, price manipulation and false statements provisions of the Commodity Exchange Act in relation to a 2015 interest rate swap transaction.
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TableNSI is also cooperating with the Securities and Exchange Commission (“SEC”) in connection with an investigation of Contentscompliance with records preservation requirements relating to the use of
non-Nomura
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
approved messaging platforms for business communications. The SEC has stated that it is conducting similar investigations of record preservation practices at other financial institutions.
In September 2017 and November 2017, NIHK and NSIS were respectively served with a complaint filed in the Taipei District Court against NIHK, NSIS, China Firstextile (Holdings) Limited (“FT”) and certain individuals by First Commercial Bank, Ltd., Land Bank of Taiwan Co., Ltd., Chang Hwa Commercial Bank Ltd., Taishin International Bank, E.Sun Commercial Bank, Ltd., CTBC Bank Co., Ltd., Hwatai Bank, Ltd. and Bank of Taiwan (collectively, “FT Syndicate Banks”). The FT Syndicate Banks’ complaint relates to a $100 million syndicated term loan facility to borrower FT that was arranged by NIHK, and made by the FT Syndicate Banks together with NSIS. The FT Syndicate Banks’ allegations in the complaint include tort claims under Taiwan law against the defendants. The FT Syndicate Banks seek to recover approximately $68 million in damages andplus interest.

In July 2018, a former Italian counterparty filed a claim against NIP in the Civil CourtF-135
Table of Rome relating to a derivative transaction entered into by the parties in 2006, and terminated in 2009. The claim alleged that payments by the counterparty to NIP of approximately EUR 165 million were made in breach of Italian insolvency law, and sought reimbursement of those payments. In March 2021, NIP, without admitting any wrongdoing, entered into a settlement agreement with the counterparty pursuant to which the proceedings have been discontinued.Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In August 2017, the Cologne public prosecutor in Germany notified NIP that it is investigating possible tax fraud by individuals who worked for the Nomura Group in relation to the historic planning and execution of trading strategies around dividend record dates in certain German equities (known as “cum/ex” trading) and in relation to filings of tax reclaims in 2007 to 2012. During the fiscal year ended March 31, 2020, Nomura Group became aware that certain of those individuals would be the subject of investigative proceedings in Germany. NIP and another entity in the Nomura Group are cooperating with the investigation, including by disclosing to the public prosecutor certain documents and trading data. If the investigation involving Nomura Group entities and former individuals proceeds to trial, the individuals could face criminal sanctions and Nomura Group entities could face administrative sanctions such as administrative fines or profit confiscation orders.
In June 2020, NIP issued a claim against a currentan Italian counterparty in the courts of England and Wales.English Courts. The claim seekssought declarations that the terms of a derivative transaction entered into in 2005 are binding. The counterparty filed and served its defense and counterclaim to these proceedings in January 2021 which seeks,sought, amongst other things, restitution of sums paid under the transaction. Separately, in June 2020, the counterparty filed an interim injunction application against NIP in the Tribunal of Palermo relating to payments due by it in relation to the same transaction. This application was dismissed at first instance but the counterparty is currently appealingappealed that decision. In October 2021, NIP, without admitting any wrongdoing, entered into a settlement agreement with the counterparty pursuant to which the proceedings in both jurisdictions were discontinued. At the same time, the derivative transaction was terminated.
Stichting Vestia, a Dutch housing association and former counterparty, has asserted a claim against NIP relating to derivative transactions entered into between Vestia and NIP between 2009 and 2011. On February 1, 2022, Vestia commenced proceedings against NIP in the English Courts. The proceedings allege that the transactions are void because Vestia lacked the capacity and/or the authority to enter into them. Vestia is seeking restitution of a net amount of approximately EUR 154.2
m
illio
n
 plus interest in respect of those transactions.
In the context of a secured financing and the enforcement of the related pledge agreements following events of default attributable to the counterparty, on February 8, 2022, two former pledgors served a formal notice stating their intention to commence legal proceedings against Nomura European Investment Limited as lender and NIP as security agent. The pledgors allege that there have been certain valuation errors in relation to enforcement of the related pledge agreements. To date, no legal proceedings have been issued in respect of the claim.
Guarantees—
In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.
In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee, namely derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security held by a guaranteed party. Since Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed belowincludes relevant information about these derivative contracts that could meet the accounting definition of guarantees.guarantees in the disclosure below.
For information about the maximum potential amount of future payments that Nomura could be required to make under these derivative contracts, the notional amount of contracts has been disclosed, except for certain derivative contracts, such as written interest rate caps and written currency options, the maximum potential payout amount cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.
 
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NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
For information about the maximum potential amount of future payments thatThe notional amounts do not represent anticipated losses from these derivatives contracts. As Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited
.
Nomura recordsmeasures all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate its risk exposure. Since the derivative contracts are accounted for at fair value, carrying value is considered the best indication of probability of payment and performance riskrisks for individualthese derivative contracts. Nomura may also reduce net exposures to certain of these contracts by entering into offsetting transactions or by entering into contracts that hedge the market risks related to these derivative contracts.
The following table presents information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee and standby letters of credit and other guarantees.
 
  
Millions of yen
   
Millions of yen
 
  
March 31
   
March 31
 
  
2020
   
2021
   
2021
   
2022
 
  
Carrying

value
   
Maximum

potential

payout /

Notional total
   
Carrying

value
   
Maximum

potential

payout /

Notional total
   
Carrying

value
   
Maximum

potential

payout /

Notional total
   
Carrying

value
   
Maximum

potential

payout /

Notional total
 
Derivative contracts
(1)(2)
  ¥7,197,647   ¥279,734,884   ¥5,207,911   ¥322,635,226   ¥5,207,911   ¥322,635,226   ¥6,151,646   ¥393,709,887 
Standby letters of credit and other guarantees
(3)
(4)
   —      2,351    —      206,072 
Standby letters of credit and other guarantees
(3)
  
 
—  
 
   206,072   
 
0—  
 
   1,698,193 
 
(1)
Credit derivatives are disclosed in Note 3 “
Derivative instruments and hedging activities
” and are excluded from derivative contracts.above.
(2)
Derivative contracts primarily consist of equity, interest rate and foreign exchange contracts.
(3)The amounts of collaterals held in connection with standby letters of credit and other guarantees as of March 31, 2020
was
¥0nil millio
n
.
(4)
As of March 31, 2021, primarilyPrimarily related to a certain sponsored repo program where Nomura guarantees to a 3rdthird party clearinghouse the payment ofclearing house in relation to its clients’ payment obligations. Our exposurecredit exposures under this guarantee is minimized through effectively obtainingcollaterals whoseby obtaining collateral from clients at amount is approximately equal to the maximum potential payout ofunder the guarantee.
The following table presents maturity information on Nomura’s derivative contracts that could meet the accounting definition of a guarantee and standby letters of credit and other guarantees as of March 31, 2021.2022.
 
 
Millions of yen
  
Millions of yen
 
 
Carrying

value
  
Maximum potential payout/Notional
  
Carrying

value
  
Maximum potential payout/Notional
 
 
Total
  
Years to Maturity
  
Total
  
Years to Maturity
 
 
Less than

1 year
 
1 to 3 years
 
3 to 5 years
 
More than

5 years
  
Less than

1 year
 
1 to 3 years
 
3 to 5 years
 
More than

5 years
 
Derivative contracts
 ¥5,207,911  ¥322,635,226  ¥88,433,903  ¥73,065,497  ¥49,763,383  ¥111,372,443  ¥6,151,646  ¥393,709,887  ¥82,738,268  ¥112,981,416  ¥65,305,775  ¥132,684,428 
Standby letters of credit and other guarantees
  —     206,072   174,864   11,722   281   19,205   0—     1,698,193   1,684,360   7,705   4,519   1,609 
22.21. Segment and geographic information:
Operating segments—
In April 2021, the Investment Management Division was newly established by replacing the Asset Management Division and the Merchant Banking Division. Accordingly, Nomura’s operating management and management reporting are prepared based on the Retail, the AssetInvestment Management, and the Wholesale segments. Nomura structures its business segments based upon the nature of its main products and services, its client base and its management structure. The operating results of the Merchant Banking division are included in “
Other.
”
F-140 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The accounting policies for segment information generally follow U.S. GAAP, except for a part of the impact of unrealized gains/losses on certain investments in equity securities held for operating purposes, which under U.S. GAAP are included in
Income (loss) before income taxes
, but excluded from segment information.
F-137
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Revenues and expenses directly associated with each business segment are included in the operating results of each respective segment. Revenues and expenses that are not directly attributable to a particular segment are allocated to each respective business segment or included in “
Other
,” based upon Nomura’s allocation methodologies as used by management to assess each segment’s performance.
Business segments’ results are shown in the following tables.
Net interest revenue
is disclosed because management viewsmonitors interest revenue net of interest expense for its operating decisions. Business segments’ information on total assets is not disclosed because management does not utilizeconsider such information for its operating decisions and therefore, it is not reported to management.
Certain comparative amounts have been reclassified to conform to the current year’s presentation, in accordance with the realignment in April 2021.
   
Millions of yen
 
   
Retail
   
Asset

Management
   
Wholesale
(1)
  
Other

(Incl. elimination)
  
Total
 
Year ended March 31, 2019
                       
Non-interest
revenue
  ¥331,743   ¥89,607   ¥496,484  ¥147,524  ¥1,065,358 
Net interest revenue
   7,737    8,238    58,904   (16,263)   58,616 
                        
Net revenue
   339,480    97,845    555,388   131,261   1,123,974 
Non-interest
expenses
   289,990    63,660    666,787   134,034   1,154,471 
                        
Income (loss) before income taxes
  ¥49,490   ¥34,185   ¥(111,399)  ¥(2,773)  ¥(30,497) 
                        
Year ended March 31, 2020
                       
Non-interest
revenue
  ¥329,983   ¥85,190   ¥506,203  ¥257,961  ¥1,179,337 
Net interest revenue
   6,376    7,415    142,416   (26,388)   129,819 
                        
Net revenue
   336,359    92,605    648,619   231,573   1,309,156 
Non-interest
expenses
   286,926    63,833    556,399   132,410   1,039,568 
                        
Income (loss) before income taxes
  ¥49,433   ¥28,772   ¥92,220  ¥99,163  ¥269,588 
                        
Year ended March 31, 2021
                       
Non-interest
revenue
  ¥366,271   ¥126,874   ¥524,019  ¥232,060  ¥1,249,224 
Net interest revenue
   2,538    7,900    167,337   (36,672)   141,103 
                        
Net revenue
   368,809    134,774    691,356   195,388   1,390,327 
Non-interest
expenses
   276,480    60,529    627,051   207,141   1,171,201 
                        
Income (loss) before income taxes
  ¥92,329   ¥74,245   ¥64,305  ¥(11,753)  ¥219,126 
                        
 
   
Millions of yen
 
   
Retail
   
Investment
Management
   
Wholesale
(1)
   
Other

(Incl. elimination)
  
Total
 
Year ended March 31, 2020
                        
Non-interest
revenue
  ¥329,983   ¥101,130   ¥506,203   ¥242,021  ¥1,179,337 
Net interest revenue
   6,376    6,807    142,416    (25,780)   129,819 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Net revenue
   336,359    107,937    648,619    216,241   1,309,156 
Non-interest
expenses
   286,926    74,364    556,399    121,879   1,039,568 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Income (loss) before income taxes
  ¥49,433   ¥33,573   ¥92,220   ¥94,362  ¥269,588 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Year ended March 31, 2021
                        
Non-interest
revenue
  ¥366,271   ¥153,523   ¥524,019   ¥205,411  ¥1,249,224 
Net interest revenue
   2,538    9,627    167,337    (38,399)   141,103 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Net revenue
   368,809    163,150    691,356    167,012   1,390,327 
Non-interest
expenses
   276,480    72,142    627,051    195,528   1,171,201 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Income (loss) before income taxes
  ¥92,329   ¥91,008   ¥64,305   ¥(28,516)  ¥219,126 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Year ended March 31, 2022
                        
Non-interest
revenue
  ¥324,642   ¥129,848   ¥617,227   ¥232,437  ¥1,304,154 
Net interest revenue
   3,343    18,145    85,828    (53,203)   54,113 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Net revenue
   327,985    147,993    703,055    179,234   1,358,267 
Non-interest
expenses
   268,745    76,478    628,563    163,481   1,137,267 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Income (loss) before income taxes
  ¥59,240   ¥71,515   ¥74,492   ¥15,753  ¥221,000 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
(1)
Non-interest
revenue
and
Non-interest
expense
for the year ended March 31, 2021 and March 31, 2022 include losses arising from the U.S. Prime Brokerage Event. See Note.23Note 23 “
Loss Arising from U.S. Prime Brokerage Event
.”
Transactions between operating segments are recorded within segment results based on commercial terms and conditions and are eliminated in “
Other
.”
F-141 
F-138
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
The following table presents the major components of
Income (loss) before income taxes
in
“Other”
for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
                                                      
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Net gain (loss) related to economic hedging transactions
  ¥1,800  ¥17,548  ¥(11,450)   ¥17,548  ¥(11,450)  ¥(9,937) 
Realized gain on investments in equity securities held for operating purposes
   221   6,601          1,731    6,601          1,731   1,355 
Equity in earnings of affiliates
(1)
        32,532        34,990   (16,410)    34,990   (16,410)   36,790 
Corporate items(2)
   (35,996)   (22,240)   4,956    (22,240)   4,956   (91,073) 
Other
(4)(6)
   (1,330)   62,264   9,420    57,463   (7,343)   78,618 
            
 
  
 
  
 
 
Total
  ¥(2,773)  ¥99,163  ¥(11,753)   ¥     94,362  ¥(28,516)  ¥     15,753 
            
 
  
 
  
 
 
(1)
Includes an impairment loss of ¥47,661 million onrecognized in respect of Nomura’s investment in Nomura Real Estate holdings, Inc. forduring the year ended March 31, 2021. ConsideringBased on the period and extent to which the share price of the investee (and therefore its estimated fair value) was below the carrying value of the investment, Nomura determined the impairment was other-than-temporary and therefore thean impairment loss was recognized.recognized through earnings. The loss was classifiedreported within
Non-interest
expenses—Other
in the consolidated statements of income.
(2)
The
Income before income taxes for the year ended March 31, 2022 includes a loss of approximately ¥62.0 billion related to legacy transactions in the U.S. from before the global financial crisis (2007 – 2008) that was recognized including legal expenses as well as certain transactions intended to mitigate future losses.
(3)
Loss before income taxes for the year ended March 31, 2021 includes a gain of ¥ 71,075 million which represents the difference between the fair value of the assets acquired and the carrying value of the assets transferred by Nomura as a result of the rights conversion of the Tokyo Nihonbashi district redevelopment project.
(3)(4)
Includes
Income before income taxes for the year ended March 31, 2020 includes a gain of ¥73,293 million from the partial sale of Nomura’s investment in the ordinary shares of Nomura Research Institute, Ltd.
(5)
Income before income taxes for the year ended March 31, 2020.2022 includes a gain of approximately ¥79.0 billion from the partial sale of Nomura’s investment in the ordinary shares of Nomura Research Institute, Ltd.
(4)(6)
Includes the impact of Nomura’s own creditworthiness.
The table below presents reconciliations of the combined business segments’ results included in the preceding table to Nomura’s reported
Net revenue,
Non-interest
expenses
and
Income (loss) before income taxes
in the consolidated statements of income for the years ended March 31, 2019, 2020, 2021 and 2021.2022.
 
                                                      
  
Millions of yen
   
Millions of yen
 
  
Year ended March 31
   
Year ended March 31
 
  
2019
 
2020
 
2021
   
2020
 
2021
 
2022
 
Net revenue
  ¥1,123,974  ¥1,309,156  ¥1,390,327   ¥1,309,156  ¥1,390,327  ¥1,358,267 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   (7,204)   (21,327)   11,545    (21,327)   11,545    5,623  
            
 
  
 
  
 
 
Consolidated net revenue
  ¥1,116,770  ¥1,287,829  ¥1,401,872    ¥1,287,829  ¥1,401,872  ¥1,363,890 
            
 
  
 
  
 
 
Non-interest
expenses
  ¥1,154,471  ¥1,039,568  ¥1,171,201   ¥1,039,568  ¥1,171,201  ¥1,137,267 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   —     
—  
   
—  
 
          
Consolidated
non-interest
expenses
  ¥1,154,471  ¥1,039,568  ¥1,171,201 
          
Income (loss) before income taxes
  ¥(30,497)  ¥269,588  ¥219,126 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   (7,204)   (21,327)   11,545 
          
Consolidated income (loss) before income taxes
  ¥(37,701)  ¥248,261  ¥230,671 
          
 
F-142 
F-139
Table of Contents

NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
Subsequent events
Effective for the first quarter of the year ending March 31, 2022, we combined our Asset Management Division and Merchant Banking Division to form a new operating segment called the Investment Management Division. This change is consistent with the updated organizational structure of our businesses and how the chief operating decision maker will assess operating performance going forward. As a result of this change in segment reporting, Nomura will have the following three operating segments: Retail, Wholesale and Investment Management
.
                                                       
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
  
2022
 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   0—     0—     0—   
   
 
 
  
 
 
  
 
 
 
Consolidated
non-interest
expenses
  ¥1,039,568  ¥1,171,201  ¥1,137,267 
                                                       
Income (loss) before income taxes
  ¥269,588  ¥219,126  ¥221,000 
Unrealized gain (loss) on investments in equity securities held for operating purposes
   (21,327)   11,545   5,623 
   
 
 
  
 
 
  
 
 
 
Consolidated income (loss) before income taxes
  ¥   248,261  ¥   230,671   ¥   226,623  
   
 
 
  
 
 
  
 
 
 
Geographic information—
Nomura’s identifiable assets, revenues and expenses are generally allocated based on the country of domicile of the legal entity providing the service. However, because of the integration of the global capital markets and the corresponding global nature of Nomura’s activities and services, it is not always possible to make a precise separation by location. As a result, various assumptions, which are consistent among years, have been made in presenting the following geographic data.
The tables below present a geographic allocation of
Net revenue
and
Income (loss)
before income taxes
from operations by geographic areas for the years ended March 31,
2019, 2020,
2021 and 202
1
2022 and Long-lived assets
associated with Nomura’s operations as of March 31, 2019, 2020, 2021 and 2021.2022.
Net revenue
in “Americas”Americas and “Europe”Europe in the table substantially represents Nomura’s operations in the U.S. and the U.K., respectively.
Net revenue
and Long-lived assets have been allocated based on transactions with external customers while
Income (loss)
before income taxes
has been allocated based on the inclusion of intersegment transactions.
   
Millions of yen
 
  
Year ended March 31
 
  
2019
  
2020
  
2021
(2
)
 
Net revenue
(1)
:
             
Americas
  ¥169,581  ¥229,265  ¥226,741 
Europe
   131,175   115,483   142,941 
Asia and Oceania
   47,977   42,571   66,985 
              
Subtotal
   348,733   387,319   436,667 
Japan
   768,037   900,510   965,205 
              
Consolidated
  ¥1,116,770  ¥1,287,829  ¥1,401,872 
              
Income (loss) before income taxes:
             
Americas
  ¥(114,081)  ¥7,354  ¥(76,963) 
Europe
   (56,851)   (14,067)   14,283 
Asia and Oceania
   5,014   19,817   49,205 
              
Subtotal
   (165,918)   13,104   (13,475) 
Japan
   128,217   235,157   244,146 
              
Consolidated
  ¥(37,701)  ¥248,261  ¥230,671 
              
 
                                                       
   
Millions of yen
 
   
Year ended March 31
 
   
2020
  
2021
(2)
  
2022
(2)
 
Net revenue
(1)
:
             
Americas
  ¥229,265  ¥226,741  ¥289,571 
Europe
   115,483   142,941   131,393 
Asia and Oceania
   42,571   66,985   85,081 
   
 
 
  
 
 
  
 
 
 
Subtotal
   387,319   436,667   506,045 
Japan
   900,510   965,205   857,845 
   
 
 
  
 
 
  
 
 
 
Consolidated
  ¥1,287,829  ¥1,401,872  ¥1,363,890 
   
 
 
  
 
 
  
 
 
 
Income (loss) before income taxes:
             
Americas
  ¥7,354  ¥(76,963)  ¥(40,950) 
Europe
   (14,067)   14,283   (21,774) 
Asia and Oceania
   19,817   49,205   28,586 
   
 
 
  
 
 
  
 
 
 
Subtotal
   13,104   (13,475)   (34,138) 
Japan
   235,157   244,146   260,761 
   
 
 
  
 
 
  
 
 
 
Consolidated
  ¥248,261  ¥230,671  ¥226,623 
   
 
 
  
 
 
  
 
 
 
F-143 
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
 
   
March 31
 
  
2019
   
2020
   
2021
 
Long-lived assets:
               
Americas
  ¥50,829   ¥84,904   ¥98,611 
Europe
   56,821    52,179    65,165 
Asia and Oceania
   9,588    29,618    26,690 
                
Subtotal
   117,238    166,701    190,466 
Japan
   252,420    292,212    303,355 
                
Consolidated
  ¥369,658   ¥458,913   ¥493,821 
                
(1)
There is no revenue derived from transactions with a single major external customer.
(2)
Includes losses arising from the U.S. Prime Brokerage Event. See Note.Note 23 “
Loss Arising from U.S. Prime Brokerage Event
.”
F-140
Table of Contents
NOMURA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
                                                       
   
March 31
 
   
2020
  
2021
  
2022
 
Long-lived assets:
             
Americas
  ¥84,904  ¥98,611  ¥103,045 
Europe
   52,179   65,165   53,643 
Asia and Oceania
   29,618   26,690   23,600 
   
 
 
  
 
 
  
 
 
 
Subtotal
   166,701   190,466   180,288 
Japan
   292,212   303,355   269,135 
   
 
 
  
 
 
  
 
 
 
Consolidated
  ¥   458,913   ¥   493,821   ¥   449,423  
   
 
 
  
 
 
  
 
 
 
22. Related party transactions
Nomura makes loans to certain of its directors and other related parties. Outstanding loans to its directors and other related parties were not considered significant.
23. U.S. Prime Brokerage Event
An event had occurred atin certain Nomura’s subsidiaries, including a U.S. subsidiary, Nomura Global Financial Products Inc., with a U.S. client, resulting in total losses of
¥245,749 
million (approximately $2,317
 million)being recognized in itsthe consolidated statements of income forduring the year ended March 31, 2021. The losses were caused by the U
.
S
.
client’s default of a U.S. client on margin calls against synthetic and cash prime brokerage transactions. The losses arose primarily through the liquidation of the hedges we held against thethese transactions and also through recognition of additional allowances for current expected credit losses against our loan tocertain of the transactions with the client. TheOf the losses, are¥(204,188) million was reported within
Revenue
—
Net gain on trading
in the amount ofand
 
¥(204,188)41,561 
million and inreported within
Non-interest
expenses—
Other
in the amount of
 ¥41,561
million in the consolidated statements of income.
Subsequent events
On May 17, 2021, Nomura has completed the unwinding of all its positions related to the event and recognized additional losses of
¥65,362 
million during the quarter ended June 30, 2021. Of these losses,
¥(56,073)
was reported within
Revenue—Net gain on trading
and ¥9,289 million reported within
Non-interest
expenses—Other
in the consolidated statements of income.
A total of ¥14,696 million of this event asloss has been recovered during the quarter ended December 31, 2021 and March 31, 2022 through an increase in the estimated fair value of May 17, 2021. The losses arising fromcertain transactions with the client elected to be measured at fair value and through a U.S. clientreduction in allowances for current expected credit losses against other transactions with the client. A gain of ¥12,161 million was recognized and reported within
Revenue—Net gain on trading
and after April 1, 2021 are approximately a reduction in expenses of ¥(2,535) million recognized through release of allowances for current expected credit losses reported within
Non-interest
¥expenses—Other
65 
billion (approximately $in the consolidated statements of income.
600 million.)

24. Subsequent events:
Sale of part of Nomura Research Institute shares
NHI sold 14,105,000 ordinary shares of Nomura Research Institute, Ltd. (“NRI”) in response to its own share repurchase through off-floor trading (ToSTNeT-3) announced on June 21, 2021. As a result, Nomura is expected to recognize a pre-tax gain of approximately ¥36 billion during the first quarter of the fiscal year ending March 31, 2022. NRI is expected to remain as an equity-method affiliate of Nomura after the share repurchase.
25. Supplementary subsidiary guarantee information required under SEC rules:
The Company provides several guarantees of debts of its subsidiaries.
The Company has fully and unconditionally guaranteed the securities issued by Nomura America Finance LLC (“NAFL”), which is an indirect, wholly owned finance subsidiary of the Company. NAFL operates as a special purpose entity. It was formed for the purpose of issuing debt securities to repay existing credit facilities, refinance indebtedness, and for acquisition purposes. The guarantee will remain in effect until the entire principal, if any, of, and interest and premium, if any, on, the securities has been paid in full or discharged in accordance with the provisions of the indenture, or otherwise fully defeased by the Company.

 
F-144 F-141
Table of Contents
INDEX OF EXHIBITS
 
Exhibit
Exhibit
Number
  
Description
        1.1  
Articles of Incorporation of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.2  
Share Handling Regulations of Nomura Holdings, Inc. (English translation) (filed on June 25, 2015 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.3  
Regulations of the Board of Directors of Nomura Holdings, Inc. (English translation)
        1.4  
Regulations of the Nomination Committee of Nomura Holdings, Inc. (English translation) (filed on June 23, 2016 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        1.5  
Regulations of the Audit Committee of Nomura Holdings, Inc. (English translation)
        1.6  
Regulations of the Compensation Committee of Nomura Holdings, Inc. (English translation) (filed on June 27, 2012 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        2.1  
Form of Deposit Agreement among Nomura Holdings, Inc., The Bank of New York Mellon as depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt (filed on April 28, 2010 as an exhibit to the Registration Statement on Form F-6 (File No. 333-166346) and incorporated herein by reference)
        2.2  
Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934
        4.1
Form of Limitation of Liability Agreement (1)
        8.1
Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “Organizational Structure” in this annual report.
        11.1
Nomura Group Code of Conduct 2022 (English translation)
        11.2
Nomura Group Code of Ethics for Financial Professionals (English translation) (filed on June 25, 201930, 2020 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        4.1
Form of Limitation of Liability Agreement(1)
        8.1
Subsidiaries of Nomura Holdings, Inc.—See Item 4.C. “Organizational Structure” in this annual report.
      11.1
Nomura Group Code of Conduct 2021 (English translation)
      11.2
Nomura Group Code of Ethics for Financial Professionals (English translation) (filed on June 30,2020 as an exhibit to the Annual Report on Form 20-F (File No. 001-15270) and incorporated herein by reference)
        12.1  
Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
        12.2  
Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)
        13.1  
Certification of the chief executive officer required by 18 U.S.C. Section 1350
        13.2  
Certification of the chief financial officer required by 18 U.S.C. Section 1350
        15.1  
Consent of Ernst & Young ShinNihon LLC, with respect to its report on the audit of the financial statements included in this annual reportan independent registered public accounting firm
        17.1  
Subsidiary Issuer of Registered Guaranteed Securities
    101.INS  
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
    101.SCH  
Inline XBRL Taxonomy Extension Schema Document
    101.CAL  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
    101.DEF  
Inline XBRL Taxonomy Extension Definition Linkbase Document
    101.LAB  
Inline XBRL Taxonomy Extension Label Linkbase Document
    101.PRE  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
    104  
The cover page for the Company’s Annual Report on Form
20-F
for the year ended March 31, 2021,2022, has been formatted in Inline XBRL
(1)
The Company has entered into Limitation of Liability Agreements substantially in the form of this exhibit with all of its outside directors and director Shoji Ogawa.
The Company has not included as exhibits certain instruments with respect to our long-term debt. The amount of debt authorized under each such debt instrument does not exceed 10% or our total assets. We will furnish a copy of any such instrument to the SEC upon request.
Table of Contents
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on
Form
20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
 
NOMURA HOLDINGS, INC.
By:
 
/s/    K
ENTARO
O
KUDA
 Name: Kentaro Okuda
 Title: 
Representative Executive Officer,
President and Group Chief Executive Officer
Date: June 25, 202124, 2022