Opening a Brokerage Account in Japan

Thinking of opening a brokerage account in Japan? Here’s a rough and ready overview of what to keep in mind.

Opening a brokerage account in Japan: Domestic vs. international markets

Let’s start here, as it’s one of the first considerations when opening a brokerage account, also known as a securities account.

Generally speaking, domestic Japanese brokerages have limited access to international markets. Most of the brokerages we researched had reasonable access to the main US markets (NASDAQ and NYSE), but none of them had direct access to any European exchanges (e.g. London, Paris and Frankfurt) or Toronto, and limited access to Asian exchanges.

In addition, while the fees for domestic transactions are relatively competitive (for example from 55 yen per transaction, or a total daily fixed fee of 234 yen), the fees for dealing on international exchanges are higher. Almost all brokerages charge 0.495% of the transaction, with a cap of 22 USD per transaction.

You also need to bear in mind there’ll be a forex transaction fee when converting balances, which for almost all the brokerages we looked at was a reasonably competitive 0.25 yen off the exchange rate (e.g. if the rate is 1 dollar = 100 yen, you’ll receive 99.75 yen for every dollar you convert back to yen).

There is reasonable access (+3,000 stock symbols) to the main US stock exchanges with SBI, Monex and Rakuten; however, DMM has less than 1,000 US stock symbols and GMO only offers CFDs as a means of trading US stocks.

They all seemed to offer other international financial instruments including ETFs and funds, but if you want more sophisticated access to international markets then the Japanese brokerages we reviewed came up short—you’d need a professional international account like International Brokers or Lightspeed.

Tax-incentivized accounts NISA & iDeCo

In Japan, one key advantage of domestic brokerages over international brokerages is that they will usually allow you to create a special tax-saving NISA or private pension iDeCo-type account. You might know of these types of accounts as “tax-advantaged accounts” if you’re from North America.

A NISA (similar in ways to a British ISA or Canadian TFSA) allows you to invest up to 1,200,000 yen per year for five years and not pay capital gains tax on any profits.

An iDeCo is a private pension fund (like a SIPP, 401k or RRSP) and an excellent option for people eligible and planning on retiring in Japan—it has the double tax saving of reducing your taxable income, and drawings once retired being tax free (within certain limits).

More information

For further details on both of these accounts and the brokerages offering them, we recommend you read the Retire Japan Guide to NISA, and the Retire Japan Guide to iDeCo.

Brokerage account opening procedures

All domestic Japanese brokerages require you to complete forms in Japanese, and most of the speedy online KYC (Know Your Customer, which means ID verification etc. as required by government regulations) procedures cannot be completed by non-Japanese citizens, so if you don’t have a Japanese passport you will have to opt for the paper application.

Fortunately, this doesn’t mean filling out a paper form; rather, you complete the application form online, after which you are required to mail in the KYC documents (copy of ID, etc.).

You’ll likely need to submit copies of your photo ID (e.g. driver’s license or residence card) and your My Number card (or My Number notification card), as well as answer questions about your income, assets and employment.

Before you can trade more advanced financial instruments like options contracts, you’ll also be required to answer questions about your trading experience.

Special notes for US taxpayers

If you’re a US taxpayer, there’s additional compliance required when setting up a brokerage in Japan. You’ll need to complete the US tax-payer section “米国納税義務”, and likely there’s reporting requirements to the US beyond the scope of this article.

Automatic vs. manual tax-filing accounts

One key advantage of a domestic Japanese vs. international brokerage is that you can opt for a “Tokutei Koza” (特定口座)—which is an account that automatically handles and deducts any tax payable in Japan.

If you don’t have this option, you’ll need to calculate your tax liabilities and file this in your tax return (確定申告 or kakutei shinkoku) each year. If you have a good accountant, then this shouldn’t be a major concern, but it’s something to keep in mind if you do your own taxes.

Overview of brokerage accounts in Japan

What follows is neither an exhaustive list, nor in any particular order. It’s based on our research, and—again—should not be taken as financial advice.

Monex Securities

The sign-up process for Monex was among the smoother of the Japanese brokerages we reviewed. However, one potential snag is that Monex requires customers to use one of these bank accounts:

• Mizuho (みずほ銀行)
• MUFJ (三菱ＵＦＪ銀行)
• SMBC (三井住友銀行)
• Risona (りそな銀行)

Read about opening a bank account in Japan.

Rakuten Securities

Rakuten, Japan’s premier tech brand, has a funky smartphone sign-up process to streamline KYC for creating your Rakuten account. If you already have a Rakuten account, then presumably you can skip (some of) this part of the sign-up process.

You’re directed to scan your ID card/driver’s licence, and then take some ID photos. This culminates in a rather quirky “moving selfie” process, presumably to prevent people from cheating the ID by holding up a photo to the camera. No doubt you’re already used to frustrating online sign-up experiences in Japan, so this tricky step won’t disappoint: it took us about five minutes to pass this threshold!

Also another (small) barrier: you are required to have an 090, 080 or 070 number, so if you’re using certain VOIP providers rather than one of the big three mobile operators, you might be out of luck. Read about getting a Japanese mobile number.

On the plus side, Rakuten’s programmers thankfully convert romaji to the required double-byte characters.

There are no restrictions on bank accounts, but having a Rakuten bank account integrates better with your Rakuten securities account.

GMO Click Securities

GMO Click was also quite a smooth sign-up process, and they also thankfully convert romaji to double-byte characters.

SBI Securities

We found SBI had a somewhat adversarial sign-up process for people with non-Japanese names.

It doesn’t allow more than 17 characters in your name (better hope you don’t have your full name on your bank account, otherwise you’ll likely have issues withdrawing funds to an account that doesn’t match your SBI account name).

Moreover, if you have a dash in your katakana name, note you can’t use the dash symbol. Pro tip: you have to type out “minus” in Hiragana (まいなす) and then change it to a minus symbol!

SBI also has “SBI Net Bank”, so for ease of integration and multi-currency transactions, you’ll probably want to create a bank account when you sign up.

DMM.com Securities

DMM seemed fine when we checked it out from Japan, but you might find your access to the website blocked when you’re out of the country. That could be stressful for frequent travelers!

Comparing brokerage accounts: Basic fees and features

Notes:

Monex Securities: App available.
Rakuten Securities: You can deposit USD from your SMBC or SMBC Trust Bank account. App available.
GMO Click Securities: No deposits or withdrawals in foreign currency available, but you can create a “証券コネクト口座” at “GMO Aozora Net Bank”, which has multi-currency accounts—though you can still only deposit yen into your brokerage account. App available.
SBI Securities: App available. See more information about banking.
DMM.com Securities: App available.

Comparing brokerage accounts: Access to non-Japanese markets

Notes:

Rakuten Securities: Stock list here.
GMO Click Securities: Limited number of US shares via CFDs. Some other markets and indexes via CFD and ETF.
SBI Securities: NYSE/NASDAQ real-time data 500 yen/month. Stock list here.
DMM.com Securities Stock list here.

Quick summary

If you’re happy with a simple set-up, like buying index funds instead of stock picking, then provided you are comfortable with a Japanese website interface, a Japanese brokerage will suffice—plus it has the advantage of automatic tax handling and access to trading in a NISA.

If you’re interested in more flexible and advanced dealing on international markets, then you will probably find the Japanese brokerages too limited.

Read about transferring money out of Japan or transferring money to Japan.