Gaitame.com Research Institute Ltd., that is a research organization of the large Over-The-Counter (OTC) Forex (FX) trader, Gaitame.com Co., Ltd., announced the result of trading research based on survey to FX investment customers. Its content is various data such as the number of traders and accounts, and the margin money amounts of customers in the FX industry in Japan every month, and is written in“Gaitame White Paper”(price: 2,200 yen including tax) published by the company every year. On the book, Mr. Heizo Takenaka (special research chief of the report, former minister for Internal Affairs and Communications, and honorary professor of Keio University) comments“It is a comprehensive analysis report”.

This time, the issue 14 of the report was published. The following is the present situation of the domestic FX markets based on the issue.

The Number of OTC and Exchange FX Customer Accounts of 12 Million 380 Thousand, Highest Number Updated for 5 Consecutive Years.

The number of OTC FX customers as of the end of December 2023 was 11,247,192 (6.7 percent up year on year), still on rise. The number of active accounts during 3Q (October－December) in FY 2023　was 841,457 (4.3 percent down year on year), decreasing by approximately 35,000. The ratio of active accounts to total accounts was 6.6 percent.

Meanwhile, the number of customer accounts of Exchange FX“Click 365” listed on Tokyo Financial Exchange (TFX) was 1,140,711 (4.4 percent up), increasing as well as OTC FX, however, the number of active accounts of Click 365 during 3Q was 16,544 (10.6 percent down) and its active account ratio was 1.5 percent.

As a result, while the number of OTC and Exchange FX customer accounts　as of the end of December 2023 was 12,387,903 (6.5 percent up), highest number updated for 5 consecutive years, the number of active accounts was 822,070 (4.4 percent down). Active accounts ratio to OTC and Exchange FX customer accounts during 3Q was 6.6 percent, decreasing by 0.8 point from 7.4 percent year on year.

The number of OTC and Exchange FX customer accounts exceeded 10 million for the first time as of December 2020, keeping the increasing trend, and updated the highest record as of the end of December 2022. Meanwhile, the highest number of active accounts of OTC and Exchange FX customer accounts was 897,813 during January－March 2020, that was a period when the yen exchange rate was fluctuating wildly due to the coronavirus pandemic.

As for FX traders, the number of OTC FX traders which have traded actually during 3Q (October－December) in FY 2023 was 47, decreasing by 2 year on year, and the number has remained around 50 since 2015, therefore, almost no new entries or exits. However, compared to the highest number of 118 traders in FY 2008, it has now fallen to less than half.

Meanwhile, the number of Exchange FX traders which have traded actually during 3Q was 19, no change year on year.

2 trillion 411.8 billion yen of margin balance and 10 quadrillion yen of trading value

As for margin balance deposited with FX traders as of the end of 2023, OTC FX trading was 1 trillion 928 billion 800 million yen (6.1 percent up year on year), increasing by 111 billion 400 million yen in terms of monetary amount, Exchange FX trading “Click 365”was 483 billion yen (4.3 percent up), increasing by 19 billion 800 million yen, and total was 2 trillion 411 billion 800 million yen (5.8 percent up).

After margin balance of FX trading was a record high for 7 consecutive years as of the end of March since FY 2010, once it started to decrease and then increased significantly.

Total trading value of OTC FX trading in 2023 (January－December) was 12 quadrillion 44 trillion 806 billion 500 million yen (1.1 percent down year on year), keeping 10 quadrillion 2 years in a row from 2022 when it exceeded 10 quadrillion for the first time.

Meanwhile, total trading value of Exchange FX trading in 2023 was 34 trillion 803 billion 200 million yen (17.7 percent down), decreasing by 7 trillion 468 billion 200 million yen. As a result, total trading value of both OTC and Exchange FX trading was 12 quadrillion 79 trillion 609 billion 900 million yen (1.1 percent down).

As for trading value for each currency pair of OTC FX trading, USD/JPY was 10 quadrillion 152 trillion 15 billion 400 million yen, accounting for 84.3 percent of the total share. The highest trading value of USD/JPY so far was 9,160 trillion 302 billion 600 million in 2022, and this time, it exceeded the past record by 991 trillion yen, reaching 10 quadrillion yen for the first time.

The second highest trading value was GBP/JPY.　Its trading value was 531 trillion 801 billion 400 million yen, decreasing by 39.7 percent, approximately 350 trillion yen year on year, and its share was 4.4 percent, decreasing by 3.8 point.

The following was as below: AUD/JPY was 390 trillion 159 billion 500 million yen (39.1 percent down) and its share was 3.2 percent, EUR/JPY was 378 trillion 330 billion 100 million yen (32.1 percent down, share 3.1 percent) and EUR/USD was 226 trillion 189 billion yen (50.1 percent down, share 1.9 percent).

In FY 2023, as FX trading was concentrated in USD/JPY, the other currency pairs increased significantly in trading value respectively, however their shares have declined respectively. About this background, Gaitame.com Research Institute analyzed that individual investors were easy to handle USD/JPY because there were two monetary policies, FRB rate hike and maintaining negative interest rates by Bank of Japan that were easy to understand comparatively.

According to the monthly survey conducted by Gaitame.com Research Institute to FX customer investors through Gaitame.com from January to December 2023 (Number of surveys was approximately 570 thousand accounts, and number of responses was unpublished), regarding the generations who have traded during the period, their 40s accounted for the most at 32.0 percent. The following was their 50s at 28.4 percent, 30s at 15.5 percent and 60s at 12.2 percent. Overall, people in their 40s were the main players. After this also, mainstay of financial services is likely to be aimed mainly at people in their 40s and 50s.

As for the percentage of new account openings by generation, people in their 30s accounted for the most at 27.1 percent. The following was 40s at 25.2 percent, 20s at 19.6 percent, 50s at 17.2 percent and 60s at 6.6 percent.

The situation is seemed that people who have traded “Yen carry trading” that became popular about 20 years ago opened an account for FX trading in anticipation of the current depreciation of the yen.

Also, as for young people, in 2022, financial education became mandatory in the course of high school although it doesn’t include investment, stock and asset management education. Furthermore, as the age of adulthood was lowered to 18 years old and an increasing number of young people are now able to open accounts without their parents’ consent, the ratio of account opener by a teenager slightly increased.

According to the survey results, the average image of FX individual investors is as follows: Ⅰ. The main players are in their 40s.Ⅱ. The amount of one transaction is 30 to 40 lots (1 lot is 1,000 currency). Ⅲ. Leverage is around 4x. Ⅳ. They are reluctant to incur losses when appropriate, and it looks like they lose big in the end.

At the end, the survey result concludes that they need to reconsider quantitative analysis of risk and return, their money management based on the analysis, and their investment strategy.

（Futures Tribune・issued May 21, 2024 ・no.3288）