Protectionism in the Global Markets

Forexmagnates.com has posted an interesting article on the recent actions taken by the Japanese Financial Services Authority (JFSA) regarding international brokers.  In short, the JFSA barring non-Japanese firms from opening accounts by Japanese citizens or residents.  This follows the actions of the United States’ Commodity Futures Trading Commission (CFTC) back in late 2010 to take similar actions.  US citizens or residents can only open FX accounts with US-registered brokers.

The “retail” FX world is still relatively small compared to the institutional world.  However with a CAGR of greater than 10% annually since 2002 the retail FX industry supports some hundreds of millions of dollars in corporate revenues each year, and the industry employs tens of thousands of people across the globe.

The actions of the CFTC and now the JFSA are not catching the attention of the media or citizens of either country except for the active trading communities in each country.  But make no mistake, these actions are protectionism by the financial regulators of each country.  I am sure there are reasons given by each regulator that justify their actions, but when governments act to “protect” citizens outside of physical security, the Big Brother effect increases its hold on the population.

Rather than barring foreign competition, the regulators could (should?) do a better job of informing consumers of the potential risks of trading or whatever activity they undertake.  And then allow the citizens to take the action they choose.  And receive the benefits of their decisions or suffer the consequences of their ill-informed decisions.

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