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Kabu Offers Margin FX while UBS Japan Sees Surge in Business

Japanese online securities broker, Kabu.com, has commenced foreign exchange margin trading services. According to the Nikkei Financial Daily, Kabu will initially offer three currency pairs, USD, EUR and GBP against the JPY, with a minimum transaction size of JPY25,000 (US$200). Stock certificates are allowed as collateral. The firm joins a growing list of online Japanese securities brokers entering the margin FX space, including Kakaku.com and Monex, who recently selected Saxo’s FX electronic trading platform to ramp up their business (see Squawkbox, May 28, 2007). Margin FX volumes surged 41% in the March 2007 quarter from the period before, (Squawkbox, June 4, 2007), reflecting the increased activity. Meanwhile, foreign banks in Japan have also benefited from the retail FX market. Derek Lindsay, head of FX distribution and services for UBS AG in Japan, tells Squawkbox that the bank’s margin FX business has had a 100% increase in monthly volume since December 2006.   The majority of UBS's retail foreign exchange business is offered through third party retail brokers but the bank also offers direct FX services for its top tier UBS wealth management clients.  Lindsay estimates that the country’s margin FX business accounts for 25% of all spot FX business in Japan.  

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