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The Retail FX Experience in Japan, 2019

Executive Summary


Two decades since the launch of retail FX trading globally, Japan remains a very relevant case study for regulators and brokers around the world to understanding foreign exchange (FX) trading at the retail level, or for that matter retail trading of any asset class. The vibrancy of Japan’s brokerage scene takes place within a credible regulatory environment and begs the question of how industry and regulators were able to strike a balance that achieves sensible industry growth. Japan’s retail FX trading has reached highs of US$250 billion per day, and it has been adopted by roughly 7% of the country’s adult population and 15.5% of the population holding investable assets. 

Select questions answered in this study include: 

  • What features in Japan’s OTC microstructure and regulatory framework have allowed more than a dozen brokerage firms to remain viable for more than a decade? 
  • What are the preferences of Japanese investors regarding financial products, retail FX brokers, and currency pairs?
  • How competitive is Japan’s retail FX brokerage market evidenced by prevailing spreads and market share analysis? 


Japan’s trading population

Financial product preferences

Japan’s regulatory footprint

Retail FX/CFD trading volume globally, by major region and product

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, 2009-2018

Japan’s client deposit changes, 2009-2018

Japan’s diverse brokerage firm landscape – ownership types

Agency v. principal brokers v. both

Own v. third-party trade execution system v. both

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 2018

Select electronic FX trading platform preferences used by FX brokers

Spread competition by broker and currency pair

Volume weighted spread costs to consumers by broker 

Average daily volume market share of Japanese FX brokers – 17 firms

Ranking of Japanese FX brokers within the top-30 global brokerage firms, 2018

Ranking of Japanese FX brokers by client deposits – 17 firms

Ranking of Japanese FX brokers by client accounts – 17 firms

Report takeaways


Regulation of retail trading in foreign exchange (FX) and contracts for difference (CFD) is undergoing transition in Europe, causing deep industry concern. Japan's retail FX regulatory  path is, in this author's view, the optimal model for regulators globally to achieve a balance of investor protection and brokerage industry viability. This report outlines key lessons from Japan's experience with retail FX.


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