Day trading in Japan: how to set up a stock trading account as a non-Japanese.The Japanese stock market has risen over 50% in the last five years, and last year was the best-performing major stock market in the world. As a result, trillions of dollars of foreign money has been pouring into the Tokyo Stock Exchange Tokyo Stock Exchange Main stock market of Japan, located in Tokyo. It opened in 1878 to provide a market for the trading of government bonds newly issued to former samurai. alone over the last 12 months. Forbes.com reckons the increase was 38% last year to US$54.8 billion, about 160% more foreign investment than in 2003. [ILLUSTRATION OMITTED] Missed Opportunities In view of the numbers, some would say that it is too late to start an online stock trading account--that the best opportunities are already gone. However, when you consider that the Nikkei is still just 40% of its peak in 1990, and that only 3 million or so people actually own the 10 million online stock accounts in Japan--versus nearly 20 million individuals in the USA--it appears that the Japanese stock market may still have some life in it yet. This is particularly true when one considers the herd instinct Herd Instinct A mentality characterized by a lack of individuality, causing people to think and act like the general population. Notes: This term is used in the investing world to refer to the forces that cause unsubstantiated rallies or sell-offs. amongst corporate investors Noun 1. corporate investor - a company that invests in (acquires control of) other companies company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" ; where excellent contrarian investment opportunities arise once the all-powerful media cans a stock. Livedoor is a good example. Its stock, which was recently reviled on a daily basis, dropped below 70 yen per share, even though its break-up value break-up value n (COMM) → valor m de liquidación break-up value n (Comm) → valeur f de liquidation was said be more in the order of 189 yen. The media had a field day, publishing regular reports about one famous corporate shareholder after another bailing out. Needless to say, the rank-and-file shareholders panicked and dumped the stock as the delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. date loomed. Then, with just a couple of weeks to spare, four major foreign funds jumped in and snapped up 53% of the company--boosting the stock to JPY JPY In currencies, this is the abbreviation for the Japanese Yen. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 130 range before it settled down to JPY 101. On a scenario like this, a savvy local personal investor could have easily spotted the opportunity as it unfolded, and picked up a 30% gain in just two weeks. [GRAPHIC OMITTED] Who Can Trade Online? Having whetted your appetite about the viability of Japanese stocks, the big question is, "How do I start trading them?" Unfortunately, unlike registering to receive an online trading Online Trading Making trades via the Internet. Notes: The use of online trading increased dramatically in the mid to late 1990's with the advent of high-speed computers and Internet connections. Stocks, bonds, options, futures, and currencies can all be traded online. account in the USA, if you want to trade Japanese stocks, even over the Internet, you need to reside in Japan. As illogical as this sounds, and we have requested an explanation from the Ministry of Finance, it is the rule. Acceptable proof of residency A duration of stay required by state and local laws that entitles a person to the legal protection and benefits provided by applicable statutes. States have required state residency for a variety of rights, including the right to vote, the right to run for public office, the is a certificate of alien registration (gaikokujin toroku shomeisho), something that can't be fudged and can only be received if you really are living here. If you are new to Japan, you get a certificate of alien registration by first coming in on a work, study, or some other mid- to long-term visa, issued in the usual fashion by the Immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. Office. Once established in Japan, you then find a place of abode One's home; habitation; place of dwelling; or residence. Ordinarily means "domicile." Living place impermanent in character. The place where a person dwells. Residence of a legal voter. Fixed place of residence for the time being. (i.e., rent an apartment), then go to your local ward or city office to register both your residence and workplace (or school). Providing everything is in order, you will be issued an ID card, the alien registration certificate, that confirms your right to live and work/study in Japan. For those readers who don't live in Japan, but who still want to trade stocks, the best solution is to set up an account with an established international stockbroker Stockbroker 1. An agent that charges a fee or commission for executing buy and sell orders submitted by an investor. 2. The firm that acts as an agent for a customer, charging the customer a commission for its services. , such as Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. , and execute your trade orders by phone, email, or some other means. Needless to say, this can be slow and expensive. One other possible idea, although it requires you to have a friend living in Japan, may be set up a stock-trading club (toshi kumiai) and then have him or her execute orders 1. An order issued by the Chairman of the Joint Chiefs of Staff, by the authority and at the direction of the Secretary of Defense, to implement a National Command Authorities decision to initiate military operations. 2. for the club's members. We don't know Don't know (DK, DKed) "Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. anyone actually doing this, but have been told that it is theoretically possible. Brokerage Choices Providing you meet the residency requirements, your first task is to choose a suitable online broker. Below we list a few of the many online brokers available, then look at three in some detail. However, you should be forewarned that currently NO online broker operating in Japan offers an English-language service. So if you want to trade, you're going to have to at least learn the relevant screens to do so. Matsui Securities Taking over a conventional securities firm from his father-in-law in the 80s, Michio Matsui moved Matsui Securities online in 1998 and in the process pretty much started the current online brokerage boom. The company is well known for its aggressive pricing, campaigns and free seminars. Surprisingly, given the prices, they also have a reputation for reliability and user-account protection. Starting up with Matsui is simple if you're Japanese. They let you open a personal account without having to affix affix v. 1) to attach something to real estate in a permanent way, including planting trees and shrubs, constructing a building, or adding to existing improvements. a seal. On the downside On the Downside is an EP by the San Diego, California band Counterfit, released by Alphabet Records in 2000. It was the band's first EP, recorded shortly after the members had relocated to San Diego from Fairfield County, Connecticut. , because of heavy demand, they are slow to authorize To empower another with the legal right to perform an action. The Constitution authorizes Congress to regulate interstate commerce. authorize v. to officially empower someone to act. (See: authority) accounts, reportedly around 10 to 14 days. If you are not a Japanese citizen, you will have to show your certificate of alien registration. Since Matsui is not prepared to receive inquiries in English, you must be competent in Japanese or bring along a Japanese speaker. Set-up charge: Free Per trade charge: JPY100,000 or less: free JPY100,000-JPY 300,000: JPY315 JPY300,000-JPY 500,000: JPY525 JPY500,000-JPY 1 million: 1,050 More than JPY 1 million: JPY 2,100 Monex Securities Started in 1999 by Oki Matsumoto with SONY, Monex is less intense than Matsui and some other online brokers. That makes it an ideal site for beginners. Monex became the largest online broker in Japan after its merger with Nikko Beans in 2005. It has about 650,000 accounts and assets of about JPY2.2trn. In the end, we chose Monex for several reasons. One was that they are more foreigner Foreigner All institutions and individuals living outside the United States, including US citizens living abroad, and branches, subsidiaries, and other affiliates abroad of US banks and business concerns; also central governments, central banks, and other official institutions of friendly than most. Then there is their simple signup process, with straightforward instructions, welcome by those of us with imperfect imperfect: see tense. Japanese. Finally, they don't require reams of paperwork proving your identity. All we had to do was provide a photocopy of our alien registration card. Turn-around after sign up was quick, less than five working days. Monex also has a "mini-kabu" club where for JPY10,000 you can start trading stocks in small lots--allowing you to learn the market. They also operate an ECN (Electronic Communications Network) A computerized, private financial trading system. Terra Nova Trading (www.terranovatrading.com) and Instinet (www.instinet.com) are examples. called PTS PTS put to sleep; a common euphemism for euthanasia, but also used to describe general anesthesia. (nighttime trading) that lets you trade from 17:30 through 23:59. Another nice thing about Monex is the volume of IPOs they handle--checking day-trader chat sites, they are supposed to be easier to get an allocation for a pre-IPO stock than most other brokers. [ILLUSTRATION OMITTED] Set-up charge: Free Per trade charge: JPY 1 million or less: JPY1,050 More than JPY 1 million: 0.105% of the total trade E*Trade Japan This is Softbank's online brokerage and is similar in operation to the US site. That might be enough to sway experienced NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on traders to choose E*Trade when opening an account in Japan. The company is regarded a competent broker with plenty of discount campaigns and pre-IPO allocations. However, its new account processing is reportedly very, very slow, taking on average about three weeks. Also, the home page is quite confusing con·fuse v. con·fused, con·fus·ing, con·fus·es v.tr. 1. a. To cause to be unable to think with clarity or act with intelligence or understanding; throw off. b. owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the information-heavy design. Perhaps this is the influence of the "more is better" syndrome that plagues Yahoo Japan as well. Set-up charge: Free Per trade charge: JPY500,000 or less: JPY472 JPY500,000-JPY1 million: JPY840 JPY1 million-JPY1.5 million: JPY1,050 JPY1.5 million or more: JPY1,575 Making the Application For the purpose of this article, we decided to subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; the Monex Securities service. We went to the application page of Monex's web site. We filled out the online application form with the help of a Japanese friend, and entered in a fair amount of personal data. Once done, we pressed the send button and three or four days later an envelope containing the sign-up kit arrived by courier A monospaced typeface originating from the typewriter that is commonly used for letters. It is still considered by many to be the "appropriate" typeface for business correspondence. . Conveniently, all the information that we'd entered online was pre-entered into the paper forms. All we needed to do was to provide the necessary additional documents and affix our personal seal.* Deciding Tax Method In filling out the Monex (or any other online broker's) application form, one question that may stump you at first is how you want to pay your tax. Basically you have the choice of either Monex paying it for you, or paying it yourself by going to your local tax office and using a self-assessment tax declaration, due by March 15th every year. We chose to pay the tax ourselves, since this gives us the use of our own cash for the entire year, rather than having fees deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from our Monex account per trade. As a side note, taxes on profits from the sale of shares are treated differently from regular income tax. You can read more about them at http://www.mof.go.jp/english/tax/taxes2005e_c.pdf. However, in essence, you can treat your trading activities as a mini-business and deduct de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. or carry forward losses to offset against profits in a latter year. Check out the Blue Form method of declaring tax, since this allows you to deduct the costs incurred in earning the income. The Japanese tax system is quite complex, so if you're not sure what to do, consider doing a consultation at your local tax office before making a decision. Other Documentation Once the application kit arrives from Monex, you have to supply identification. For Japanese, this can be a photocopy of a driver's license Noun 1. driver's license - a license authorizing the bearer to drive a motor vehicle driver's licence, driving licence, driving license license, permit, licence - a legal document giving official permission to do something or passport. Non-Japanese applicants must provide a photocopy of their certificate of alien registration or certificate of registered matters. If the former, make sure that it is still valid and if the latter, ensure that it is valid for at least another six months. We stuffed the signed documents into the supplied envelope and mailed them off. It's as simple as that! A few days later, we received our membership packet, complete with password, guide and rules, and a credit card application--just in case we didn't have one already. The final step was to transfer some trading funds into the Monex bank account, the details of which were given in the membership packet. As soon as the money hit the account, using the web sign-on information in the same packet, we were ready to go. Research References in English To wrap up, although the purpose of this article is to help non-Japanese with the account establishment process, rather than trading, as a non-Japanese you will soon find that there is a dearth of information about listed stocks Listed stocks Stocks that are traded on an exchange. in English. Here are a few resources that may be helpful. One technique you can try is to pick up the ticker symbols Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors on the Nikkei site, then go to Yahoo Finance or your brokerage charting page, and plug them in to get more detailed stock charts. *A note on the type of seal, hanko or inkan, needed. Just as with starting a bank account, you can use a mitomein, an unregistered seal that is less formal than the jitsuin, which you must register at the local ward or city office. You can buy a mitomein at any hanko shop and ask them to carve carve v. carved, carv·ing, carves v.tr. 1. a. To divide into pieces by cutting; slice: carved a roast. b. your name either in Japanese or romaji (alphabetic characters). Although you can choose any character you like, you probably want to get a stylized styl·ize tr.v. styl·ized, styl·iz·ing, styl·iz·es 1. To restrict or make conform to a particular style. 2. To represent conventionally; conventionalize. version of your name in katakana--since that will be easier for Japanese speakers to match the characters to the actual phonetics phonetics (fōnĕt`ĭks, fə–), study of the sounds of languages from three basic points of view. Phonetics studies speech sounds according to their production in the vocal organs (articulatory phonetics), their physical properties of your name.
Name URL
Aizawa Securities http://www.aizawabtc.com
Ando Securities http://www.ando-sec.co.jp
Century Securities http://www.century-sec.co.jp
Cosmo Securities http://www.cosmo-sec.co.jp
Daiwa Direct http://www.daiwa.co.jp/index-s.html
e-Trade http://newtrading.etrade.ne.jp/
Hirota Securities http://www.hirota-sec.co.jp
HIS Securities (HS Securities) (http://www.hs-sec.co.jp)
Imamura Securities http://www.imamura.co.jp
Iwai Securities https://www.iwaisec.co.jp
JET Securities http://www.jetsnet.co.jp
Kabu.com http://www.kabu.com
Livedoor Securities http://www.kabu.livedoor.com
Maruhachi Securities http://www.star-trade.net/
Marusan Securities http://www.03trade.com
Matsui http://www.matsui.co.jp
Mito Securities http://www.mito.co.jp
Mitsubishi UFJ Securities http://www.sc.mufg.jp
Mizuho Investors Securities http://www.mizuho-isec.co.jp
Monex http://www.monex.co.jp
Naito Securities http://www.naito-sec.co.jp
Netwing Securities http://www.netwing-sec.co.jp
Nikko Cordial Securities http://www.nikko.co.jp
Okasan Securities http://www.okasan.co.jp
Orix Securities http://www.orix-sec.co.jp
Rakuten Securities http://www.rakuten-sec.co.jp
Retela Crea Securities http://www.retela.co.jp/
Shinko Securities http://www.shinko-sec.co.jp
SMBC Friend Securities http://www.smbc-friend.co.jp/
Takagi Securities http://www.takagi-sec.co.jp
Tokai Tokyo Securities http://www.tokaitokyo.co.jp
Toyo Securities http://www.toyo-sec.co.jp
Utsumiya Securities http://www.utsumiya.co.jp
Yutaka Securities http://www.yutaka-sec.co.jp
Resource URL Comments
Tokyo www.tokyoipo.com Free. This is a quirky but highly
IPO useful website for companies about
to do an IPO. It lists issues as
they are announced, three or four
weeks before the actual IPO. It's
interesting to follow the prices
after listing. The site keeps
about six months' worth of
post-IPO data on its database.
Nikkei www.nni.nikkei.co.jp JPY6,000/month. This is probably
Online the best online reference for
company snapshots, news, and stock
charts in English. Easy to sign up
for and there is a significant
amount of breaking news on the
site, which seems to be updated on
an hourly basis.
Seeking http://japanstockblog.com/ Of course you never know whether
Alpha blog writers really know what
they're talking about or not[??],
but this is one of the better
aggregations of blogs on financial
topics in Japan and is useful to
gain a barometer of what observers
are thinking.
Yahoo http://quote.yahoo.co.jp/ While this site is entirely in
Japan Japanese, the finance section is
quite easy to navigate.
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