Saxo Bank Revises Its Minimum CFD Units in Japan

Summary:
• Saxo Bank Japan has revised downwards the minimum tradeable units. We discuss the motivation behind it and why Japan is a peculiar case.

Saxo Bank Japan, a subsidiary of Danish multi-asset broker, Saxo Bank, has revised the minimum trading unit size for stock index CFDs. The decision means that now its clients can trade the assets ranging from 0.1 to 0.01, depending on the tradable instrument. The change essentially introduces fractional trading. Also, it removes obstacles that many investors confront when seeking to build a diverse portfolio of listed stocks.

Fractional shares and Saxo Bank’s take on Japan’s conservative corporate culture

Young investors have shown significant interest in fractional trading. For one thing, it enables traders to spread their limited funds among a wider variety of stocks. That way, investors stand a better chance of absorbing market shocks due to diverse portfolios. However, the reputation of the Japanese markets for fierce competition and tight spreads puts ordinary brokers at a disadvantage. Saxo Bank Japan is clearly taking on the challenge.

There has been a significant increase in the number of foreign investors in Japan’s stock market over the past decade. Also, in a bid to entice more retail investors, brokers in Japan have started reducing their trading fees. Because of Japan’s peculiar corporate culture, increasing amounts of pressure are coming from both inside and outside the country. This is also attributable to a growing change in the generational dominance of the country’s corporate space from old to young.  This paradigm shift is what is driving the likes of Saxo Bank to restructure their products.

Investing in fractional shares was inconceivable twenty years ago, but things have changed significantly in that time. A majority of some of the largest brokers are currently advertising this service. This demonstrates how high the demand actually is. The ease with which investors can acquire extremely small stakes in a wide variety of organizations due to fractional shares is both a benefit and a problem for investors. As a result, if your brokerage requires commissions, diversifying your holdings could lead to a significant increase in your overall fees.