The leverage on the Forex market will not be reduced to 1: 10

Japanese financial supervision, Japanese Financial Services Agency (JFSA)wants to forgo his plan to reduce maximum leverage in the Forex market. As reported by Reuters, the idea is to be abandoned due to opposition from participants of the local market.

"No" to the lever 1:10

For many years, the Japanese market has a leverage of 1:25. Interestingly, the 4% margin requirement is currently one of the highest in the world (for example, there is more in Turkey, where the requirement is 10% / leverage 1:10). The JFSA decided to introduce restrictions already in 2008 after the outbreak of the global economic crisis, which was also supposed to contribute to increasing protection of individual investors and the entire industry.

Even so, two years ago an idea was created to further bolt the investors and reduce the lever to 1: 10. This will not happen, however. The Japanese regulator announced that it would abandon these plans. The reason for this decision is to be clear opposition from retail traders as well as Forex brokers.

JFSA, however, does not want to remain indifferent and abandon the glove. The main fear of the regulator is that even the leverage of 1: 25 combined with an aggressive approach to risk in the currency market may affect the high losses of retail investors and, consequently, also for brokers.

Consequently, instead of reducing the leverage, it is planned to strengthen the "stress tests" in institutions dealing with currency trading in order to minimize all risks related to the settlement of Forex transactions.

It must be admitted, however, that despite the very low value of leverage in force for a decade, the Japanese, according to some sources, are the most active retail traders in the world, generating a huge volume compared to other countries.

Leverage down - here comes ESMA ...

While in Japan the idea of ​​further reduction of leverage goes down in history, the European currency market awaits the entry into force of the new ESMA guidelines. These changes include shortening the leverage for all retail traders to 1:30. But are we sure that no further restrictions will be forced in a few years? After all, from leverage 1:30 to 1:10 it's not that far ...

The estimated date of entry into force of ESMA changes is July 2018.