Japan plans to lower the leverage to 1: 10 on FX

Japanese financial supervision is considering lowering the leverage to 1:10 - this was reported by Finance Magnates. Shock? No one should be surprised by the dissatisfaction of the main stakeholders who will be affected by these changes, namely investors. After all, Japan is the largest market for retail forex traders in the world.

Gradual reduction of leverage

The Japanese Financial Services Agency (JFSA), i.e. the local supervision authority, has already twice decided to limit the leverage by half. First, after the global crisis in 2008, the maximum leverage was reduced to 1:50. Not much later it turned out that this was just an introduction to changes and eventually the leverage was reduced to 1:25. Now, almost a decade after the "reform", further cuts are being prepared, up to 1:10.

However, the difference is fundamental. Earlier leverage reductions were preceded by public consultations with investors and ultimately met with the approval of the proposed solutions. This time it is different and it is actually difficult to clearly define the reason for wanting to introduce changes. For now, however, only that is known, that even if the idea passes, the real leverage of 1:10 will not come into force until mid-2018. However, the changes will not apply to the Tokyo Stock Exchange, which does not offer OTC products.

Killing the domestic market?

Big worries arise about the condition and future of the Japanese Forex market. There are already voices among investors who plan to migrate to foreign platforms under the jurisdiction of another regulator, or even without any licenses.

Market share of Japanese brokers

In the face of such drastic changes in the Japanese or Turkish market (Decreasing 1 leverage: 10 and raising the required minimum deposit), Polish traders can appreciate the government's ideas to limit the leverage "only" to 1:25.