Japan’s seven derivatives exchanges have been left behind by the dizzying growth elsewhere. Attracting more foreign money to trade in the markets could be a big part of reversing that decline. But although overseas firms are not barred, they face soft obstacles of complexity, cost and fragmentation. Exchanges and other players are now determined to cure some of these problems, as Agnieszka Troszkiewicz reports in the second part of FOW’s exploration of the Japanese market.
Japan’s derivatives market knows it has a problem. In 1990, Japanese exchanges hosted 12% of the world’s futures and options trading, by number of contracts.
But five years of stagnation in the late 1990s left the country behind. By 2003, Japan’s market share had fallen to 3.6%.
In 2008, the country’s seven derivatives exchanges handled only 1.6% of world trades. Their collective volume plateaued during 2004 and 2005, and has grown only by...