April 28, 2016

Exclusive: Japanese Forex regulator(JFSA) to reject transfers to foreign brokers

Probably a start of the end of the Forex markets of foreign online brokers.

japanese forex financial regulation JFSA

Japanese financial regulation, JFSA has taken another action to unrecommend foreign Forex brokers this April, 2016.

*”Foreign Forex brokers” in this case means, all brokers based outside of Japan.

This time JFSA has forbidden some card companies and banks to transfer funds to some foreign brokers’ accounts.

So all Japanese traders trading with foreign brokers such as XM, FBS and other 20 of them, are not able to make a deposit through international bank transfer or credit card.

This action probably has the biggest affect to the market in last several years, and it might reduce the number of traders who has chosen to trade with foreign brokers but not with brokers in Japan.

Why rejecting transfers?

Not all the banks and card companies have taken this action yet.

But we have been informed that eventually all banks and card companies in Japan will reject all transfer requests directed to accounts of foreign brokers which are promoting its brand towards Japanese residents.

The reason behind this action is JFSA generally does not allow foreign brokers to market towards Japanese residents.

JFSA has been warning Japanese residents to not trade with foreign brokers because it is “too much risk”, as JFSA cannot take care of any legal actions caused in foreign countries.

SCAM tagged brokers by JFSA

Every single foreign broker who has promoted towards Japan has been tagged as a broker with “high risk” and “no licenses” by JFSA.

There is this official document showing the list of all brokers which are not recommended to trade with.

But being listed in the document doesn’t necessarily mean that these brokers are working on a fraud, as most of them are fully licensed brokers from official financial regulations outside of Japan.

Still the document itself has been teaching many Japanese people that foreign brokers are bad in general.

JFSA license

Acquiring a license to provide financial services in Japan is one most hardest thing for foreign brokers and there are also some demerits to acquire it.

Well first requirement is that only leverage up to 1:25 is allowed for Forex trading and no-deposit bonus and other gorgeous promotions will be prohibited.

The thing is that if foreign brokers taken away these conditions from their services, there is no merit for Japanese traders to choose foreign brokers to trade.

Because high leverage and bonus promotions are two main things why Japanese traders choose foreign brokers.

If you are a broker, you have two options which are:

  1. Acquire the official license and compete with other Japanese brokers with the same conditions
  2. Promote your brand anyway from outside of Japan by adopting your service for them

Foreign brokers to adopt the situation

We, Hercules support foreign brokers to promote themselves to Japanese market anyway considering many situations and reasons though, the market environment is changing every year.

For some brokers, losing Japanese market and clients will make them face bankruptcy and these brokers are in need to adopt themselves to the new environment.

There maybe no rapid movement from JFSA regarding this, but they are certainly taking actions to get rid of foreign brokers from Japan.

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