Note: This English translation is for reference purposes only. In the event of any discrepancy between the Japanese original and thisEnglish translation, the Japanese original shall prevail. The Financial Futures Association of Japan assumes no responsibility for thistranslation or for direct, indirect or any other form of damage arising from the translation.

Results of the Actual Conditions Survey ofOver-The-Counter Retail Foreign Exchange Margin Trading
August 31, 2015
The Financial Futures Association of Japan
Introduction
The Financial Futures Association of Japan (hereinafter referred to as the "Association"), in
cooperation with the Tokyo Foreign Exchange Market Committee, conducts every April asurvey of business model and other actual conditions of over-the-counter (OTC) retail foreignexchange (FX) margin trading conducted by members that handle OTC retail FX margin
trading.
The Association also collects on a regular basis from Association members various data thatare necessary for examining the management condition of each member company of the
Association (hereinafter referred to as the “Monitoring Data” in this report 1).
The results of the survey of actual conditions mentioned above are aggregated and analyzed
while taking the Monitoring Data into account, and are summarized as follows:Part I:

1.

Survey of Actual Conditions of Over-The-Counter Retail Foreign Exchange
Margin Trading in April 2015

Survey Method

We conducted the survey by distributing questionnaires (please refer to the material separately
attached) to all members that handled OTC retail FX margin trading as of April 30, 2015
(excluding members that only provide intermediary services) and asking then to answer thequestions on the questionnaires.
2.

Number of Members Subject to the Survey

The number of members subject to the survey (unless otherwise specifically provided,
hereinafter referred to as the “Members”) 2 was 56 which was down by five companies
compared with the last survey.
Exhibit 1: Change in Number of Members Subject to the Survey(Unit: Company (Member))

2015
56

2014 [Note]
61

2013
59

Year-on-Year Change-5Note: A revision is made on the figure for 2014 (addition of one company).

1

Trading volume of over-the-counter-retail FX margin trading with customers uses a figure aggregated based on themonitoring survey that is reported by each member to the financial regulatory authority, a copy of which copy is to besubmitted to the Association. Therefore, please note that the figures do not completely match those publicly announced
by the Association on the monthly flash report on OTC FX transactions.

2

Unless otherwise specifically explained or described, the “members subject to the survey” shall be referred to as the“Members” in this report. As all members that handle OTC retail FX margin trading are the “members subject to thesurvey,” the meaning of the “members that handle OTC retail FX margin trading” is the same as the “members subject tothe survey.” However, please understand that both expressions are used in this report, depending on the context or for
making the report easier to understand.

1

3.

Collected Results<Item 1>
(1)

Business ModelIn this survey, the Association focused on the flow of executing a transaction of OTC retail
FX margin trading, and categorized the flows into 24 groups indicated in the “Table ofBusiness Model Category” below (the total number of model numbers indicated in the tablebelow (“model No.” on the Exhibit”)) as business models depending on the characteristics ofthe flow:
Table of Business Model Category
Model No. of EachBusiness Model(model No.)White Label[Note 1]

1
2
3
4
5
6
7
8
9

No. of Firms Used for
Cover Transactions to
Formulate Prices[Note 2]Marry
(During Trading Hours)[Note 3]Yes
SingleNo
Not Applicable
Yes

Timing of Execution with
Customers and CoverTransaction[Note 4]Discretionary
After
BeforeDiscretionary
After
BeforeDiscretionary
After
BeforeSeveral10
Discretionary
11
No
After
12
Before13
Discretionary
Yes
14
After
15
BeforeSingle16Discretionary
17
No
After
18
BeforeApplicable
19
Discretionary
20
Yes
After
21
BeforeSeveral22
Discretionary
23
No
After
24
BeforeNote 1: White label means a transaction form where a Member executes a transaction with a customer under its own nameusing a pricing/execution system managed by another foreign exchange broker (including FX operator). It includes
a case where a Member uses a system provided by its parent company.
Note 2: It means the number of firms that provide a cover rate used for formulating the price, not the number of firms who
actually conduct cover transactions. Under normal conditions, if a trading price with customers is formulated basedon the rate provided by a specific single firm that is used for cover transaction, it is described as “Single,” while if
the rate is selected or synthesized from those provided by several firms that are used for cover transactions every
time the price for customers is formulated, it is described as “Several.”
Note 3: During the daytime, if there is a system that controls the price fluctuation risk arising from transactions withcustomers by using marry, it is described as “Yes,” while if there is no such system, it is described as “No.”
Additionally, if cover transactions are conducted for all transactions executed with customers during the day time inprinciple, it is described as “No,” while if cover transactions are not made for some of the transactions executedwith customers during the daytime, and the price fluctuation risk is offset by open positions created by transactions
with other customers that match the original transactions, it is described as “Yes.”

2

Note 4: Under normal conditions, if a cover transaction is executed after executing a transaction with a customer, it isdescribed as “After,” while if a transaction with a customer is executed only after a cover transaction is completed,
it is described as “Before.” If a cover transaction can be executed either before or after executing a transaction witha customer, it is described as “Discretionary.” Also, if a Member holds its own position by conducting a covertransaction before receiving a customer order and can match its own position against the customer’s order, it isdescribed as “Discretionary.” If a transaction with a customer can be completed at the same time when a covertransaction is conducted under a system such as STP, it is described as “Before.” In the case of white label,“Discretionary,” “After,” or “Before” is determined depending on the timing of cover transaction made by theoutsourcing contractor. It is not necessary to consider response at the time of emergency.

(2)

Distribution of Business Models

Exhibit 2 shows the number of Members subject to the survey (56 companies in total) that
adopt a certain business model (model No.) shown in the Table of Business Model Category
in Part 1, Section 3, <Item 1>-(1). The total number of responses was 66, which exceeded thetotal number of the Members subject to the survey, as some Members adopted several
business models (model No.).
When we look at the breakdown of each business model (model No.), the number of Membersthat adopted Model No. 8 (the business model that is not a white label form, uses several
firms for cover transactions, can conduct marry transactions, and conducts a cover transaction
after executing a customer order) was 16 (accounting for approximately 24% of the total
responses). Additionally, the number of Members that adopted Model Nos. 16 to 18 (thebusiness model that is a white label form, uses a single firm for cover transactions, and cannot
conduct a marry transaction) was totally 21 (accounting for approximately 32% of the total
responses).
Exhibit 3 shows the number of Members subject to the survey (56 in total) that adopted either“Single (one)” or “Several (two, or three or more)” business models (Model No.).

3

Exhibit 2: Total Number of Members that Adopt Each Model Number in Part 1, 3-(1)(Unit: Company (Member))

18

16

16
14
12
10
8

6

6
4
2
0

1

2

2
0

0

7
5

5

1

0

8
6

2

1

0

0

0

0

2
0

2

0

Exhibit 3: The Number of Business Models Adopted by the Members(Unit: Company (Member))
The number of Members that adopt asingle model
47(3)

The number of Members that adopt
several (two) models
8

The number of Members that adopt
several (three or more) models
1

Ranking of Members Based on Trading Volume of OTC Retail FX Margin Tradingwith Customers and Business Models Adopted

We rank the Members subject to the survey based on the trading volume of OTC retail FX
margin trading, and categorize them into three groups 3. Exhibit 4 shows the total number ofMembers by each of three groups that adopted a certain business model (Model No. show in
3-(1)) as in Exhibit 2.
When we look at the breakdown, we found that the most widely adopted models were Models
6 to 8 for the First Group, Model Nos. 6, 8, 16, and 17 for the Second Group, and Models No.
12 and 16 to 18 for the Third Group.

3

We ranked the Members subject to the survey by the trading volume of OTC retail FX margin transaction in FY endedApril 2015, and categorized the top one-third as the First Group (Rank 1st to 19th), the next one-third as the second
Group (Rank 20th to 38th), and the remaining one-third as the Third Group (Rank 39th to 56th).

4

Exhibit 4: The Total Number of Members in Each of Three Groups Based on OTC
Retail FX Margin Trading Volume Ranking that Adopted a Certain Model(model No.) Shown in Part 1, 3-(1)(Unit: Company (Member))

8
7

The First Group
第一グループの会員
Members

6

第二グループの会員
The Second Group
Members

5

第三グループの会員
The Third Group
Members43210<Item 2> Use of Prime Broker (PB) 4 System and Volume of Use(1)

Change in the Use of PBs by the Members Subject to the Survey

Exhibit 5 shows the number of Members using the Prime Broker (PB) system, the number ofcontracts made through the PB system, the number of PBs, and the trading volume of OTC
retail FX margin transactions with customers under the PB system.
Exhibit 6 shows the number of Members by the use of Prime Broker (PB) system in terms of
Newly started, Ceased (terminated), Increased, and Decreased:

4

Prime Broker (PB) means a broker who intermediates a transaction between the Member and a bank that is used for acover transaction, and takes up the position of the Members based on the give-up instruction or by a tri-party agreement forthe settlement between the Member and the financial institution used for the cover transaction.

5

Exhibit 5: Use of PB system and the Usage Amount
Survey month/year[Note 1]

No. of Members
using the PB System

No. of contracts
made throughthe PB system (total)

No. of PBs(Net) [Note 2]

PB usage amount(million yen)

April 2015

17

31

8

99,643,704

April 2014

16

30

7

52,764,799

April 2013
17
30
－
－
Note 1:
Survey of the number of PBs (net) and the PB usage amount began in April 2014 (The same shall apply in
Exhibits 6 and 7).
Note 2:
It is the number of PBs that the Members have contracted after deducting the overlapped numbers.

Exhibit 6: Use of PB system(Newly started, Ceased (terminated), increased, and decreased)(Unit: Company (Member))

Survey month/year

No. of Members thatceased using PBs

No. of Members that
decreased the number
of PBs used

No. of Members that
increased the number
of PBs used

No. of Members that
newly started using
PBs

April 2015 [Note]

0

3

3

1

April 2014
2
1
3
Note: For the data as of April 2015, one Member that used the PB system ceased the business.

1(2)Attribute of PBs 5
As shown in Exhibit 7, the number of PBs used by the Members that handle OTC retail FX
margin trading was eight in 2015. Of these, the attribute of four PBs is the “i. financial
institutions subject to the reporting to the Tokyo Foreign Exchange Market Committee”
Exhibit 7: Use of PBs by Attribute(Unit: Company (PB))
Surveymonth/year

April 2015
April 2014

i. Financial
institution subject
to the reporting to
the Tokyo Foreign
Exchange Market
Committee
46ii. Financial
institution subject
to the reporting to
the Bank of Japan(excluding thosecategorized as i)-iii. Financial institution
subject to the reporting
to a central bank(overseas) (excluding
those categorized as i
or ii)
2
1

Domestic
PBs otherthan i to iii

Overseas
PBs otherthan i to iii-

2-<Item 3> Offering of Automatic Trading Tools(1)

Offering of Automatic Trading Tools to Customers

Exhibit 8 shows the number of Members that offered automatic trading tools to customers in
April 2013, 2014, and 2015, and in the case where the automatic tool was offered, the numberof Members that offered a tool that was internally developed, externally developed, or both.
Exhibit 8: The Number of Members Offering Automatic Trading Tools
and the Attribute of Developer of the Tools
5

Please refer to the footnote in Part 2, 3-(1) for each attribute of PBs.

6

(Unit: Company (Member))

Survey month/year(2)

No. of Members thatoffered automatic
trading tools

Whether the automatic trading tools offered were internally developed,
externally developed, or bothInternally developed

Externally developed(developed by others)

Both

April 2015

23

4

16

3

April 2014

21

3

16

2

April 2013

19

1

16

2

Impact of Automatic Trading Tools

Exhibit 9 shows the trading volume of OTC retail FX margin trading with customers executedby all Members subject to the survey, by the Members that offered automatic trading tools,
and by the Members that did not offer automatic trading tools in each survey month and year
for each survey conducted in April 2013, 2014, and 2015.
Exhibit 10 shows the trading volume of OTC retail FX margin trading with customers
executed by the Members that offered automatic trading tools (12 members) in all surveys
conducted in April 2013, 2014, and 2015, and by the Members that did not offer automatic
trading tools (28 members) in all surveys conducted in April 2013, 2014, and 2015.
Exhibit 9: Trading Volume of OTC Retail FX Margin Trading with Customer(By all Members Subject to the survey, and Members that offered/did not offer automatic trading tools in each survey
conducted in April 2013, 2014, and 2015)(Unit: million yen, %)Category

Trading volume of OTC retail FX margin tradingwith customers

Change(from 2014
to 2015)

Change(from 2013
to 2014)

Change(from 2013
to 2015)

April 2015

April 2014

April 2013

Members subject to theSurvey453,041,189

238,252,636

442,119,319

190.2%

53.9%

102.5%

Members that offeredautomatic trading tools

36,697,371

35,660,526

74,879,925

102.9%

47.6%

49.0%

Members that did not offer
automatic trading tools

416,343,818

202,592,110

367,239,394

205.5%

55.2%

113.4%

Exhibit 10: Trading Volume of OTC Retail FX Margin Trading with Customers(By Members that offered or did not offer automatic trading tools in all surveys conducted in April 2013, 2014, and2015)(Unit: million yen, %)Category

Trading Volume of OTC Retail FX Margin
Trading with Customers
April 2015

April 2014

April 2013

Change(from 2014
to 2015)

Change(from 2013
to 2014)

Change(from 2013
to 2015)

Members that have offeredautomatic trading tools in all
years from April 2013 to 2015
(12 members in total)

17,130,333

11,449,894

26,778,376

149.6%

42.8%

64.0%

Members that have not offeredautomatic trading tools in all
years from April 2013 to 2015
(28 members in total)

371,513,201

191,871,505

343,366,676

193.6%

55.9%

108.2%

7

<Item 4> Offering of API 6 to Customers(1)

Offering of API to Customers

Exhibit 11 shows the number of Members that offered API in April 2013, 2014, and 2015.
Exhibit 11: The Number of Members that Offered API(Unit: Company (Member))(2)

Survey month/year

No. of Members that offeredAPI

No. of Members that stopped
offering API

No. of Members that started
offering API

April 2015

15

0

8

April 2014

7

0

2

April 2013

5

－

－

Impact of Application Programming Interface

Exhibit 12 shows the trading volume of OTC retail FX margin trading with customers
executed by all Members subject to the survey, Members that offered Application
Programming Interface (API), and Members that did not offer API in each survey conductedin April 2013, 2014, and 2015.
Exhibit 13 shows the trading volume of OTC retail FX margin trading with customers
executed by the Members that have offered API in all surveys conducted in April 2013, 2014,
and 2015 (five members) and by the Members that have not offered automatic trading tools inall surveys conducted in April 2013, 2014, and 2015 (39 members).
Exhibit 12: Trading Volume of OTC RFX Margin Trading with Customers(By all Members subject to the survey, and Members that offered/did not offer API in each survey conducted
in 2013, 2014, and 2015)(Unit: million yen, %)Trading Volume of OTC Retail FX Margin
Trading with Customers
April 2015

April 2014

April 2013

Change(from 2014
to 2015)

All Members subject to thesurvey453,041,189

238,252,636

442,119,319

190.2%

53.9%

102.5%

Members that offered API ineach survey month and year

81,606,353

24,711,589

50,594,975

330.2%

48.8%

161.3%

Members that did not offer API
in each survey month and year

371,434,836

213,541,047

391,524,344

173.9%

54.5%

94.9%

Category

6

Change(from 2013
to 2014)

Change(from 2013
to 2015)

API(Application Programming Interface )means specifications of the interface that is used to exchange data with external
software (mainly a system for system trading).

8

Exhibit 13: Trading Volume of OTC Retail FX Margin Trading With Customers(By Members that offered/ did not offer API in all surveys conducted in April 2013, 2014, and 2015)(Unit: million yen, %)Trading Volume of OTC Retail FX Margin
Trading with Customers
April 2015

April 2014

April 2013

Change(from 2014
to 2015)

Members that have offered API
for all years from 2013 to 2015
(five members)

45,631,247

23,717,351

50,594,975

192.4%

46.9%

90.2%

Members that have not offered
API for all years from 2013 to2015 (39 members)

368,748,935

193,445,472

355,380,916

190.6%

54.4%

103.8%

Category

Change(from 2013
to 2014)

Change(from 2013
to 2015)<Item 5> Currency Options
Exhibit 14 shows the number of Members handling OTC retail FX margin trading that also
handled currency option trading (limited to the currency options regulated by the Financial
Instruments and Exchange Act) in April 2013, 2014, and 2015
Exhibit 14: Number of Members Handling OTC Retail FX Margin Tradingthat Also Handled OTC Currency Option Trading(Unit: Company (Member))Number of Members that handled OTC Currency Options
Category

Note:

No. of Members that also handled retail BO
trading [Note]

April 2015108

April 201410

7

April 20138
6
Retail BO means currency binary options for retail customers that are defined in the “Business Conduct Rules on
Retail OTC Binary Option Trading” published by the Association.

9

Part 2:1.

Aggregation and Analysis of Cover Transaction Data for Over-The-Counter
Retail Foreign Exchange Margin Trading

Cover Transactions Subject to Aggregation and Attribute of Members

Table 1 shows the number of Members that handled OTC retail FX margin trading by type ofbusiness.
Table 1: Number of Members Handling OTC Retail FX Margin Trading
by Type of Business(Unit: Company (Member))
Attribute of Member (Business Type)

April 2015

April 2014

April 2013

April 2012

Registered Financial Institution

5

5

3

3

Securities Company [Note 1]

30

31

30

34

Financial Futures Company, etc. [Note 2]

21

25

26

27

Total
Note 1:
Note 2:

56
61
59
64
Securities Company means a member of the Association that is also a member of the Japan Securities Dealers
Association (excluding OTC derivative members and special members).
Financial Futures Company, etc. means a member of the Association (including commodity futures trading
companies) other than a Registered Financial Institution and Securities Company.

2.

Impact of Foreign Exchange Margin Trading in Japan on Foreign Exchange
Market(1)

Flow of Transactions

The flow of funds in OTC retail FX margin trading consists of the flow between a customer
and a Member that handles OTC retail FX margin trading (internal flow) and that between a
Member that handles OTC retail FX margin trading and a firm used for cover transactions(external flow). Marry transactions that are offset within a Member that handles OTC retail
FX margin trading without conducting a cover transaction with external parties are
categorized as internal flow.
Furthermore, when we look at the retail FX margin trading in Japan through Tokyo Financial
Exchange's Click365 that is regarded as a transaction in a domestic exchange, as it has aframework under which an investor and a market maker are matched for the transaction, we
can say that it has similar characteristics to those of the external flow of the OTC retail FX
margin trading.
As the trading volume that is regarded as external flow (in retail FX margin trading) (external
circulation volume) increases, it may impact the foreign exchange market through firms used
for cover transactions (as well as market makers).
Table 2 below shows the external circulation volume of retail FX margin trading.

10

Table 2: External Circulation Volume of Retail FX Margin Trading(Unit: 100 million yen, %)OTC Retail FX Margin Trading
Surveymonth/year(1) Trading
Volume with
Customers[Note 1]

(2) External
Circulation Volume(Total amount ofcover transactions)[Note 2](2)/(1)(%)

Internal
Circulation
Volume= (1) - (2)(3) Click 365
Trading
Volume[Note 3, 4](4) Total External
Circulation
Volume of Retail
FX Margin
Trading= (2) + (3)April 2015

4,530,411

1,818,843

40.1%

2,711,568

32,955

1,851,798

April 2014

2,382,526

986,06941.4%

1,396,457

23,3581,009,427

April 2013

4,421,193

2,025,760

45.8%

2,395,433

74,8062,100,566

April 2012
1,278,975
700,28854.8%
578,687
49,157
749,445
Note 1: Based on the monitoring data. In this table, figures as of April 2014 are not the same as those on Table 2, Part 2 of“Results of the Actual Conditions Survey of Over-The-Counter Retail Foreign Exchange Margin Trading“ dated
August 29, 2014, but the revised ones (the same shall apply in Table 7 and 10).
Note 2: Based on the monitoring data. Hedge transactions and other transactions are included for members for which hedgetransactions and other proprietary trading are difficult to distinguish from cover transactions.
Note 3: This figure represents the monthly trading volume disclosed by the Tokyo Financial Exchange multiplied by themonth-end settlement price.
Note 4: There were six marker makers (MMs) as of June 30, 2015 (Commerzbank, Deutsche Securities, Barclays Bank,
Goldman Sachs Japan, Nomura Securities, and Bank of Tokyo-Mitsubishi UFJ).

(2)

Comparison with the Tokyo Foreign Exchange Market

As shown in Table 3, the total external circulation volume of retail FX margin trading exceeds
the spot trading volume by non-financial institution customers (domestic) in the Tokyo
foreign exchange market.
Table 3: Comparison between Spot Transactions in the Tokyo Foreign Exchange Market
and External Circulation Volume(Unit: 100 million yen, %)Survey Results Announced by the Tokyo
Foreign Exchange Market Committee [Note 1]
Surveymonth/year(1) Spot Trading
Volume(2) Of which, Transactions
with Non-Financial
Institution Customers(domestic) [Note 2]

April 2015

3,263,748

1,272,232

April 2014

2,347,993

764,693

April 2013

3,077,047

793,050(3) Total External
Circulation Volume of
Retail FX Margin
Trading (The same as
those on (4) in Table 2)(3)/(1)(%)(3)/(2)(%)

1,851,798

56.74%

145.56%

1,009,427

42.99%

132.00%2,100,566

68.27%

264.87%

April 2012
1,614,486
319,237
749,44546.42%
234.76%Note 1: Figures in (1) and (2) of the table above are calculated by multiplying the spot trading volume described in“[Reference Table] <Table 1>” in the “Survey on Foreign Exchange Transaction Volume in Tokyo Foreign
Exchange Market” published by the Tokyo Foreign Exchange Market Committee by the yen/dollar spot rate as of
17:00 at the end of every April published by the Bank of Japan (80.74 yen on April 2012, 97.83 yen on April 2013,102.51 on April 2014, and 118.91 yen on April 2015).
Note 2: We adopt the same definition of non-financial institution customers as those on the “Survey on Foreign Exchange
Transaction Volume in Tokyo Foreign Exchange Market” published by the Tokyo Foreign Exchange Market
Committee. In the survey, it is explained that transactions with retail FX margin trading operators should berecorded as transactions with non-financial institution customers.

11

3.

Cover Transactions for Over-The-Counter Retail Foreign Exchange Margin
Trading(1)

Firms Used for Cover Transactions by Attribute 7 and Use of Cover Transactions

Table 4 shows the attributes of firms used for cover transactions with which Members that
handle OTC retail FX margin trading conduct a cover transaction.
The number of Members handling OTC retail FX margin trading is approximately 3.4 perfirm used for cover transactions. When we look at the attribute of firms used for covertransactions, the number of Members handling OTC retail FX margin trading isapproximately 6.7 on average per financial institution subject to the reporting to the Tokyo
Foreign Exchange Market Committee, which is higher than the general average.
Table 4: The Number of Firms for Cover Transactions Used by Members Handling OTCRetail FX Margin Trading by Attribute, and the Total Number of Members Handling
OTC Retail FX Margin Trading that Use Firms for Cover Transactions(Unit: Company (Member))
The Number of Firms Used for CoverTransactions by Attribute

Number of Members Handling OTCRetail FX Margin Trading that Use
Firms for Cover Transactions (Total)[Note 1]

2015

2014

2013

2012

2015

2014

2013

2012

22

26

26

20

128

141

140

141

(1) Financial institutions subject to thereporting to the Tokyo Foreign
Exchange Market Committee

17

19

21

15

114

124

109

110

(2) Financial institutions subject to thereporting to the Bank of Japan(excluding (1))

1

2

1

2

1

2

2

9

(3) Other financial institutions subject
to the reporting to a central bank(overseas) (excluding (1) and (2))

4

5

4

3

13

15

29

22

2. Total of firms that are not categorized
into any of the above but are used forcover transactions (total of (4) and (5))

35

32

30

35

68

68

63

78

(4) Domestic

11

12

10

13

24

31

27

30

(5) Overseas Total

24

20

20

22

44

37

36

48

U.S.
U.K.
Singapore
Australia
Others [Note 2]

3
9
4
5
3

2
9
4
3
2

3
9
4
1
3

7
7
4
1
3

4
16
16
5
3

3
14
15
3
2

5
13
14
1
3

21
8
14
1
4

Attribute of Firms
Used for Cover Transactions

1. Total from (1) to (3)Grand Total
57
58
56
55
196
209
203
219
Note 1: It is a total aggregated figure after categorizing firms for cover transactions used by OTC retail FX margin trading
by attribute.
Note 2: Malaysia, New Zealand, Ireland, Belize, Cyprus, and UAE.

7

When we determine the attribute, financial institutions that participate in (report to) the “Survey on Foreign Exchange
Transaction Volume in Tokyo Foreign Exchange Market” are categorized into “Financial institutions subject to thereporting to the Tokyo Foreign Exchange Market Committee”; financial institutions that cooperate with the “Central
Bank Survey on Foreign Exchange and Derivatives (FX and Derivatives Survey)” conducted once in three years by the
Bank of Japan (excluding those categorized into the financial institutions subject to the reporting to the Tokyo Foreign
Exchange Market Committee) are categorized as “Financial institutions subject to the reporting to the Bank of Japan”,;
and financial institutions that cooperate with the “FX and Derivatives Survey” conducted by a central bank other than inJapan are categorized into “Other financial institutions subject to the reporting to a central bank (overseas).”

12

(2)

Trading Volume of Cover Transactions by Attribute of Firms Used for
Cover Transactions

As in Table 4, Table 5 shows the trading volume of cover transactions executed between
Members that handle OTC retail FX margin trading and firms used for cover transactions
after categorizing firms used for cover transactions by attribute. When we look at the data by
attribute, firms subject to the reporting to the Tokyo Foreign Exchange Market Committee
accounted for 57.4% of the entire cover transactions.
Table 6 shows the aggregated results by categorizing data in (1), (2), and (4) of the attributesof firms used for cover transactions as shown in Table 5 as domestic cover transactions, anddata in (3) and (5) as overseas cover transactions.
Table 5: Trading Volume of Cover Transactions by Attribute of Firms Used for
Cover Transactions(Unit: 100 million yen, %)2015
Trading
Volume of
CoverTransactions

1. Financial Institutions(financial institutions included in
categories (1) to (3))

2014
Percent
age of
Total

Trading
Volume of
CoverTransactions

1,066,640

58.6%(1) Financial institutions subject
to the reporting to the Tokyo
Foreign Exchange Market
Committee

1,043,167(2) Financial institutions subject
to the reporting to the Bank ofJapan (excluding (1))(3) Financial institutions subject
to the reporting to a central
bank (overseas) (excluding (1)and (2))

2013
Percent
age of
Total

Trading
Volume of
CoverTransactions

562,145

57.0%

57.4%

546,09800%23,472

2. Other Firms Used for CoverTransactions (Other than 1.)

2012
Percenta
ge of
Total

Trading
Volume of
CoverTransactions

Percenta
ge of
Total

872,99443.1%

334,156

47.7%

55.4%

537,75326.5%

312,265

44.6%

0

0%

0

0%

0

0%

1.3%

16,047

1.6%

335,241

16.5%

21890

3.1%

752,20241.4%

423,92343.0%

1,152,765

56.9%

366,13152.3%(4) Domestic Operators

636,72935.0%

347,36235.2%

929,45145.9%

234,01133.4%(5) Overseas Operators Total

115,473

6.4%

76,5607.8%

223,31411.0%

132,120

18.9%

U.S.

38,953

2.1%

9,942

1.0%

18,8080.9%

65,953

9.4%

U.K.

36,8622.0%

32,667

3.3%

60,0953.0%

31,861

4.5%

Singapore

18,156

1.0%

29,7753.0%

136,950

6.8%

29,6044.2%

Australia

20,976

1.2%

3,089

0.3%

5,972

0.3%

3,781

0.5%

525

0.0%

1,084

0.1%

1,486

0.1%

918

0.1%

1,818,843

100.00%986,069100.0%

2,025,760

100.0%

700,288

100.0%

Attribute of Firms Used for CoverTransactions

Others [Note]
Grand Total

Note: Malaysia, New Zealand, Ireland, Belize, Cyprus, and UAE.

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Table 6: Change of Trading Volume of Cover Transactions (Domestic and Overseas)(Unit: 100 million yen, %)Surveymonth/year

Trading Volume of
Cover Transactions(Total)April 2015

(3)

1,818,843

Domestic Cover Transactions

Overseas Cover Transactions

Trading Volume

Percentage of
Total

Trading Volume

Percentage of
Total

1,679,896

92.4%

138,946

7.6%

April 2014

986,069

893,460

90.6%

92,607

9.4%

April 2013

2,025,760

1,467,204

72.4%

354,049

17.5%

April 2012

700,288546,276

78.0%

87,843

12.5%

Trading Volume of Cover Transactions Based on the Trading Volume of
OTC Retail FX Margin Trading

In order to show the trading volume of cover transactions in connection with the trading
volume of OTC retail FX margin trading (with customers), we firstly rank Members that
handle OTC retail FX margin trading by their trading volume of OTC retail FX margin
trading (with customers) in each survey year and month, and then categorize them into six
groups (e.g. from first to third place). Tables 7 to 10 show data of OTC retail FX margin
trading categorized by the above six groups.
Table 7: Trading Volume of OTC Retail FX Margin Trading (with Customers)(by ranking group based on the trading volume with customers)(Unit: 100 million yen)
Survey month/
1st to 3rd
4th to 10th
year
place
place
April 2015
2,476,761
1,367,613
April 2014 [Note]
1,294,840
675,578
April 2013
2,093,296
1,523,692
April 2012
559,208
438,497
Note: The same as Note 1 in Table 2.

11th to 20thplace
497,839
306,871
586,132
176,432

21st to 30thplace
134,886
70,005
163,396
71,18531st to 40thplace
46,89627,08449,501
28,15041th placeand beyond
6,415
8,145
5,173
5,500

Total
4,530,411
2,382,526
4,416,019
1,278,975

Table 8: Trading Volume of Cover Transactions by Members Handling OTC Retail FX
Margin Trading by Ranking Group Based on the Trading Volume of OTC Retail FX
Margin Trading with Customers(Unit: 100 million yen)
Survey month/
year
April 2015
April 2014
April 2013
April 2012

1st to 3rd
place
405,016
264,476
467,500
64,558

4th to 10thplace
902,433
354,287
863,764
390,440

11th to 20thplace
337,143
275,918
519,334
144,234

14

21st to 30th
place
128,655
58,878122,196
63,20431st to 40thplace
39,271
24,41947,99533,15041th placeand beyond
6,323
8,089
4,969
4,699

Total
1,818,843
986,069
2,025,760
700,288

Table 9: Ratio of Trading Volume of Cover Transaction by Ranking Group Based on the
Trading Volume of OTC Retail FX Margin Trading to the Total Trading Volume of
Cover Transactions(Unit: %)Survey month/
year
April 2015
April 2014
April 2013
April 2012

1st to 3rd
place
22.3%
26.8%
23.1%
9.2%

4th to 10th
place
49.6%
35.9%
42.6%
55.8%

11th to 20th
place
18.5%
28.0%
25.6%
20.6%

21st to 30th
place
7.1%
6.0%
6.0%
9.0%

31st to 40th
place
2.2%
2.5%
2.4%
4.7%

41th placeand beyond
0.3%
0.8%
0.2%
0.7%

Table 10: Ratio of Trading Volume of Cover Transactions (Table 8) to the Trading
Volume of OTC Retail FX Margin Trading (Table 7)(by ranking group based on the trading volume of OTC retail FX margin tradingwith customers)(Unit: % [Note 2])
Survey month/year

1st to 3rdplace

4th to 10thplace

11th to 20thplace

21st to 30thplace

31st to 40thplace

41th placeand beyond

April 2015

16.4%

66.0%

67.7%

95.4%

83.7%

98.6%

April 2014 [Note]

20.4%

52.4%

89.9%

84.1%

90.2%

99.3%

April 2013

22.3%

56.7%

88.6%

74.8%

97.0%

96.1%

April 2012

11.5%

89.0%

81.8%

88.8%

117.8%

85.4%

Note 1: The same as Note 1 in Table 2.
Note 2: It is possible that the trading volume of cover transactions may exceed the trading volume of OTC retail FX margin
trading (i.e. over 100%) due to the transfer of open positions following the change of the firm used for covertransactions or transaction errors.

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Conclusion (General Comments and Considerations)
The following is the conclusion (general comments and considerations) of the survey:
When we look at the business model for OTC retail FX margin trading that is executed by Membersthat handle OTC retail FX margin trading, we found a trend that Members whose trading volume of
OTC retail FX margin trading with customers is larger utilize several firms for cover transactions, andconduct marry transactions. On the other hand, Members whose trading volume of OTC retail FX
margin trading is smaller adopt a white label form, use a single firm for cover transactions, and do not
conduct marry transactions. The trend of use/no use of marry transaction mentioned above is also
supported by the ratio of trading volume of cover transactions against the trading volume of OTC
retail FX margin trading with customers; i.e. a Member whose trading volume of OTC retail FX
margin trading is smaller tends to have a higher cover transaction ratio.
For the prime broker (PB) system, we found no significant trend change in this survey. When we lookat prime brokers, Members that handle OTC retail FX margin trading use eight PBs, among which fivebrokers have obtained a banking license (including foreign bank branches) in Japan (including the casewhere one of the group companies obtained the license). We guess that those PBs used by many
Members that handle OTC retail FX margin trading generally have at least an amount of capital thatcan fulfill the requirements under the banking license in Japan (or a group company of such PB has
such capital).
For automatic trading tools and API, although more and more Members that handle OTC retail FX
margin trading have introduced both the tools and API (introduction of API is higher than that ofautomatic trading tools), we found no cause-and-effect relationship between the offering of tools and
API and the trading volume of OTC retail FX margin trading with customers. This means that, in thissurvey, there is no evidence that introduction of automatic trading tools and API has an effect ofincreasing transactions with customers.
When we look at the impact of OTC retail FX margin trading on the foreign exchange market byreference to the data of spot trading indicated by the Tokyo Foreign Exchange Market Committee
survey, we can say that there are actually some impacts, supported by an increase in the number oftransactions by non-financial institution customers (domestic) into which many of Members that
handle OTC retail FX margin trading seem be categorized, and by the observation that the external
circulation of OTC retail FX margin trading exceeds the trading volume of transactions by suchnon-financial institution customers (domestic).
As for firms used for cover transactions by attribute as well as usage and trading volume of covertransactions, we found a trend that the ratio of financial institutions that participate in (report to) the“Survey on Foreign Exchange Transaction Volume in Tokyo Foreign Exchange Market” is higher
compared with firms belonging to other attributes, which has continued as in other years. This
indicates that the business relationship has already been established between Members that handle
OTC retail FX margin trading and financial institutions that participate in (report to) the “Survey on
Foreign Exchange Transaction Volume in Tokyo Foreign Exchange Market” through covertransactions.
(Written by Kurakata at Research Department of FFAJ)- The Financial Futures Association of Japan does not guarantee that data and information provided in this document are accurate, correct,
and/or up-to-date although it has made every effort to ensure such accuracy, correctness, and timeliness.
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