TOKYO -- The Tokyo Financial Exchange, a venue for financial derivatives trading, will start offering foreign exchange margin trading in Taiwan and other markets, hoping to draw in retail investors abroad.
Japan has grown into the world's largest market for forex margin trading, which lets individuals leverage their funds for larger transactions. But market growth has stalled in recent years amid intensifying competition among trading brokers.
The TFX will launch a Taiwanese version of Click365, its platform for forex margin trading, as early as this year, and plans an expansion to Hong Kong as well. It has already received marketing approval from financial authorities in both Taiwan and Hong Kong.
The exchange will grant overseas investors access to currency margin trading by pairing Japanese forex service providers active on Click365 with local brokerages. The Taiwanese platform will feature currencies including the U.S. dollar, the euro, the British pound and the yen.
Tokyo-based Nissan Securities is moving to form a partnership with a Taiwanese financial institution. An official at Fujitomi, another service operator in Tokyo, said "we will enter the market if there's an opportunity."
Forex trading has gained traction among retail investors in Taiwan. Hong Kong, an Asian financial hot spot, is home to several financial companies funded by Chinese capital. The TFX could attract trade orders tied to the mainland.
In Japan, forex margin trading is popular among homemakers and business people, with many engaging in late-night trading. Over-the-counter transactions topped 5 quadrillion yen ($44 trillion) in fiscal 2015, data from the Financial Futures Association of Japan shows.
But the relatively static yen and the rise of cryptocurrency trading have softened OTC trading volume to around 4.1 quadrillion yen in fiscal 2017. Brokers are cutting service fees in an escalating battle over clients.
The TFX posted a 55 million yen operating loss for the year ended in March, down from a 573 million yen profit in fiscal 2016.