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Japan eyes tighter leverage cap on forex trading

Proposal before regulator would lower limit on gearing from 25-to-1 to 10-to-1

Japan's financial watchdog is taking steps to limit retail investors' risk exposure in forex trading.   © Reuters

TOKYO -- Japan's Financial Services Agency is considering lowering the maximum leverage allowed on foreign exchange trading by individuals as soon as this spring to curb risk taking.

The agency is studying a proposal to bring the leverage cap from 25-to-1 down to 10-to-1, based on trends in historical market volatility. The change would increase the margin deposit required for trading the same amount of currency by 150% and lower the potential for investment gains.

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