The binary options market in Japan is quite popular and has given rise to an increase in the number of brokers who have emerged to meet the needs of investors and traders. In Japan, all financial transactions including those in the binary options market are supervised by regulatory agencies. Brokers dealing with binary options in this country are closely scrutinized just like any other firms that have their headquarters in Japan.
The watchdog agencies that perform regulatory functions in the financial market in Japan have forced many binary options brokers in this country to move their offices outside the country. The main reason is that this supervision is too costly for small firms who prefer to move to countries like Cyprus where there are minimal regulations.
How Binary Options Brokers in Japan are Regulated
The securities and exchange market in Japan is regulated by two agencies, the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC). While the FSA is involved in making sure the financial market in the country is stable, the SESC is tasked with the duty of ensuring that all firms in the financial sector are compliant. This includes help with making investigations against violations.
This regulatory body has the mandate of imposing penalties and fines in cases of compliance violations. The Japanese binary options brokers fall under the supervision of the SESC. This body regulates how the binary options business is run in Japan. It is as a result of the huge presence and strictness of this regulatory body that most binary options brokers have opted to operate outside Japanese borders. The body has made the binary options business very costly, an expense that is out of reach for small firms which are starting out in the business.
Binary Options Brokers outside Japan
The SESC agency is charged with enforcing strict rules that govern the Japanese financial markets. It is in this regard that many binary options brokers feel limited in conducting their business. The issue of fines and penalties as a result of compliance violations has pushed many brokers out of the Japanese market.
All brokers in the Japanese binary options market are expected to follow the set-out rules very closely or else face punitive measures for non-compliance. All brokers are expected to disclose their financial transactions to the authorities. This is an issue that many binary options brokers are uncomfortable with. It is as a result of such a hostile business environment that most brokers prefer to set up offices outside the country.
The situation is even dire for smaller firms which do not have sufficient capital like reputable Japanese banks and other financial institutions. These firms find it difficult to stick to the rules because it is not only cumbersome but also costly. The rules governing the running of binary options business in Japan act as a barrier that creates bottlenecks to the binary options market.
This is the main reason why many binary options brokers from Japan seek refuge in countries like Cyprus where they can operate their businesses under minimal supervision and regulation. The regulations in Cyprus are relaxed and brokers can operate without having to worry about compliance violations. In Cyprus, operating a binary options business is more predictable and this is an attractive aspect of the business. This is because the chances that a new rule can be passed by the government without the involvement of the businessmen are very minimal.
Such a situation has been experienced in other parts of the world where an arbitrary decision has the capacity of decimating a business within no time. Such a situation is possible in Japan and that is why many binary options brokers are shying away from the Japanese market. It is convenient to operate in Cyprus because the Japanese market is still within reach at that point. It is also a good strategy of minimizing exposure and the threat of looming arbitrary rules and regulations.
The best thing about the binary options trade is how the trades in the field are operated. Brokers do not need to visit a physical address to deal with business issues. In this business, everything is done online through several applications and programs which include Skype, email, phone, or online chat. This, therefore, makes the location of a broker’s offices irrelevant since the business can be operated to serve international customers irrespective of its location.
Binary Options Brokers in Japan
Despite the mass exodus of binary options brokers from the local Japanese market, there are still many more brokers operating in this market. These brokers cater to the Japanese traders in the market. They have their offices in Japan while others operate from their bases in Cyprus. When dealing with a binary options broker in Japan, it is important to consider the three Rs which stand for reputation, returns, and reliability.
It is advisable to work with brokers who are reputable and have a good track record in the business. It is also important to look out for brokers who offer the highest returns on investments, and those that send out the pay-outs on time. Other things to consider include the variety of assets offered, the trading platform and other special features.