Traders Securities originally forged a role in the financial services industry through the Japanese retail market. The genesis of the company itself is reflective in the path of its President, Isao Kanamaru. “Commodity futures in overseas and retail forex business have been the core of my career for many years. Seeing the demands for trading venues for futures contract from individual investors was on the increase, I had a strong conviction that this market would be expanding in much larger scale if online trading were put into practice in near future,” noted Mr. Kanamaru in an interview with Finance Magnates.
As such, “I came to a decision to provide a pioneering financial instrument of global market to domestic investors by founding Traders Securities Co., Ltd., one of the first securities to specialize in trading derivatives online.
Back then when we started as Traders Securities, the general recognition of derivatives including forex trading were very little in Japan but with legal framework for investor protection established and a transition of the consumer`s view to their asset management from life savings to investments, derivatives market in Japan have achieved significant progress within a very short period.”
Winners of Finance
Retail forex in Japan is a hugely popular construct. Indeed, the competition prevalent in the country requires brokers and companies to maintain a unique and successful approach in their business. Traders Securities boasts a number of versatile products in its suite, with an emphasis on trader education.
According to Mr. Kanamaru, “Our leading product, Minnano-FX, has held up its catchphrase ‘for both beginners and experienced traders’ since its debut. In Japan, there are still so many people who consider investment as difficult or complicated and we have been developing and serving a simple, yet very sophisticated trading platform to our clients that way even inexperienced investors can figure out how to trade without confusion.”
Moreover, “We also have been putting a great effort in marketing to encourage people to start off their participation in the forex market by promoting various campaigns and inviting notable individuals to our online seminars. On the other hand, our services are valued by our competent clients who seek the narrowest spread for major currency pairs in the industry.”
Other professionals and traders in the industry, who recently voted Traders Securities as the Best Broker in 2015 at the Finance Magnates Tokyo Summit, echoed this endorsement and sentiment. Commenting on the award reception, Mr. Kanamaru noted, “We believe we are given this award for our determined policy, which is, our client needs are always our first priority.”
Challenges of the Japanese FX Market
However, despite the successful stint of Traders Securities, the Japanese retail foreign exchange (FX) market presents a number of challenges for existing and incoming brokers.
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Perhaps most strikingly, “Client anticipations for the forex brokers are the highest standard amongst the world. It is definitely the biggest challenge for us to provide the ideal trading environment for our clients including narrow spreads, low rejection rates, and low slippages,” noted Mr. Kanamaru.
However, moving forward, “We intend to distinguish ourselves from other brokers by making the best trading experience, together with seminars, appealing campaigns and refined trading platforms, as possible available,” reiterated Mr. Kanamaru.
Irrespective of the challenges, foreign FX brokers face perhaps the most daunting task of all: penetrating the Japanese market. Additionally, the country has experienced varied levels of success by both B2B and B2C firms.
“Localization is particularly important part of B2C business. It is not only about translating websites into Japanese but also furnishing the products, which correspond to Japanese look-and-feel. Moreover you need to pursue the investors with marketing that is appropriate to Japan.”
Furthermore, “The Japanese market also requires strict compliance and duty to the regulatory authorities, therefore extensive knowledge of the Japanese financial business is needed. Alternatively, B2B business doesn’t require such strict compliance to the authorities as B2C does. Since Japanese brokers are purely seeking for better technology and liquidity, a bar to the entry for foreign companies has been lowered.”
Future Growth on the Horizon?
With an eye on the future, Traders Securities has already looked beyond Japan to sustain its growth trajectory. According to Mr. Kanamaru, “We have already advanced to Indonesia as our first overseas expansion, providing commodity futures via local exchange.”
Furthermore, “We are planning to expand our line-ups with FX and CFDs in the future, focusing at present on a system for the trading of these instruments. We consider it crucial to not only distribute our services that were indeed a success in Japan but also to contribute financial products fitted to needs of local investors through relevant channel by cooperation with local firms and human resources.”
Japanese markets are known as cutthroat in terms of competition and spreads, which inherently places a disadvantage on foreign brokers. Indeed, “After the successful marketing of narrow spread towards Japanese investors, many brokers in Japan have started to pledge narrow spread for most currency pairs which eventually led to intensive competitions amongst brokers.” Conversely, other regions such as Europe or the United States are opting to pursue profits through other means, i.e. algorithmic trading, etc.
Every broker’s clientele is different, with Traders Securities being no exception. Like many other brokers in Japan, the company maintains some acute similarities, notwithstanding the popularity of select currency pairs.
“The most traded asset by our clients is the USDJPY. However, in recent years the trading volume for the USDJPY is declining somewhat and other currency pairs like the AUDJPY or EURUSD are increasingly traded instead. We believe this is owing to the fact that we are providing narrower spread for those pairs since last year and favorably received from our clients. Also, there is a contribution of a highly volatile market for EUR pairs with the Greek financial crisis behind, leading to the increase of trading volume from many traders,” noted Mr. Kanamaru.