Electronic trading is gaining momentum in Japan, and more adoption is anticipated, driven by the increasing popularity of multi-dealer platforms and application programming interfaces (APIs). This is according to research by the global analytics and insights provider for the financial services industry, Coalition Greenwich.

The Japanese FX sector has made a significant shift towards electronic trading, driven by increasingly sophisticated e-trading systems and the surging liquidity of multi-dealer platforms. While the global financial markets have long embraced electronic trading, Japan's journey has been measured.

Shifting to the Digital Horizons

Globally, FX trading is hailed as the most electronic market, with a whopping 76% of cash FX trading volume reportedly being transacted electronically across North America, Europe, and Asia. While Japan has historically lagged behind in this trend, accounting for about 60% of FX cash trading volume, according to the report, recent developments suggest a potential change on the horizon.

According to Seiji Ishii, the Head of Japan at Coalition Greenwich, "The growing popularity of multi-dealer electronic trading platforms and APIs is providing a foundation that could, over time, bring the market more in line with global trading practices that increasingly favor electronic execution."

A crucial factor propelling Japan's embrace of electronic trading lies in the growing popularity of multi-dealer platforms and application programming interfaces (APIs). These platforms provide a dynamic foundation that aligns with the global shift towards electronic execution.

Multi-Dealer Platforms and APIs: The Driving Forces

Additionally, over the last few years, there has been a significant increase in Japanese banks embracing multi-dealer platforms, with their surge climbing from less than half to a remarkable 64%. As these financial institutions improve liquidity and pricing for major currency pairs on these platforms, they realize the substantial cost efficiencies that the electronic FX trading offers, the report noted.

The report is corroborated by the growing number of industry players expanding their operations to Japan. In March, Finance Magnates reported that the Australian-based broker, ThinkMarkets, had entered Japan's forex landscape. With the official launch of its online trading services in the country, the company said it was seeking to revolutionize trading experiences through its proprietary app, ThinkTrader.

Similarly, in June, ACY Securities ventured into the shares and CFDs market in Japan and Hong Kong. This followed its introduction of 311 share CFDs across various global exchanges, including the Frankfurt Stock Exchange (FSE) and the London Stock Exchange (LSE).