ASIC Forex Brokers & Regulations for Australia

ASIC Forex brokers are quickly becoming one of the hottest topics of discussion in the retail Forex trading industry due to the rising number of ASIC regulated brokers and the increased protection of funds provided by the ASIC regulation. ASIC (Australian Securities & Investments Commission) is a traditional regulatory authority that has been involved with the Australian financial markets since the early 90s. However, 2009 saw a radical change in the ASIC’s approach to the financial markets, and the regulator started to amend the way in which financial companies could operate in the Australian stock exchange. The ASIC began implementing new and advanced regulatory guidelines to ensure that all businesses participating in the financial markets adhere to a strict set of rules according to global regulatory standards. ASIC seems to be one of the highly reputable agencies in the market that are concerned about safeguarding the interests of the investors. ASIC has stipulated all Forex brokers to hold a valid Australian Financial Services License (AFSL), which brings them directly under the ASIC regulation. ASIC operates under the Corporations Act (2001) of the Australian legislature and ensures that all laws are correctly interpreted according to the framework of the Government to maintain the integrity of the markets. ASIC also incorporates rules under the Insurance Contracts Act (1984) and the National Consumer Credit Protection Act (2009).

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How Does ASIC Regulation Help The Trader?

asicASIC is an agency that has an extensive and detailed rulebook of regulatory guidelines that is aimed to deter any companies from indulging in financial scams or malpractices. ASIC consistently monitors all regulated members on a periodic basis, and the agency is quick to initiate investigations against any company for alleged deviation from the regulatory guidelines. To ensure that all companies conform to a uniform set of directives, the ASIC has devised a centralized regulatory structure that provides guidance and recommendations for member firms within the existing framework of regulatory rules. ASIC has adopted the global standards of Forex broker regulation, as ASIC regulated Forex brokers are required to hold at least $1 million in operating capital. Australian Forex brokers should work with tier-1 banks for keeping their clients’ funds in a segregated account, which cannot be used by the broker for any business purposes. The ASIC also has an investor compensation scheme in place to ensure that client funds are protected in the event of broker insolvency.

Relationship Between ASIC & The Trader

ASIC works tirelessly to enhance investor confidence and consumer trust among financial firms and is dedicated to improving the knowledge of individual investors by protecting them from the volatility of the markets. The ASIC has introduced a wide variety of financial programs such as the MoneySmart program, which aims to educate investors about the different avenues that can help in maximizing their returns. The ASIC also provides other services such as helping investors to reclaim lost money in dormant accounts, protecting investors from insolvency issues, keeping them safe from financial scams, and informing investors about the codes of practice that they should be aware of before investing in the markets. The ASIC also issues several rules regarding lending and borrowing money, as citizens are advised to indulge in borrowing activities only with authorized and regulated financial entities. Traders can also contact the ASIC for any complaints against member firms or the conduct of the ASIC staff or services. ASIC takes every consumer complaint seriously and is known to investigate most tip-offs and other reports of misconduct to make sure that the integrity of the Australian financial markets is protected against abuse. The agency works as an independent organization, which prevents any conflict of interest with investors or member firms.

Is It Easy To Find An ASIC Regulated Forex Broker?

Forex brokers are required to hold a valid AFSL license to be able to operate in Australia. Australia is turning out to be a huge market for retail Forex trading, and several brokers are flocking to the region to set up a mainstream brokerage under the ASIC regulation. Australia provides several incentives and a great business environment for new companies, which helps Forex brokers to experience excellent returns on their investment. It is relatively easier to find ASIC Forex brokers; however, the number may be significantly lower than other regulatory agencies such as the FCA and the CySEC. However, the ASIC does provide several attractive benefits that allow brokers to take full advantage of the ASIC regulations without the drawback of any trading restrictions. ASIC brokers are known to provide a high amount of leverage and total freedom of trading, which helps smaller retail traders as well as institutional investors to invest in the markets without worrying about the implications of a controlled trading environment.

What Should I Look For In An ASIC Regulated Broker?

Every trader has the primary responsibility of safeguarding their investment by ensuring the reliability and authenticity of a broker before depositing money and trading with them. Some brokers misrepresent the facts about their regulation to indulge in fraudulent financial practices. If a dealer claims to be based in Australia, your priority is to check whether they have a valid AFSL license and whether the company has a regulatory status from the ASIC. Every ASIC regulated Forex broker in Australia is provided a unique AFSL number, which can be verified through the official ASIC website. If a broker is reluctant to share the information, the trader should exercise high levels of caution while dealing with such a company. ASIC regulations state that all regulatory information about the company should be imparted to traders freely without any fail. The ASIC also provides a brief history about regulated members on their official database, which allows traders to learn more about a firm before deciding to open an account.

What To Do In Case Of Consumer Complaint

ASIC entertains consumer complaints through the various Federal agencies and also encourages companies to resolve issues at the broker level. In case the investor is unable to obtain a favorable response, he/she can also approach the Financial Ombudsman service or contact a higher authority such as the Court for resolution of the matter. Nevertheless, Australian Forex brokers are highly proactive in their approach and usually, resolve customer issues by working with their clients on finding a good resolution. The ASIC guidelines have indeed helped in achieving low levels of scams, which help traders to enjoy absolute peace of mind while dealing with ASIC regulated FX brokers.