The Stagnation of the Binary Options Market in Japan

The Stagnation of the Binary Options Market in Japan

The most recent Financial Futures Association of Japan (FFAJ) report claims that there is still not enough growth in the binary options trading market in Japan. The FFAJ report shows that the trading volumes has been dropping every month and more accounts are going into inactive state. When binary options trading was first introduced in Japan, it was very well received and gets a lot of growth.

The financial regulator has taken many actions to protect the Japanese clients. However, it also impose many strict regulations on the broker at the same which may have reduced the popularity of the options among the traders in Japan.

Read: Why UKOptions could be the right broker for you

The chart provided by FFAJ shows that the number of new binary options trading accounts is steady and the figure is about the same as in 2014. This may not necessarily be a positive sign because many active trading accounts are not trading in large volumes.

Although new accounts are constantly opened, the stats shows that these accounts do not have much trading activities. The trading volume in March has decreased by 22% and the number of active account has also dropped significantly compared to in June 2014. In March, FFAJ report claimed that there are 12,786 active accounts including 1950 newly opened accounts.

In April 2016, there was a slight increase of 20% in the number of newly opened accounts but this is nothing since the trading volume remains the same. However, this is an indications that more investors have become interested in trading in the binary options market. Most of the new trading accounts focus on the forex currency pair EUR/USD in April.

There are also much trading activities on the GBP/JPY currency pairs. The increase in the trading activity in GBP/JPY could be due to the upcoming elections that are to take place in May.

The stagnation in the Japanese binary options trading market is due to the unstable economy in the country. It started to enter into the stagnation phase in 2013 but the government of Japan has taken many actions to improve its economy. There is an increasing number of positive signs of the recovery of the binary options market.

This can be seen in the increasing number of active accounts in the statistic report at the end of 2015. it is expected that the number of active accounts will double or triple in the upcoming years. The number of active accounts is currently higher compared to the previous years.  Out of the total trading volume of $370 millions, $170 millions was payout to the customers for in-the-money trades.

There are two financial regulators that regulate the brokers in Japan including FFAJ and Japan Financial services Agency. FFAJ is responsible for regulating every single activity that is taking place in the binary options market. The Japan Financial Services regulates the banks and trading platforms in Japan. The law in Japan makes provisions for the two financial regulators to make sure that the binary options brokerage firms comply with the rules in its legislation.

Short term trades are not allowed in Japan and brokers caught violating this rule will be banned offering trading services in Japan. Many brokers who violated the rule got their IP addresses blocked banned in Japan. The blocking of the IP addresses of many binary options brokers has left many people wondering whether Japan will completely ban binary options trading.

There are eight regulated binary options brokers that do business with Japan traders. Most of the brokers are from offshore countries and they maintain a branch office in Japan. In Japan, the minimum expiry time allowed for the options trading is 2 hours.

Binary options brokerage firms that want to offer over the counter options are required to state the base hour. All brokers are required by the FFAJ to provide a transparent trading environment to ensure the trade ends at the exact expiry period.

Brokers are not allowed to offer bonus to attract investors. The brokerage firm is responsible for checking to make sure that the customer has the necessary knowledge to trade in the market. Traders who do not know about the binary options market well are not allowed to trade.

The broker will test the knowledge of the investor through a questionnaire. Brokers must display the payout the investor will receive so that customer knows how much they will win or lose.

The economic growth in Japan is not the only factor that influence the binary options market. There are also other factors in the market that affect the financial assets in the binary options market. If you want to trade on indices and stocks in binary options market, you must make sure to take into account all the factors to improve your chances of winning.

Having a good understanding on how the trading signals work can increase your profits in binary options.

Read: Banc de Binary Settlement of €350,000 to CySEC

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