Japanese brokers’ combined volume of over-the-counter (OTC) forex trading amounted to nearly JPY 1.2 quadrillion in the April-June 2016 period, or the first quarter of the current fiscal year (FY), the Financial Futures Association of Japan (FFAJ) said on Wednesday. The figure represents a drop of 24.9% from the preceding quarter. Nearly all contracts were traded on margin.
Forex trading volumes from the Tokyo Financial Exchange (TFX) dropped by 28.3% over the quarter to nearly JPY11.3 trillion in the three months under review. Domestic exchange-traded forex volumes results similar to those of OTC trading as they were 24.7% down on the quarter at nearly JPY 1.3 quadrillion in the first quarter of the fiscal year. Meanwhile, overseas on-exchange forex trading volumes declined by just 10.5% to JPY 534.6 trillion.
The broker explained the declining trading metrics with the result of the UK referendum on EU membership. The UK decided to exit the EU, causing shock in markets.
“Open position of the overall FX margin trading transactions at the end of the first quarter was down due to Brexit shock. On the other hand, the open interest both of on-exchange currency related options and interest related options increased from the previous term,” the regulator said in the report.
Following is detailed information about the Q1 FY 2017 trading volume of forex brokers in Japan by instruments:
Brokers in Japan handled 775,343 active accounts during the quarter, of which 747,554 were for OTC trading and the remaining 27,789 were for trading on exchange. Overall, brokers handled 11,665,889 futures trading accounts in April-June, which is 22.9% less than in the previous quarter, while, futures accounts with overseas brokers posted a growth of 24.5% on the quarter to 43,055.
Exactly 125 members out of 141 in total filed reports with the FFAJ for the quarter under review. Of them, 100 offered OTC trading and 51 (of which 43 were domestic) offered on-exchange products.