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Retail FX in Japan, 2020

Annual report series covering development of retail FX trading in Japan

JAPAN'S RETAIL FX MARKET DYNAMICS, 2020

Introduction

The start of 2020 is fraught with Coronavirus concerns for the global economy, with implications for dollar-yen (USDJPY), one of the few refuges for investors in times of crisis. And if dollar-yen begins to trend up/down, one can be sure that Japan’s active retail FX population – the largest in the world – will also be an important market participant. 


Japan’s well established retail FX market with two dozen midsized or large brokerage firms, 840,000 active traders, and fairly transparent metrics makes it an ideal geography from which to analyze retail trading trends and how brokerage firms still compete effectively after years of spread compression. 


Select questions answered in this study include: 


  • Which of Japan’s retail FX brokerage firms are emerging victorious from a challenging trading environment and which ones are falling behind? 
  • What implication, if any, does dollar yen volatility have on trading activity, FX prime brokerage, and internalization rates?
  • What are the four trader types served by retail FX brokers serve and which form the basis for the “Mrs. Watanabe” myth?  


TOPICS ADDRESSED

  • Japan’s trading population
  • Financial product preferences
  • Japan’s active trading account types: true retail, TFX trader, semi-professional, and corporate 
  • Japan’s retail FX volume 
  • FX pair preferences and behavior around major net long/short positions
  • Breadth of FX pair offerings
  • Lessons from the post-leverage reduction period
  • Japanese active account growth stats, 2009-2019
  • Japan’s client deposit changes, 2009-2019
  • Share of internalization v. hedging via: banks, other domestic firms, or offshore firms
  • Evolution of FX prime brokerage in Japan’s retail FX market, 2014 to 2019
  • Spread competition by broker and currency pair
  • Volume weighted spread costs to consumers by broker 
  • Average daily volume market share of Japanese FX brokers
  • Ranking of Japanese FX brokers by client deposits
  • Ranking of Japanese FX brokers by client accounts


REPORT ACCESS AND QUESTIONS

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