Yen volatility boosts BTM revenues

Forex revenues were up 29% to ¥84 billion ($794 million) for the financial year ending March 31, compared with ¥65 billion ($550 million) the previous year. A spokesperson attributed the rise partly to a "big jump" in customer transactions, "especially in relation to options that customers needed to hedge against the yen’s appreciation", according to RiskNews' sister publication, FX Week.

That demand mainly came from a range of corporates in a variety of industries, said Takashi Kimori, BTM deputy general manager of foreign exchange and treasury in Tokyo. He said options have become increasingly popular financial tools in Japan over the past three or four years, but 2003’s volatile markets meant volumes were particularly high.

The yen started the fiscal year trading at just over 118 to the dollar in April 2003. It peaked at 120.55 on April 11, and traded between 116 and 120 until August, when it started a meteoric descent down to just above 104 by the end of March 2004.

Market participants agreed that options are likely to continue playing a central role in Japanese foreign exchange over the current financial year. BTM’s Kimori said the markets would remain "torrid", with options still being the most popular way to hedge against currency risk.

James Gow, managing director and co-founder of forex trading platform FX Online Japan, said the options market would continue to draw a lot of money. "Volatility’s just beginning at the moment, and that can only put more focus on options," he said.