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, 2016
Research Department, 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 in 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 from Association members various data that are necessary for
examining the management condition of each member company of the Association(hereinafter referred to as the “Monitoring Data” in this report 1) on a regular basis.
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 1:
1.

Survey of Actual Conditions of Over-The-Counter Retail Foreign Exchange
Margin Trading in April 2016

Survey Method

We conducted the survey by distributing questionnaires (please refer to the material separately
attached) to all the members that handled OTC retail FX margin trading as of April 30, 2016(excluding members that only provide intermediary services) and asking them 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 51, 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))

1

2

Survey Month and Year

No. of Members Subject to the Survey

Year-on-Year Change

April 2013

59

-4

April 201461

2April 2015

56

-5April 2016

51

-5

Trading volume of over-the-counter-retail FX margin trading with customers uses a figure aggregated based on the monitoring surveythat is reported by each member to the financial regulatory authority, a copy of which is to be submitted 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.
Unless otherwise specifically explained, 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 the survey,” the meaning of the “members that handle
OTC retail FX margin trading” is the same as that of the “members subject to the 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 Model

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 of Business Model
Category” below (the total number of model numbers indicated in the table below (“modelNo.” on the Exhibit)) as a business model depending on the characteristics of the flow:
Table of Business Model Category
Model No. of EachBusiness Model(model No.)White Label[Note 1]

No. of Firms Used for
Cover Transactions to
Formulate Prices[Note 2]Marry
(During Trading Hours)[Note 3]

1

Timing of Execution with
Customers and CoverTransaction[Note 4]Discretionary

Yes

2
3

After
BeforeSingle4Discretionary

5
6
7

No

After
BeforeNot
Applicable

Discretionary

8

Yes

9

After
BeforeSeveral10

Discretionary

11

No

After

12

Before13

Discretionary
Yes

14
15

BeforeSingle16Discretionary

17
18
19

No

22

After
BeforeApplicable

Discretionary
Yes

20
21

After

After
BeforeSeveralDiscretionary

23

No

24

After
BeforeNote 1:White label means a transaction form where a Member executes a transaction with a customer under its own name using a
pricing/execution system managed by another foreign exchange broker (including FX operator). This includes a case where a
Member uses a system provided by its parent company.

Note 2:This means the number of firms that provide a cover rate used for formulating the price, not the number of firms who actuallyconduct cover transactions. In a normal condition, if a trading price with customers is formulated based on the rate provided by aspecific single firm that is used for cover transaction, it is described as “Single,” while if the rate is selected or synthesized fromthose provided by several firms that are used for cover transactions every time the price for customers is formulated, it isdescribed as “Several.”

Note 3:

During the daytime, if there is a system that controls the price fluctuation risk arising from transactions with customers 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
made for all the transactions executed with customers during the daytime in principle, it is described as “No,” while if cover2transactions are not made for some of the transactions executed with customers during the daytime, and the price fluctuation risk
is offset by open positions created by transactions with other customers that match against the original transactions, it is describedas “Yes.”
Note 4:(2)

In a normal condition, if a cover transaction is made after executing a transaction with a customer, it is described 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 covertransaction can be made either before or after executing a transaction with a customer, it is described as “Discretionary.” Also, if a
Member holds its own position by making a cover transaction before receiving a customer order and can match its own position
against the customer’s order, it is described as “Discretionary.” If a transaction with a customer can be completed at the same time
when a cover transaction is made 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 the outsourcing
contractor. It is not necessary to consider response at the time of emergency.

Distribution of Business Models

Exhibit 2 shows the number of Members subject to the survey (51 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 65, 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.), 24 members(accounting for about 37% of the total responses) adopted at least one of Models No. 7 to 9
(the business model that is not a white label form, uses several firms for cover transactions,and can conduct marry transactions), out of which the number of Members that adopted
Model No. 8 (the business model that is not a white label form, uses several firms for covertransactions, can conduct marry transactions, and conducts a cover transaction after carryingout contract with a customer) was 17 (accounting for approximately 26% of the total
responses).
Exhibit 3 shows the number of Members subject to the survey (51 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))

Exhibit 3: Breakdown of Members by Number of Business Models Adopted(Unit: Company (Member))

The number of Members that adopt
a single model

The number of Members that adopt several(two) models

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

41

8

2

(3)

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 Model
No. 7 and 8 for the First Group, Model No. 6, 8, and 17 for the Second Group, and Model No.
8 and 18 for the Third Group.

3

We ranked the Members subject to the survey by the trading volume of OTC retail FX margin trading in FY ended April 2016, andcategorized the top one-third as the First Group (Rank 1st to 17th), the next one-third as the Second Group (Rank 18th to 34th), and theremaining one-third as the Third Group (Rank 35th to 51st).

4

Exhibit 4: 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 inPart 1, 3-(1)(Unit: Company (Member))

The First Group
Members
The Second Group
Members
The Third Group
Members<Item 2> Use of Prime Broker (PB) System 4 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 trading with customers under the PB system.
Exhibit 6 shows the number of Members by the use of the Prime Broker (PB) system in termsof 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 a cover transaction,and takes up the position of the Members based on the give-up instruction or by a tri-party agreement for the settlement between theMember and the financial institution used for the cover transaction.

5

Exhibit 5: Use of PB system and the Usage AmountNo. of Members
using the PB System

No. of contracts
made throughthe PB system (total)

April 201317

April 2014
April 2015

Survey month andyear[Note 1]

No. of PBs

PB usage amount(Net) [Note 2](million yen)

30

---

---

16

30

7

52,764,799

17

31

8

99,643,704

April 20161531
970,309,960
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, andDecreased)(Unit: Company (Member)

Survey month andyear

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 2014

2

1

3

1

April 2015 [Note 1, Note 2]

0

3

2

2

April 2016 [Note 1]
30
3
1
Note 1:
In addition to the figures indicated above, as of April 2015 and April 2016, one Member that used the PB systemceased the business, respectively.
Note 2:(2)

As one Member did not start using PBs but added the number of PBs in April 2015, we revised the announced
figure for 2015.

Attributes of PBs 5

As shown in Exhibit 7, the number of PBs used by the Members that handle OTC retail FX
margin trading was 10 in 2016. Of these, the attribute of six PBs is the “i. financial
institutions subject to reporting to the Tokyo Foreign Exchange Market Committee.”
Exhibit 7: Use of PBs by Attribute(Unit: Company (PB))

Survey monthand yeari. Financial
institution subject
to reporting to theTokyo Foreign
Exchange Market
Committee

ii. Financial
institution subject
to reporting to the
Bank of Japan(excluding thosecategorized as i)iii. Financial
institution subject toreporting to a central
bank (overseas)(excluding thosecategorized as i or ii)

Domestic PBs
other than i to
iii

Overseas PBs
other than i to
iii

April 2014

6

-

1

-

-

April 2015

4

-

2

-

2

April 2016

6

-

2

-

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, 2015, and 2016, and in the case where the automatic tool was offered, the5Please refer to the footnote in Part 2, 3-(1) for each attribute of PBs.

6

number of Members that offered a tool that was internally developed, externally developed, orboth.
Exhibit 8: Number of Members Offering Automatic Trading Tools and the Attributes ofDevelopers of the Tools(Unit: Company (Member))Internally developed

Externally developed(developed by others)

Both

April 2013

19

1

16

2

April 2014

21

3

16

2

April 2015

23

4

16

3

April 2016

25

7

15

3

Survey month and
year

(2)

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

No. of Members thatoffered automatic
trading tools

Impact of Automatic Trading Tools

Exhibit 9 shows the trading volume of OTC retail FY margin trading with customers executedby all the 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 April 2013, 2014, 2015, and2016.
Exhibit 10 shows the trading volume of OTC retail FX margin trading with customers
executed by the Members that offer automatic trading tools (11 Members) in all the surveys
conducted in April 2013, 2014, 2015, and 2016, and by the Members that did not offer
automatic trading tools (22 Members) in all the surveys conducted in April 2013, 2014, 2015,
and 2016.
Exhibit 9: Trading Volume of OTC Retail FX Margin Trading with Customer(By all the Members subject to the survey, and Members that offered/did not offer automatic trading tools in eachsurvey conducted in April 2013, 2014, 2015, and 2016)(Unit: million yen, %)Trading volume of OTC retail FX margin
trading with customers

Change(2016/
2015)

Change(2016/2015)

Change(2016/
2015)

Members
Membersthat did notthat offeredoffer
automatic
automatic
trading
trading
tools
tools

Change(2016/
2013)

Change(2016/
2013)

Change(2016/
2013)

Members
Membersthat did notthat offeredoffer
automatic
automatic
trading
trading
tools
tools

Members
SurveyMembersthat offered
Month and subject to theautomatic
Year
Surveytrading tools

Membersthat did notoffer
automatic
trading tools

Members
subject to
the Survey

April 2013

442,119,319

74,879,925

367,239,394

-

-

-

-

-

-

April 2014

238,252,636

35,660,526

202,592,110

53.9%

47.6%

55.2%

53.9%

47.6%

55.2%

April 2015

453,041,189

36,697,371

416,343,818

190.2%

102.9%

205.5%

102.5%

49.0%

113.4%

April 2016

407,399,182

98,816,141

308,583,041

89.9%

269.3%

74.1%

92.1%

132.0%

84.0%

7

Members
subject to
the Survey

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 the surveys conducted in April 2013, 2014,2015, and 2016)(Unit: million yen, %)Trading Volume of OTC Retail FX Margin Trading with Customers
Survey Monthand Year

Members that have offeredautomatic trading tools in all theyears from April 2013 to 2016
(total of 11 Members)...(A)Members that have not offeredautomatic trading tools in all theyears from April 2013 to 2016
(total of 22 Members)...(B)Change in(A) 2016/2015)

Change in(B) 2016/
2015)

Change in(A) 2016/
2013)

Change in(B) 2016/
2013)

April 2013

22,640,632

302,899,609

-

-

-

-

April 2014

8,220,599

174,135,239

36.31%

57.49%

36.31%

57.49%

April 2015

12,753,463

332,076,229

155.14%190.70%56.33%

109.63%

April 2016

12,145,191

305,503,567

95.23%

92.00%

53.64%

100.86%<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, 2015, and2016.
Exhibit 11: Number of Members that Offered API(Unit: Company (Member))

Survey month and year

No. of Members that offeredAPI

No. of Members that stopped
offering API

No. of Members that started
offering API

April 2013

5

−

−

April 2014

7

0

2

April 2015

15

0

8

April 2016

12

3

1

(2)

Impact of Application Programming Interface

Exhibit 12 shows the trading volume of OTC retail FX margin trading with customers
executed by all the 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, 2015, and 2016.
Exhibit 13 shows the trading volume of OTC retail FX margin trading with customers
executed by the Members that have offered API in all the surveys conducted in April 2013,2014, 2015, and 2016 (four Members) and by the Members that have not offered API in all
the surveys conducted in April 2013, 2014, 2015, and 2016 (34 Members).

6

In this document, API (Application Programming Interface) means specifications of the interface that is used to exchange data withexternal software (mainly a system for system trading).

8

Exhibit 12: Trading Volume of OTC Retail FX Margin Trading with Customers(By all the Members subject to the survey, and Members that offered/did not offer API in each survey conducted in
April 2013, 2014, 2015, and 2016)(Unit: million yen, %)Trading Volume of OTC Retail FX Margin Tradingwith Customers

Change(2016/
2015)

Change(2016/
2015)

Change(2016/
2015)

Change(2016/
2013)

Change(2016/
2013)

Change(2016/
2013)

Survey Monthand Year

All theMembers
subject to thesurveyMembers thatoffered API

Members that
did not offerAPI

All theMembers
subject tothe survey

MembersthatofferedAPI ineach
surveymonth

Membersthat did notoffer APIin eachsurveymonth

All theMembers
subject tothe survey

MembersthatofferedAPI ineach
surveymonth

Membersthat did notoffer APIin eachsurveymonth

April 2013

442,119,319

50,594,975

391,524,344

-

-

-

-

-

-

April 2014

238,252,636

24,711,589

213,541,047

53.89%

48.84%

54.54%

53.89%

48.84%

54.54%

April 2015

453,041,189

81,606,353

371,434,836

190.15%330.24%173.94%102.47%161.29%94.87%

April 2016

407,399,182

91,996,657

315,402,525

89.93%

112.73%84.91%

92.15%

181.83%80.56%

Exhibit 13: Trading Volume of OTC Retail FX Margin Trading With Customers(By Members that offered/ did not offer API in all the surveys conducted in April 2013, 2014, 2015, and 2016)(Unit: million yen, %)Trading Volume of OTC
Retail FX Margin Trading with Customers
SurveyMonth andYear

Members that haveoffered API for all theyears from April 2013 to2016 (fourMembers)...(A)Members that have notoffered API for all theyears from April 2013 to2016 (34 Members)...(B)46,457,231
20,488,056
41,254,377
32,039,598

335,198,683
184,142,666
338,819,569
310,107,387

April 2013
April 2014
April 2015
April 2016

Change in(A) 2016/2015)

44.10%
201.36%77.66%

Change in(B) 2016/
2015)

54.94%
184.00%91.53%

Change in(A) 2016/
2013)

44.10%
88.80%
68.97%

Change in(B) 2016/2013)

54.94%
101.08%92.51%<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, 2015, and 2016.
Exhibit 14: Number of Members Handling OTC Retail FX Margin Trading that Also
Handled OTC Currency Option Trading(Unit: Company (Member))Number of Members that handled OTC Currency Options
Survey Month and Year

Note:

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

April 2013

8

6

April 201410

7

April 2015108

April 201610

7

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 Attributes 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 ofBusiness(Unit: Company (Member))
Attribute of Member(Business Type)

Registered Financial
Institution

Securities Company[Note 1]

Financial Futures
Company, etc.[Note 2]

Total

April 2012

3

34

27

64

April 2013

3

30

26

59

April 2014

5

31

25

61

April 2015

5

30

21

56

April 2016

5

30

16

51

SurveyMonth and Year

Note 1:
Note 2:

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 thana 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 circulation) and the flow
between a Member that handles OTC retail FX margin trading and a firm used for covertransactions (external circulation). Marry transactions that are offset within a Member that
handles OTC retail FX margin trading without carrying out a cover transaction with anoutside firm are categorized as internal circulation.
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 circulation in retail FX margin trading(external circulation volume) increases, it may impact the FX market through firms used forcover 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
Survey monthand year(1) Trading
Volume with
Customers(2) External
Circulation Volume(Total amount ofcover transactions)[Note 1](2)/(1) (%)

Internal
Circulation
Volume = (1)– (2)(3) Click 365
Trading
Volume[Notes 2, 3](4) Total External
Circulation
Volume of Retail
FX Margin
Trading= (2) + (3)April 2012

1,278,975

700,28854.8%

578,687

49,157

749,445

April 2013

4,421,193

2,025,760

45.8%

2,395,432

74,8062,100,566

April 2014

2,382,526

986,06941.4%

1,396,457

23,3581,009,427

April 2015

4,530,411

1,818,843

40.1%

2,711,568

32,955

1,851,798

April 2016
4,073,991
1,681,387
41.3%
2,392,604
31,728
1,713,115
Note 1: Based on the Monitoring Data. Hedge transactions and other transactions are included for members for which hedge transactions
and other proprietary trading are difficult to distinguish from cover transactions.
Note 2: This figure represents the monthly trading volume disclosed by the Tokyo Financial Exchange multiplied by the month-end
settlement price.
Note 3: There were six MM (marker makers) as of June 30, 2016 (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 monthand year

Survey Results Announced by the Tokyo Foreign
Exchange Market Committee [Note 1](1) Spot Trading
Volume(2) Of which, Transactions with
Non-Financial Institution
Customers (domestic) [Note 2](3) Total External
Circulation Volume of
Retail FX Margin
Trading (The same as
those in (4) in Table 2)(3)/(1)(%)(3)/(2)(%)

April 2012

1,614,486

319,237

749,44546.4%

234.76%

April 2013

3,077,047

793,050

2,100,566

68.3%

264.87%

April 2014

2,347,993

764,693

1,009,42743.0%

132.00%April 2015

3,263,748

1,272,232

1,851,798

56.7%

145.56%

April 2016
2,638,980
588,956
1,713,115
64.9%
290.87%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 ofJapan (80.74 yen on April 2012, 97.83 yen on April 2013, 102.51 on April 2014, 118.91 yen on April 2015, and 108.401 yen on
April 2016).
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 isexplained that transactions with retail FX margin trading operators should be recorded as transactions with non-financial
institution customers. However, it should be noted that such transactions can be classified into a category other than those with
non-financial institution customers if the FX margin trading operator is not a specialized FX margin trading operator.

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

The number of firms for cover transactions used by the Members handling OTC retail FX
margin trading by attribute shown in Table 4 and the total number of Members handling OTC
retail FX margin trading that use firms for cover transactions (by attribute) shown in Table 4-2
indicate the attribute of firms used for cover transactions with which Members that handle
OTC retail FX margin trading make a cover transaction.
The number of Members handling OTC retail FX margin trading is approximately 3.5 per
firm used for cover transactions. When we look at the attributes of firms used for covertransactions, the number of Members handling OTC retail FX margin trading isapproximately 7.0 on average per financial institution subject to reporting to the Tokyo
Foreign Exchange Market Committee, which is higher than the general average.
Table 4: Number of Firms for Cover Transactions Used by Members Handling OTCRetail FX Margin Trading by Attribute(Unit: Company (Member))

1. Total from (1) to (3)(1) Financial institutions subject
to reporting to the Tokyo Foreign
Exchange Market Committee(2) Financial institutions subject
to reporting to the Bank of Japan(excluding (1))(3) Other financial institutions
subject to reporting to a central
bank (overseas) (excluding (1)and (2))

2. Total of firms that are notcategorized into any of the above
but are used for covertransactions (total of (4) and (5))(4) Domestic Operators(5) Overseas Operators Total

U.S.

U.K.

Singapore

Australia

Others [Note]

Grand Total

Attribute of Firms
Used for CoverTransactions

April 2012

20

15

2

3

35

13

22

7

7

4

1

3

55

April 2013

26

21

1

4

30

10

20

3

9

4

1

3

56

April 2014

25

19

1

5

32

12

20

2

9

4

3

2

57

April 2015

22

17

1

4

35

11

24

3

9

4

5

3

57

April 2016
22
17
1
4
Note: Malaysia, New Zealand, Ireland, Belize, Cyprus, and UAE.

37

13

24

4

8

4

4

4

59

Survey month andyear

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 reporting 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 reporting to the Tokyo Foreign Exchange Market Committee) are categorized as “Financial institutions subject toreporting to the Bank of Japan”; and financial institutions that cooperate with the “FX and Derivatives Survey” conducted by a central
bank other than in Japan are categorized into “Other financial institutions subject to reporting to a central bank (overseas).”12

Table 4-2:

Total Number of Members Handling OTC Retail FX Margin Trading thatUse Firms for Cover Transactions (by Attribute) [Note 1](Unit: Company (Member))

1. Total from (1) to (3)(1) Financial institutions subject
to reporting to the Tokyo Foreign
Exchange Market Committee(2) Financial institutions subject
to reporting to the Bank of Japan(excluding (1))(4) Domestic Operators(5) Overseas Operators Total

U.S.

U.K.

Singapore

Australia

Others [Note 2]Grand Total(3) Other financial institutions
subject to reporting to a central
bank (overseas) (excluding (1)and (2))
2. Total of firms that are notcategorized into any of the above
but are used for cover transactions(total of (4) and (5))

Attribute of Firms
Used for CoverTransactions

April 2012

141

110

9

22

78

30

48

21

8

14

1

4

219

April 2013

140

109

2

29

63

27

36

5

13

14

1

3

203

April 2014

141

124

2

15

68

31

37

3

14

15

3

2

209

April 2015

128

114

1

13

68

24

44

4

16

16

5

3

196

April 2016

136

119

1

16

68

24

44

9

11

15

4

5

204

Surveymonth and year

Note 1: This is a total aggregated figure after categorizing firms for cover transactions used by Members handling OTC retail FX margin
trading by attribute.
Note 2: Malaysia, New Zealand, Ireland, Belize, Cyprus, and UAE.

(2)

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

As in Table 4 and Table 4-2, Table 5 and Table 5-2 show the trading volume of covertransactions 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, financial institutions subject to reporting to the Tokyo
Foreign Exchange Market Committee accounted for 47.1% of all cover transactions.
Table 6 shows the aggregated result by categorizing data in (1), (2), and (4) of the attributes offirms used for cover transactions as shown in Table 5 as domestic cover transactions, and datain (3) and (5) as overseas cover transactions.

13

Table 5: Trading Volume of Cover Transactions by Attribute of Firms Used for CoverTransactions(Unit: 100 million yen)

2. Other Firms Used for Cover Transactions(Other than 1.)(4) Domestic Operators(5) Overseas Operators Total

U.S.

U.K.

Singapore

Australia

312,265

021,890366,131234,011132,120

65,95331,861

29,604

3,781

918

700,288872,994537,7530335,241

1,152,765

929,451

223,31418,80860,095

136,950

5,972

1,486

2,025,760

Grand Total(2) Financial institutions subject to reportingto the Bank of Japan (excluding (1))

334,156

April 2013

Others [Note](1) Financial institutions subject to reportingto the Tokyo Foreign Exchange Market
Committee

April 2012

Survey monthand year(3) Financial institutions subject to reporting
to a central bank (overseas) (excluding (1)and (2))

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

Attribute ofFirms Used
for CoverTransaction

April 2014

562,145546,098

0

16,047423,923

347,362

76,5609,942

32,667

29,775

3,089

1,084

986,069

April 2015

1,066,640

1,043,167

023,472752,202636,729

115,473

38,95336,862

18,156

20,976525

1,818,843

April 2016

841,822792,164

049,658

839,564

750,293

89,27036,825

18,381

19,973

10,196

3,893

1,681,387

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

Table 5-2: Trading Volume of Cover Transactions by Attribute of Firms Used for CoverTransactions (As a Percentage of Grand Total in Each Month by Attribute)(Unit: %)(1) Financial institutions subject toreporting to the Tokyo Foreign
Exchange Market Committee(2) Financial institutions subject toreporting to the Bank of Japan(excluding (1))

2. Other Firms Used for CoverTransactions (Other than 1.)(4) Domestic Operators(5) Overseas Operators Total

U.S.

U.K.

Singapore

Australia

Others [Note]

Grand Total

April 2012

47.7%

44.6%

0.0%

3.1%

52.3%

33.4%

18.9%

9.4%

4.5%

4.2%

0.5%

0.1%

100.0%

April 2013

43.1%

26.5%

0.0%

16.5%

56.9%

45.9%

11.0%

0.9%

3.0%

6.8%

0.3%

0.1%

100.0%

April 2014

57.0%

55.4%

0.0%

1.6%

43.0%

35.2%

7.8%

1.0%

3.3%

3.0%

0.3%

0.1%

100.0%

April 2015

58.6%

57.4%

0.0%

1.3%

41.4%

35.0%

6.3%

2.1%

2.0%

1.0%

1.2%

0.0%

100.0%

April 2016

50.1%

47.1%

0.0%

3.0%

49.9%

44.6%

5.3%

2.2%

1.1%

1.2%

0.6%

0.2%

100.0%

Survey monthand year(3) Financial institutions subject toreporting to a central bank(overseas) (excluding (1) and (2))

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

Attribute of Firms
Used for CoverTransaction

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

14

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

Overseas Cover Transactions

Surveymonth and year

Trading Volume of
Cover Transactions(Total)Trading Volume

Percentage of
Total

Trading Volume

Percentage of
Total

April 2012 [Note]

700,288546,27678.0%

154,01022.0%

April 2013 [Note]

2,025,760

1,467,204

72.4%

558,555

27.6%

April 2014

986,069

893,461

90.6%

92,607

9.4%

April 2015

1,818,843

1,679,896

92.4%

138,946

7.6%

April 2016

1,681,387

1,542,458

91.7%

138,929

8.3%

Note:

We corrected some errors found in the previously published data that exist in percentage of total (%) for overseas cover transactions
for April 2012 and 2013 data.

(3)

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 the first to the third). 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 monthand year

1st to 3rdplace

4th to 10thplace

11th to 20thplace

21st to 30thplace

31st to 40thplace

41st placeand more

Total

April 2012

559,208

438,497

176,432

71,18528,1505,500

1,278,975

April 2013
[Note]

2,093,296

1,523,692

586,132

163,396

49,501

5,173

4,421,193

April 2014

1,294,840

675,578

306,871

70,00527,0848,145

2,382,526

April 2015

2,476,761

1,367,613

497,839

134,886

46,896

6,415

4,530,411

April 2016

2,064,879

1,426,025

457,247

89,27134,0172,550

4,073,991

Note:

We corrected some errors found in the previously published data that exist in total for April 2013 data.

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 monthand year

1st to 3rdplace

4th to 10thplace

11th to 20thplace

21st to 30thplace

31st to 40thplace

41st placeand more

Total

April 2012

64,558

390,440

144,234

63,20433,1504,699

700,288

April 2013

467,500

863,764

519,334

122,196

47,995

4,969

2,025,760

April 2014

264,476354,287

275,918

58,87824,4198,089

986,069

April 2015

405,016

902,433

337,143

128,655

39,271

6,323

1,818,843

April 2016

331,651

929,141

301,644

90,70325,9472,299

1,681,387

15

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 andyear

1st to 3rdplace

4th to 10thplace

11th to 20thplace

21st to 30thplace

31st to 40thplace

41st placeand more

April 2012

9.2%

55.8%

20.6%

9.0%

4.7%

0.7%

April 2013

23.1%

42.6%

25.6%

6.0%

2.4%

0.2%

April 2014

26.8%

35.9%

28.0%

6.0%

2.5%

0.8%

April 2015

22.3%

49.6%

18.5%

7.1%

2.2%

0.3%

April 2016

19.7%

55.3%

17.9%

5.4%

1.5%

0.1%

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 trading withcustomers)(Unit: % [Note])
Survey month andyear

1st to 3rdplace

4th to 10thplace

11th to 20thplace

21st to 30thplace

31st to 40thplace

41st placeand more

April 2012

11.5%

89.0%

81.8%

88.8%

117.8%

85.4%

April 2013

22.3%

56.7%

88.6%

74.8%

97.0%

96.1%

April 2014

20.4%

52.4%

89.9%

84.1%

90.2%

99.3%

April 2015

16.4%

66.0%

67.7%

95.4%

83.7%

98.6%

April 2016

16.1%

65.2%

66.0%

101.6%

76.3%

90.1%

Note:

It is possible that the trading volume of cover transactions may exceed the trading volume of OTC retail FX margin trading (i.e. over100%) due to the transfer of open positions following the change of the firm used for cover transactions or transaction errors.

16Conclusion (General Comments and Considerations)
The following is a 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
Members that handle OTC retail FX margin trading, as indicated in last year’s report, wefound a trend that Members whose trading volume of OTC retail FX margin trading withcustomers is larger use several firms for cover transactions, and conduct marry transactions.
On the other hand, Members whose trading volume of OTC retail FX margin trading issmaller adopt a white label form, use a single firm for cover transactions, and do not conduct
marry transactions. The trend of use/non-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., Member whose trading volume of OTC
retail FX margin trading is smaller tend to have a higher cover transaction ratio. Additionally,
when we look at the total number of business models adopted, there is a trend that Membersthat adopt a white label, use a single firm for cover transactions, and do not conduct marrytransactions decreased slightly.
Recently, more and more OTC retail FX margin trading operators have provided automatic
trading tools and the trading volume of OTC retail FX margin trading with customers
executed by the Members that have provided automatic trading tools accounts forapproximately 24% (8% in 2015) of the total trading volume of OTC retail FX margin trading
operators with customers that were subject to the survey. However, when we look at Membersthat have continuously provided automatic trading tools since FY 2013, the ratio of theirtrading volume with customers to the total trading volume of OTC retail FX margin tradingwith customers is approximately 3% (3% in FY 2015), which suggests that, as indicated inlast year’s report, provision of automatic trading tools has scarcely contributed to the increaseof trading volume of OTC retail FX margin trading with customers executed by the Members.
When we look at API, although the number of Members that handle OTC retail FX margin
trading and have provided API has slightly decreased, the trading volume of OTC retail FX
margin trading with customers executed by the Members that have provided API wasapproximately 23% (18% in FY 2015) of the total trading volume of OTC retail FX margin
trading operators with customers that were subject to the survey. The trading volume of OTC
retail FX margin trading with customers executed by Members that have continuously
provided API since FY 2013 accounted for approximately 8% (9% in 2015), which suggests
that, as indicated in last year’s report, provision of API has scarcely contributed to theincrease of trading volume of OTC retail FX margin trading with customers executed by theMembers.
When we look at the impact of OTC retail FX margin trading on the foreign exchange market
compared with 263 trillion yen of spot trading indicated by the Tokyo Foreign Exchange
Market Committee survey, we can generally say that although there are actually some impacts
supported by the decrease in transactions by non-financial institution customers (domestic)
into which transactions by Members that handle OTC retail FX margin trading seem to be
categorized, the external circulation of OTC retail FX margin trading that reachedapproximately 168 trillion yen gave a certain impact on the trading volume of transactions bysuch non-financial institution customers (domestic), as shown in last year’s report.
As for firms used for cover transactions by attribute as well as usage and trading volume ofcover transactions, this year’s survey also confirmed a trend that the ratio of financial

17

institutions that participate in (report to) the “Survey on Foreign Exchange Transaction
Volume in Tokyo Foreign Exchange Market” is higher compared with firms belonging toother attributes. This indicates that the business relationship has continuously been establishedbetween Members that handle OTC retail FX margin trading and financial institutions thatparticipate in (report to) the “Survey on Foreign Exchange Transaction Volume in Tokyo
Foreign Exchange Market” through cover transactions.
(Written by Kurakata at Research Department of FFAJ) The Financial Futures Association of Japan does not guarantee that data and information provide in this document are
accurate, correct, and/or up-to-date although it has made every effort to ensure such accuracy, correctness, and timeliness.
 All of the information contained in this document (text, charts, tables, etc.) is subject to copyright, and is protected by theapplicable copyright laws and international treaties. The Financial Futures Association of Japan does not assume any
liability for and has no obligation to compensate for any loss or damage caused by or arising from data and information
contained herein, including any errors, omissions, or reliance on this information.
Copyright © The Financial Futures Association of Japan All Rights Reserved.

18