The massive spike in volatility on the first trading day of 2019 wreaked havoc across client books
Japanese STP brokers have not remained unscathed during the first trading day of the year in the country. During the early hours of January 3, before the Tokyo market opened, a massive flash crash across JPY currency pairs affected Japanese yen traders dramatically.
After flushing stop-loss orders, client losses across the board were significant. For Japanese STP brokers, however, which under the regulatory regime are not offering Negative Balance protection, the sharp move caused the recurrence of a familiar pattern.
Just like after the SNB many brokers couldn’t chase their clients for the losses on their books, the January flash crash ultimately affected the companies too.
The magnitude of the event was not as pronounced as the Swiss franc spike in January 2015. Nevertheless, the total losses suffered by Japanese STP brokers on the first trading day in Tokyo this year totaled to about $8.6 million.
Flash Crash Event
The flash crash unfolded over about 10 minutes. Prices slipped during the most-illiquid time of the day, during the New Zealand trading session. Japanese yen crosses were the primary drivers for big moves across all major currency pairs.
As stop loss orders of clients got executed with significant Slippage, some customers ended up in negative balance territory. To date, data from the Japanese Financial regulator shows that several Japanese FX brokers still have uncollected collateral.
The bulk of the losses is with retail clients. A total of 6,389 customers got affected with brokers looking to collect from them ¥808 million ($7.4 million). Corporate clients got affected to a lesser extent, but brokers are still owed ¥135 million ($1.2 million) from 209 customers. The total figure amounts to ¥943 million or $8.6 million.
Putting things into perspective, unclaimed balances from clients around the SNB flash crash in January 2015 totaled to about ¥3.4 billion ($31 million at current exchange rates).
Risk Control Failures
Despite the fact that companies have already dealt with a similar occurrence, the January flash crash exposes weaknesses in risk controls. Brokers outside of Japan confirmed to Finance Magnates that client losses have been astonishing during the day.
That said, brokers worldwide have not been affected as much due to the lack of sufficient trading volumes in JPY pairs. Market making brokers in the meantime have booked significant gains for their books.
The event could reintroduce discussion at the Japanese regulator about leverage and possibly the lack of negative balance protection for retail traders. For now, brokers which are facing the loss have a choice whether to chase their clients or forgive the loss.
The SNB event in Europe was perhaps one of the major triggers for the review of the retail brokerage industry.
Japanese STP brokers have not remained unscathed during the first trading day of the year in the country. During the early hours of January 3, before the Tokyo market opened, a massive flash crash across JPY currency pairs affected Japanese yen traders dramatically.
After flushing stop-loss orders, client losses across the board were significant. For Japanese STP brokers, however, which under the regulatory regime are not offering Negative Balance protection, the sharp move caused the recurrence of a familiar pattern.
Just like after the SNB many brokers couldn’t chase their clients for the losses on their books, the January flash crash ultimately affected the companies too.
The magnitude of the event was not as pronounced as the Swiss franc spike in January 2015. Nevertheless, the total losses suffered by Japanese STP brokers on the first trading day in Tokyo this year totaled to about $8.6 million.
Flash Crash Event
The flash crash unfolded over about 10 minutes. Prices slipped during the most-illiquid time of the day, during the New Zealand trading session. Japanese yen crosses were the primary drivers for big moves across all major currency pairs.
As stop loss orders of clients got executed with significant Slippage, some customers ended up in negative balance territory. To date, data from the Japanese Financial regulator shows that several Japanese FX brokers still have uncollected collateral.
The bulk of the losses is with retail clients. A total of 6,389 customers got affected with brokers looking to collect from them ¥808 million ($7.4 million). Corporate clients got affected to a lesser extent, but brokers are still owed ¥135 million ($1.2 million) from 209 customers. The total figure amounts to ¥943 million or $8.6 million.
Putting things into perspective, unclaimed balances from clients around the SNB flash crash in January 2015 totaled to about ¥3.4 billion ($31 million at current exchange rates).
Risk Control Failures
Despite the fact that companies have already dealt with a similar occurrence, the January flash crash exposes weaknesses in risk controls. Brokers outside of Japan confirmed to Finance Magnates that client losses have been astonishing during the day.
That said, brokers worldwide have not been affected as much due to the lack of sufficient trading volumes in JPY pairs. Market making brokers in the meantime have booked significant gains for their books.
The event could reintroduce discussion at the Japanese regulator about leverage and possibly the lack of negative balance protection for retail traders. For now, brokers which are facing the loss have a choice whether to chase their clients or forgive the loss.
The SNB event in Europe was perhaps one of the major triggers for the review of the retail brokerage industry.
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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