By Javier Paz Founder and MD of
By Javier Paz Founder and MD of

Borrowing a page from Japan’s successful Retail FX experience

Simultaneously across key jurisdictions, the retail FX trend started two decades ago this year. In the United States it was firms like Gain Capital and Oanda, while in Russia with the likes of Alpari and Forex Club. In Japan, retail FX also started – at least on paper – in 1998, but only gained force after 2004. As a long-time professional analyst of the retail FX market, I’ve come to hold the Japanese retail FX way of doing things as the healthiest and best model for other jurisdictions to follow. While acknowledging that there are national idiosyncrasies that could make it impossible to fully replicate the Japanese model elsewhere, much of what Japan got right can be pursued.

An evaluation of the Japanese model is timely since many countries today regulate retail trading erring on the side of caution. During a retail FX presentation that I gave to the FX Committee of the European Central Bank in 2011, I predicted that more regulation was needed and was one of the voices calling for them. Since then, I’ve noted with some sadness how regulatory efforts in the U.S. and many other areas – South Korea, Turkey, Israel, New Zealand, and most recently Europe – regulate this new industry with a mix of apprehension, inadequacy, and even contempt.  This author views Japan and Australia as success stories in terms of how sound regulations can lead to positive, sustainable industry outcomes. This writing is an executive summary of a more detailed report Forex Datasource prepared for clients regarding what makes the Japanese retail FX experience superior, who are the key players, and how the industry is engaging the next generation of retail traders.  The...continued

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