FSA plans to introduce margin trading limits in Japan

Japanese Financial Services Agency (FSA) intends plans on introducing margin trading limits across crypto exchanges. 

Margin trading limits to be imposed in Japan

As per a report by Japan Times, the nation’s finance regulator FSA has revealed its plans on setting up margin trading limits that would restrict users across exchanges. This would hinder crypto growth and stunt the adoption of Bitcoin in the region. The agency intends on setting a margin limit of twice the users’ deposits as well on their margin leverage.

The move was preceded by a limit of four times the users’ deposit that was set up across domestic exchanges via a self-regulatory body in 2019. As per the agency’s statement, the move was conducted to protect investors in times of fluctuating market prices. The FSA wants to guard against the volatility of the crypto industry. By setting up margin trading limits, the agency can also bar traders and investors from manipulating the markets and ensure a safe trading environment.

Financial instruments and Exchange Act implemented soon

Japan Times revealed that the “new rule” would be included in a Cabinet Office order. The order would be imposed through the revised Financial instruments and Exchange Act that is to be implemented in Spring this year. However, it is unclear whether the restrictions would be applied as soon the act is implemented, or there would be a deadline for firms to follow.

Margin trading has been popular lately, especially for Japan, in which case the interest in the matter reached an all-time high during October 2019. Margin trading can dictate larger market moves, especially when a huge number of people engage in the practice at the same time.

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