Japan's Financial Services Agency will limit foreign exchange traders' leverage on margin transactions, drawing down the multiple in two stages to 25 times collateral by August 2011.
The financial watchdog proposed the regulatory changes in May. Despite widespread opposition to such a cap expressed in the public comment period, the agency on Friday decided to revise the regulations, citing the risk of highly leveraged trades and the need to protect consumers. The Japan Federation of Bar Associations was among those supporting the measure.
The leverage multiple will initially be capped at 50 in August 2010, and then reduced to 25 a year later.
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