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FSA Inspects Finances Of All Forex Margin Traders Amid Subprime Fallout
TOKYO (Nikkei)--The Financial Services Agency has started inspecting the nation's some 120 brokerage firms specializing in foreign exchange margin trading to ascertain their financial health.
The FSA will also look into whether the companies are managing client assets separately from their own. The inspection has been prompted by the financial difficulties experienced by a number of these firms following the outbreak of the U.S. subprime mortgage loan crisis.
One such broker, FX Sapporo Co., filed for bankruptcy on Oct. 22, while Alpha FX closed its Web site suddenly on Monday, and its representative director has remained out of contact. The financial watchdog has sent each company a questionnaire asking them to clarify the state of their operations, among other things. It will also interview their executives through local bureaus of the Finance Ministry. When the subprime problem surfaced this summer, sending the yen sharply higher, the agency started to inspect the top 25 forex brokers. The extent of the negative fallout from the subprime issue has prompted the FSA to expand the scope of the inspections.
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