This Graphic Shows Just How Strong the Japanese Forex Industry Is
If you need any more proof that Japan’s retail forex industry leads the entire world, check out the image below.
If you need any more proof that Japan’s retail forex industry leads the entire world, check out the image below. The chart compares average daily volumes (ADV) of equity trading at the entire Tokyo Stock Exchange (TSE) versus at just one forex broker, GMO Click Securities. The data was uncovered as we were doing research for the upcoming Forex Magnates Tokyo Summit in July.
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As can be seen, average daily volumes of GMO Click have been consistently above those at the TSE over the past year. For the TSE, ADV topped ¥3 trillion yen for the first time in years and was its highest figures since 2007. Both forex and equity volumes have been aided by aggressive easing monetary easing policies at the Bank of Japan. The stimulus actions have weakened the yen against the dollar by nearly 25% since November, and during the same time lifted the Nikkei 225 index over 73% higher to above 15,000 for the first time since 2007. (Incidentally, even after the Nikkei’s rally, it is still more than 50% below its all-time highs that were reached in 1990.)
When consolidating the entire retail forex market, the contrasts to the equity market become even more striking. In our Q1 Industry Report, total Japanese retail forex ADV were estimated around ¥15 trillion for the quarter; around 7X the size of the TSE’s equity market.
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Think
Fx leverage 25:1
TSE leverage mixed both 1:1and1:3.3
Simply as much as 8 times leveraged on FX or GMO
At least take this into account when you look at the figures.
Still, it is huge.
Think
Fx leverage 25:1
TSE leverage mixed both 1:1and1:3.3
Simply as much as 8 times leveraged on FX or GMO
At least take this into account when you look at the figures.
Still, it is huge.
what % of japanese clients trade with non-japan brokers?
does japan govt attempt to stop jap residents from trading overseas?
what % of japanese clients trade with non-japan brokers?
does japan govt attempt to stop jap residents from trading overseas?
I saw a similar illustration of this trend here as seen in SBI financial groups results:
http://ex-fx-gyosha.noor.jp/wp-content/uploads/2013/05/201303sbifxtrade.png
The light blue “SBI FXT” data is from SBI’s FX Trade operation.
The dark blue is SBI’s securities business.
The red 365 line is the exchange based forex (which doesn’t have much going for it now since the tax rules for OTC forex were changed.)
(The original blog piece containing this graphic was here for anyone interested http://www.fx-no-kotsu.com/fx%E6%A5%AD%E7%95%8C%E3%81%AE%E8%A3%8F%E8%A9%B1/sbi-fx%E3%83%88%E3%83%AC%E3%83%BC%E3%83%89%E3%81%AE%E5%8F%96%E5%BC%95%E9%87%8F%E3%81%AF%E3%81%A9%E3%82%8C%E3%81%A0%E3%81%91%E4%BC%B8%E3%81%B3%E3%81%9F%E3%81%AE%E3%81%8B%EF%BC%9F/)
I saw a similar illustration of this trend here as seen in SBI financial groups results:
http://ex-fx-gyosha.noor.jp/wp-content/uploads/2013/05/201303sbifxtrade.png
The light blue “SBI FXT” data is from SBI’s FX Trade operation.
The dark blue is SBI’s securities business.
The red 365 line is the exchange based forex (which doesn’t have much going for it now since the tax rules for OTC forex were changed.)
(The original blog piece containing this graphic was here for anyone interested http://www.fx-no-kotsu.com/fx%E6%A5%AD%E7%95%8C%E3%81%AE%E8%A3%8F%E8%A9%B1/sbi-fx%E3%83%88%E3%83%AC%E3%83%BC%E3%83%89%E3%81%AE%E5%8F%96%E5%BC%95%E9%87%8F%E3%81%AF%E3%81%A9%E3%82%8C%E3%81%A0%E3%81%91%E4%BC%B8%E3%81%B3%E3%81%9F%E3%81%AE%E3%81%8B%EF%BC%9F/)
jon, a lot of system and high leverage traders opened accounts overseas when the Japanese FSA clamped down the leverage to 50:1 and then 25:1 a few years back. But I suspect the % with overseas accounts would be relatively low (if I am correct to assume that there are probably more than a million distinct traders in Japan). Even those with accounts overseas would likely have multiple accounts in Japan as well I imagine. I’m a Japan resident, and while the government did nothing to stop me opening an account overseas, the tax rate for profits with overseas FX… Read more »
jon, a lot of system and high leverage traders opened accounts overseas when the Japanese FSA clamped down the leverage to 50:1 and then 25:1 a few years back. But I suspect the % with overseas accounts would be relatively low (if I am correct to assume that there are probably more than a million distinct traders in Japan). Even those with accounts overseas would likely have multiple accounts in Japan as well I imagine. I’m a Japan resident, and while the government did nothing to stop me opening an account overseas, the tax rate for profits with overseas FX… Read more »
@FXGAI – thanks for sharing that info from SBI @Jon – As FXGAI mentioned there is an increase in Japanese traders using foreign brokers. During last year’s London Summit, in the panels, the CEO of Pepperstone mentioned they were benefiting from the changes in regulations. In terms of the regulators, the CEO of Monex mentioned during the M&A panel that the JFSA believes any foreign broker targeting Japanese traders fallus under their jurisdiction. But, he wished them luck in trying to enforce that. So, yes the regulators are aware of foreign brokers, but a this point they haven’t actively made… Read more »
@FXGAI – thanks for sharing that info from SBI @Jon – As FXGAI mentioned there is an increase in Japanese traders using foreign brokers. During last year’s London Summit, in the panels, the CEO of Pepperstone mentioned they were benefiting from the changes in regulations. In terms of the regulators, the CEO of Monex mentioned during the M&A panel that the JFSA believes any foreign broker targeting Japanese traders fallus under their jurisdiction. But, he wished them luck in trying to enforce that. So, yes the regulators are aware of foreign brokers, but a this point they haven’t actively made… Read more »
I was just looking at the FSA’s homepage, and they do have information saying that overseas brokers are (in principal) acting illegally if they have not registered with the FSA and do business with Japan residents, and warning investors to be careful. The FSA are also so kind as to provide a list of such unregistered brokers that they have been able to confirm so far: http://www.fsa.go.jp/ordinary/chuui/mutouroku/03.pdf (Pepperstone, IronFX, YouTrade, TradingPoint are listed as some examples, presumably these brokers won’t cooperate with Japanese authorities) This reminds me that some non-Japanese brokers have refused to open accounts through their overseas vehicles… Read more »
I was just looking at the FSA’s homepage, and they do have information saying that overseas brokers are (in principal) acting illegally if they have not registered with the FSA and do business with Japan residents, and warning investors to be careful. The FSA are also so kind as to provide a list of such unregistered brokers that they have been able to confirm so far: http://www.fsa.go.jp/ordinary/chuui/mutouroku/03.pdf (Pepperstone, IronFX, YouTrade, TradingPoint are listed as some examples, presumably these brokers won’t cooperate with Japanese authorities) This reminds me that some non-Japanese brokers have refused to open accounts through their overseas vehicles… Read more »
FX world volumes have been far bigger than equity volumes for decades so I don’t see what the surprise is (?) Especially as there are stock limits.
FX world volumes have been far bigger than equity volumes for decades so I don’t see what the surprise is (?) Especially as there are stock limits.