The Japanese Financial Services Agency, which among other things regulates the activities of the Japanese OTC forex brokerages, is mulling to cut the max leverage offered to retail clients to 1:10.
This would be the third cutting of the leverage since 2008, when the cap was set at 1:50, followed by another halving to 1:25 several years later. Currently the 1:25 leverage is among the lowest, along with that in Turkey, which recently was set at 1:10.
Re: Japan mulls cutting OTC forex leverage to 1:10
2On the one hand this should be actually a good thing from the perspective of the retail traders as this is in their favor and protects them from forex trading which is poorly regulated.
Re: Japan mulls cutting OTC forex leverage to 1:10
3Such restriction will kick small investors out of Forex trading. On other hand it will leave only the bigger and more experienced players who know how to play the game
Re: Japan mulls cutting OTC forex leverage to 1:10
4Yep, that is true, but still this cannot change the way of how the market is functioning and always when someone is winning another will be loosingLazarR wrote: Fri Nov 10, 2017 1:30 am Such restriction will kick small investors out of Forex trading. On other hand it will leave only the bigger and more experienced players who know how to play the game
Re: Japan mulls cutting OTC forex leverage to 1:10
5Fully agree with you, FrancoisT. But from my perspective, more investors on the market would potentially mean more funds to be split between the winners. Call me greedy but that is how I see it
Re: Japan mulls cutting OTC forex leverage to 1:10
6I believe the idea behind is to move out traders with small accounts and with no or small knowledge about the market.LazarR wrote: Thu Nov 16, 2017 2:36 am Fully agree with you, FrancoisT. But from my perspective, more investors on the market would potentially mean more funds to be split between the winners. Call me greedy but that is how I see it
In fact what would be most likely happen with this step, Japanese brokers will loose volumes and clients
Re: Japan mulls cutting OTC forex leverage to 1:10
7I should agree with you FrancoisT, this leverage cap of 10:1 is restrictive for the retail investors and it will require from them to invest more capital in order to trade which they could potentially lose. Thus the inexperienced traders with smaller accounts would be forced to use other market makers in loosely regulated jurisdictions.
Re: Japan mulls cutting OTC forex leverage to 1:10
8That was probably the purpose of the legislation, to force small traders out of the local market.