Astute Japanese traders looking to capitalize on FX volatility – again!

Once again, Japan’s traders are requesting trading facilities for volatile currencies. First of all the CHF boomed in the aftermath of Black Thursday in January 2015, now the Turkish Lira is in high demand among those in the Land of the Rising Sun.


History is repeating itself, as Japan’s astute FX traders are once again looking to trade volatility in other markets which has been caused by geopolitical events away from home.

During the Swiss National Bank’s removal of the 1.20 peg on the EURCHF in January, traders in Japan continued to look toward making the most of volatile situations whilst traders in other regions scaled back their positions and brokerages in situations which create high levels of volatility often look at risk management measures by increasing margin requirements, decreasing leverage and in some cases, setting orders featuring the currency in question to close only.

A case in point which attracted attention of those paying close attention was the massive increase in trading the CHF in Japan in January 2015, in the aftermath of the Swiss National Bank’s black swan event.

A stratospheric 635% increase in volumes on the CHF/JPY took place in January 2015 on Click 365 exchange-traded FX contracts over the previous January, a clear testimony that the sharp increase in the value of the Swiss franc against a multitude of other currencies attracted the attention of Japan’s traders, and indeed contrary to being exposed to negative client balances due to open CHF trades as was the case with a great many FX brokerages and venues across the world, Japanese industry participants traded the Swiss currency against the domestic tender at a very high rate.

This trading pattern is once again emerging, with Turkish Lira now becoming a currency in demand among Japanese traders.

Whilst many firms in Europe and North America have taken restrictive measures to decrease exposure to potential negative client balances as a result of extreme volatility brought about by the rapid decrease in the value of the Turkish Lira against all major currencies (particularly the benchmark US dollar) over the past few days following the attempted military coup in Turkey, some restricting trading of the currency, and others reducing leverage or increasing margin requirements, Japan’s traders have developed an appetite for the currency.

This morning, Switzerland’s Dukascopy Bank has added the Turkish Lira and Japanese Yen (TRY/JPY) pair in a demo account environment, as well as the South African Rand against the Japanese Yen (ZAR/JPY).

Dukascopy Bank has stated that the reason for this is as a result of numerous requests from Japanese traders, and that the instruments will soon be available on live accounts.

Japan has been an important strategic market for Dukascopy Bank over the past year, as the company acquired Alpari Japan just six months after the insolvency of Alpari UK when it fell foul of negative client balances generated by exposure to Swiss Franc volatility on January 15 2015.

At the time, Dukascopy Bank’s will to expand into Japan was part of a very rare acquisitions path for the company, its previous reach into overseas regions having been conducted via white label partnerships across the world, led for 8 years by at-the-time First Vice President Luis Sanchez before he left the firm to become CEO of BMFN in November 2014.

As calculated and conservative as Japan’s traders are loyal to their home territory, it is very clear that they know how to capitalize on market opportunities and are not afraid of volatility.

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