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Side note before beginning this week’s newsletter. TradeInformer will be in Sydney for a couple of days next month. Thursday is the new Friday so if you are around on the 15th and would like to get together for a drink with other readers then please let me know.
ATFX is on a hiring spree – read about it here.
As I’ve been boring readers with repeatedly, this month I have been in Japan. In case you missed it, last week we had an interview with IG Group’s CEO here.
Anyway, last year I did a post about observations in ASEAN when I was there and it went down well, so I figured we’d take a look at some of the things ‘on the ground’ here that I’ve seen in Japan.
1. DMM.com
I will be honest and say that I had never even heard of DMM before coming here, but they are apparently one of – if not ‘the’ – biggest brokers in Japan.
DMM is an interesting company for a lot of reasons (and I recommend reading this Bloomberg article about them to see why). It started out as a physical porn rental shop in the mid-1980s.
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The company’s founder, who never allows himself to be photographed, had a stint as a half-nude dancer at a gay bar prior to setting up the shop. He was also quick to set up online porn streaming in 1998, which seems to have been the key to the company’s success.
DMM’s website has almost 40m users and has transformed from a porn company into a huge business empire, with operations including a Rwandan e-payments firm, an aquarium, a solar panel business and a company that sells ambulances and firetrucks.
In the broker space, they have been doing FX since 2009, CFDs since 2010, and stockbroking and crypto since 2018. They also run a ‘fractional horse ownership’ website that is overseen by the financial regulator and is a way of owning part of a horse and then getting a share of any winnings. Maybe something for you all to consider expanding into?
Recently the company lost $320m in a crypto hack, which was apparently one of the largest ever. They have pledged to pay back customers the full amount. Good luck to them with that.
In terms of advertising, since I’ve been here, they have been running an ad on YouTube and in taxis (perhaps elsewhere) that seems fitting with their ‘roots’. It would actually probably work well in Europe as a ‘shock value’ advert but yea, good luck pitching that to your marketing team.
The other observation is that you can buy gift cards for their website in stores everywhere. It’s hard to convey how omnipresent these are but basically everywhere you go in Japan there is either a Family Mart, 7/11, or Lawson convenience store within about 2 minutes walking distance. On one road near to where I’m staying now, there are at least four within <5 minute walk of each other. These all stock DMM gift cards.
Sadly, from what I can tell, these can’t actually be used for the company’s brokerage business. Still, what would brokers in the UK give to have their brand on a card in basically every cornershop / Tesco / Sainsbury’s in the country? Maybe you could do it with e-payments or stocks offerings somehow.
This also points to what I think is interesting about DMM’s online businesses. They clearly don’t really see themselves as a broker but more just an e-commerce company. They had loads of porn users, so why not just take that database and convert it into FX/CFD traders? The same logic applies to games, streaming, and e-book services they offer.
It points to a split you see in this industry in general. Some people come to the industry with a finance background but lots don’t. One broker founder I remember speaking to talked about how they wanted to found some sort of online business. They looked at different verticals (e-commerce, video games, and gambling, among others) and then decided trading was the best one. No interest in financial markets was behind it. Today they are doing very well.
The other point is that DMM is kind of like an even more extreme version of the cross selling you see with multiple products today, whether that be stocks, crypto, or prop trading. It’s just they have porn and solar panels instead. Any readers thinking of branching out?
2. XM is everywhere online
Much like in ASEAN, XM is everywhere in Japan and operate via their XMTrading brand.
From what I understand they have over 0.5m accounts here.
We looked at how XM is so big in Japan before so it’s worth reading that if you are interested.
But the main thing I see being here is just Google ads. Without exaggeration, they are on 70% to 80% of sites I visit that have Google ads on them. They are everywhere!
3. Exness only does reverse solicitation
If you try and sign up to Exness in Japan by yourself then it doesn’t work. You can go on their website and won’t be geo-redirected like you do in the UK or Europe, but the option to register for the company if you are from Japan isn’t there.
However, Exness does have local partners and, interestingly, if you sign up via them, then you can register. So for example, let’s say I search ‘trade gold’ in Japanese. This website, which offers cashback, pops up. Exness is the first on the list and by using their link, I can sign up.
What is also interesting about the Japanese market, from what I see, is that there is a clear delineation of offshore brokers. Unlike European markets, if you go on Japanese affiliate sites that let you sign up to a broker that is not Japan regulated, it’s very clear that this is what you are doing.
4. Doo Prime has a Japanese URL now
Doo Prime is a broker we haven’t looked at much but they seem to have been expanding a lot over the last couple of years.
They recently hired someone in Cyprus to manage customer relations for Japan, so I figured I’d look at the website from here.
When you try to do that, you get redirected to a Japanese website and URL – dooprimejp.com.
This looks new because they had almost no traffic until June of this year. So there you have a potential ‘new’ entrant to the market, although given the companies targeting this region, it’s going to be tough.
5. Plus500 is ramping up
Plus500 acquired a Japanese broker in 2022 but has only really started rolling out services in the past few months.
They now have five local employees, most of whom seem like they manage operations or legal stuff. Two of those people have prior experience at IG.
I have seen them doing a few google search ads but they aren’t on any of the sorts of review / comparison websites that you see them dominating in Europe / UK.
The product also looks different. Firstly, there is a localised website…
Secondly, they only have two asset classes to trade in – knock out options and FX.
Traffic for the website is picking up but there were – if SimilarWeb is accurate – only about 10k visits last month. But that has been rising steadily, so presumably they’re upping ad spend at the moment.
6. OOH marketing
I have not seen too much OOH marketing here but there have been a couple of notable exceptions. One was this ad in the Tokyo metro for a company I’d never heard of called Central Tanshi FX…
The other company that I have seen a few times is GMO – which is, along with DMM, one of the biggest FX/CFD brokers in the country. Unfortunately I only saw them in moving vehicles and I didn’t take a picture in time. One exception was the huge building length advert that I saw when walking around in the centre of Osaka.
Note how there are no risk warnings or anything like that.
Kind of like branded cigarette packs, it’s so much more pleasing to the eye.