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Japan looking to tamp down leverage in forex trades

Regulator seeks to reduce risks of financial crisis

Lowering the leverage cap on foreign exchange margin trading would help mitigate the fallout from sudden market volatility.   © Reuters

TOKYO -- Japan is considering lowering the maximum leverage permissible in foreign exchange trading on grounds that both retail and institutional investors are facing greater risks should the market face sudden fluctuations.

Foreign exchange margin trading in Japan amounts to roughly 5 quadrillion yen ($44.2 trillion) annually. The lower cap would reduce the risk of a crisis originating in Japan, but will likely be met by resistance from industry players.

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