Leverage in Japan to decrease to 1:50, consolidation on the horizon?

By Oz Golan, Tradency.

From August 1st all Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term brokers in Japan will be required to reduce their trading Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term 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.

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 (https://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.