JPY

heres that story on japanese FX margin trading

Japan limits forex trades of Mrs Watanabes
By Lindsay Whipp in Tokyo

Published: August 1 2010 19:11 | Last updated: August 1 2010 19:11

Japans Mrs Watanabes, the shorthand name for the large number of Japanese retail investors, are being restricted in the amount they can borrow to finance their bets in the currency markets, in a move by the Japanese regulator to eliminate what it sees as excessive speculation by inexperienced traders.

The new rule on margin trading, which came into effect on Sunday, limits the amount that retail traders can borrow to 50 times the amount of collateral used. From next year, rules will be tightened further to lower the limit to 25 times. There were no limits imposed before.

Regulators have become concerned because foreign exchange brokerages can offer retail investors leverage of as high as 400 times. Ahead of the rule change, most retail investors unwound yen positions which contravened the new leverage limits, contributing to the currencys climb late last week to its highest this year, one trader said.

Junya Tanase, a currency strategist at JPMorgan Chase, cautioned that there could be some market volatility in early trading on Monday as traders unwind remaining positions at a time when the market tends to be illiquid.

The impact on the yen market is likely to be much more pronounced next year with the further lowering of borrowing limits. Traders said that without the added leverage, some small traders could stop trading altogether. Yuji Saito, a director in the FX department at Crdit Agricole in Tokyo, said market liquidity in Tokyo was likely to fall. Wealthier traders, however, might open accounts overseas and trade without restriction from there, he said.

One currency day trader, who claimed not to use leverage of more than 50 times, posted a blog saying: It feels like [currency trading] will be a no-go for people who arent rich. Itll become quite an investment. Well, there are probably only a few people who win in the currency markets, so a good result might be that the number of people getting indebted will drop.
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Ashraf

Wasup,. tough question, it might reduce japanese retail traders' appetite for playing FX but i cannot say what impact on direction as the impact on price from retailers is sketchy


Ashraf