Leverage in Japan to decrease to 1:50, consolidation on the horizon?
By Oz Golan, Tradency. From August 1st all Forex brokers in Japan will be required to reduce their trading leverage
By Oz Golan, Tradency.
From August 1st all Forex brokers in Japan will be required to reduce their trading leverage to 1:50 by the FSA Japan (Financial Service Agency). The First effect will be on the retail users who will need to deposit more funds in order to trade the same positions they are holding. If they do not increase their funds, volumes are going to decrease and Brokers incomes will reduce accordingly. I speculate that these market conditions may create a financial challenges for Japanese Brokers, especially the mid – small size brokers who will not have enough capital to continue their marketing efforts to recruit new clients.
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The Japanese market is the most evolved Forex market in the world that benefits from a huge popularity among the retail users which generate higher client value than in other countries in the world. Opportunities are waiting for big Brokers who have enough capital. In the past we were witness some moves from the non Japanese Brokers acquiring local brokers, Saxo Bank acquired Astmax FX and established an FSA license, Forex.com acquired the mid size Broker Fx-Arena and FXCM already have a foothold in the Japanese market. This is a good opportunity for larger non-Japan brokers to penetrate in to this rewarding market, since they are able to start with an existing client base and most important to get the FSA regulation immediately without applying for it. This could also be a good opportunity for the bigger brokers in Japan such as Gaitama, Central Tanshi, Money Partners Himwari, and Cyber Fx (http://www.yano.co.jp/press/pdf/639.pdf) to base their dominance in the market by picking up the struggling mid size brokers.
Those who will survive the regulations effects will look for new ways to generate more volumes without allowing high leverage trading. I assume that we will see more variety for driving volume products and trading platforms being offered to the users.
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Or things could play out there as they have in the US, where an overzealous gov’t agency thinks they can regulate a global commoditized marketplace. Is there anything preventing Japanese citizens from wiring their balances to the UK and avoiding the leverage cap?
Or things could play out there as they have in the US, where an overzealous gov’t agency thinks they can regulate a global commoditized marketplace. Is there anything preventing Japanese citizens from wiring their balances to the UK and avoiding the leverage cap?
I have to say that I can’t see how this will affect the market, when we analyzed our community of traders there wasn’t a single successful trader that used that high of a leverage and in fact it seems like the less leverage one uses the more likely he is to succeed in trading.
— Asaf.
I have to say that I can’t see how this will affect the market, when we analyzed our community of traders there wasn’t a single successful trader that used that high of a leverage and in fact it seems like the less leverage one uses the more likely he is to succeed in trading.
— Asaf.
Oh – our community have plenty of traders that use even 200:1 leverage but they are just not successful 🙂
I really don’t know that someone that just clicked on a banner and got to a broker that offers 50:1 would leave because of this. OANDA have not been offering more than 50:1 since the day the launched so I think this is a perception and in reality when you make the leap and open a broker account you trade with what that broker gives you.
— Asaf.
Oh – our community have plenty of traders that use even 200:1 leverage but they are just not successful 🙂
I really don’t know that someone that just clicked on a banner and got to a broker that offers 50:1 would leave because of this. OANDA have not been offering more than 50:1 since the day the launched so I think this is a perception and in reality when you make the leap and open a broker account you trade with what that broker gives you.
— Asaf.
50:1 won’t kill the market, and won’t cause mass-consolidation. I think that this step will help the industry mature. A sudden 10:1 limit will inflict severe damage, but I believe that 50:1 will pass quite safely.
50:1 won’t kill the market, and won’t cause mass-consolidation. I think that this step will help the industry mature. A sudden 10:1 limit will inflict severe damage, but I believe that 50:1 will pass quite safely.
I also dont see a huge effect coming. The largest German-based FX broker usually offers a leverage of 1:100 since the beginning, nevertheless, they are quite successful.
I also dont see a huge effect coming. The largest German-based FX broker usually offers a leverage of 1:100 since the beginning, nevertheless, they are quite successful.