> Which is a complicated way of saying that the share that I think I own actually exists in the world, through an admittedly complicated web of commercial relationships maintained by professionals at regulated financial institutions. It is not simply a bookkeeping entry that my broker made up to take my $2.
Why is this the line between investing and gambling? I might own $1 billion of equities on swap. This is just a bookkeeping entry that my dealer made up to take my money. I don't see how not owning the physical stock suddenly makes it gambling.
If you own $1 billion of equities on swap, you can guarantee that your broker has actually bought the equities (or something close to them) as a hedge. There is no way that your broker has an unhedged $1 billion equity swap with you. They collect a spread on the swap transaction of a few basis points, which is hopefully less than the cost to hedge the swap. They don't want to take the risk of the position moving against them by more than a few basis points (typically the equity market moves hundreds of basis points per day) so they almost always hedge.
The Japanese FX broker, on the other hand, has the odds so firmly stacked in their favour that they have no need to actually do any FX trading (though I expect that they do some). If the margin is high enough, the statistical fluctuations don't matter that much. That's the difference between a brokerage and a bucket shop.
Why is this the line between investing and gambling? I might own $1 billion of equities on swap. This is just a bookkeeping entry that my dealer made up to take my money. I don't see how not owning the physical stock suddenly makes it gambling.