The Financial Stability Board (FSB) distinguishes financial leverage, which comes from raising funds through borrowing such as loans and repo transactions, from synthetic leverage, which uses derivatives to create positions linked to the price of an underlying asset1. In the summary of the second round of results (December 2025) of the fund monitoring survey it has conducted since 2024, the Financial Services Agency calculates gross leverage as gross positions, excluding cash and similar assets, divided by net assets2.

Consider a hypothetical example in which a fund with net assets of 1 billion yen holds 800 million yen of stocks and 200 million yen of cash, and buys 2.2 billion yen of equity index futures. Its positions in stocks and futures total 3 billion yen and the multiple is 3 times. If both the stocks and the futures move at the same rate as the index, a 10% market move produces a gain or loss of 300 million yen, or 30% of net assets.

Notes

  1. Financial Stability Board, "Leverage in Nonbank Financial Intermediation: Final report," July 9, 2025, section 2.1, page 4 (page 8 of the PDF). ↩

  2. Financial Services Agency, "ファンドモニタリング調査（第２回）結果概要" (Summary of the results of the fund monitoring survey, second round) (in Japanese), December 2025, "(4) レバレッジの状況" (Leverage) and footnote 14, page 15 (page 17 of the PDF). ↩