Japan’s Forex market still reeling in first half 2012

Swiss-exchange listed Compagnie Financière Tradition SA (or “Tradition”), controlled by France’s Viel & Cie, owns 49.5% of Gaitame, one of the largest Japanese Forex firms. In its 2012 first half results release, Tradition reported that revenue at Gaitame fell by 4% in the first half of 2012 (versus 1H 2011), and that was following a 2011 year which saw revenues off 46% as compared to 2010.

Gaitame’s first half revenues of CHF 13.3 million (approx $14 million) means of course annualized revenues of about $28 million for Gaitame. And that, using industry standards, translates roughly into about $30 billion of monthly trading volume for Gaitame. (By way of comparison, in the first half of 2012 industry leader FXCM had $171 million in revenues from retail trading, and averaged $309 billion in monthly retail volume).

The key takeaway from Tradition’s report– and from Gaitame’s numbers — is that the Japanese Forex market still has not fully stabilized from the effects of strict 25x leverage restrictions put into place last year. And, that the Japanese FX market — once the world’s largest — is actually now much smaller than previously thought. Given the new data, as well as other reports we have seen out of Japan lately, we stick by our earlier estimate of about $33 billion per day in volume for the Japanese retail FX market, or about 18% of the overall world market. And leading Japanese firms such as Gaitame, GMO Click, DMM and FXOnline Japan (owned by the UK’s IG Group) are indeed much smaller volume-wise than previously thought, each falling well out of the list of the world’s top 10 FX brokers.

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

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