Japan regulator instructs brokers to stop marketing Binary Options

Japan likely to regulate binaries beginning in the spring.

LeapRate has learned that Japan’s financial regulator JFSA has instructed regulated Japanese brokers to stop marketing binary option products to their customers, pending a regulatory review of the product by the JFSA. Binaries have become more popular in Japan the past two years, and the JFSA has (apparently) made the decision to regulate them, with the new rules to be introduced early in 2013, likely in March. It is still unclear exactly what those rules will be, but they will likely limit the riskiness of options allowed.

There remain several global FX firms which take Japanese clients, but which do not formally have a Japan office nor are regulated in Japan.

Japan’s regulator introduced very strict new rules relating to spot FX trading and naked short selling of stocks in 2010 and 2011, limiting leverage on FX trades to 25:1 as of August 2011. Our research shows that this action reduced overall FX trading activity in Japan by nearly 40%, to about $35 billion per day, although Japan remains the world’s #2 retail FX market, after Europe.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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