In Australia, Forex trading is very popular and since 2007 there has been a steep increase in trading volumes. According to currency analysts, the overall increase in Forex trading activity is more than two times the volumes seen in 2007 and they exceed $400 billion in a day.
There are as many as 50,000 to 60,000 retail traders in the country and most of them trade every day. Typically, Australian traders buy and sell currency pairs such as EUR/USD, GBP/USD, AUD/CHF, AUD/EUR, AUD/NZD, and AUD/USD.
This is to say that they trade a mix of the minor, major, and exotic Forex pairs. However, it is important that they work with ASIC Forex brokers if their goal is to succeed in Forex trading.
ASIC is known as the Australian Securities and Investments Commission and the agency’s role is to ensure that the Forex brokers operating in the country abide by framework set up by the Commission. ASIC oversees all of the Forex trading that happens in the country.
The financial services providers that offer Forex trading platforms to Australians must be licensed by ASIC as per the terms and conditions stipulated in the 2001 Corporations Act. The agency maintains a registry of the licensed Forex brokers providing online platforms to Australian traders.
ASIC regulated Forex brokers follow the specified safety protocols to protect their clients from suffering steep losses. Many leading international Forex brokers have a number of Australian clients and though the U.S. restricted the availability of leverage to 50:1, following the 2009 global financial crisis.
The Australian authorities have been a little more lenient offering a leverage of up to 500:1. Currently, it is the government, and not the ASIC, that specifies the leverage levels that Australian Forex brokers can offer to their clients.
In 1991, the ASIC was formed and it was initially known as the Australian Securities Commission. The regulatory authority was responsible for protecting customers, creditors, and investors on the federal level.
As it is now, the ASIC has not set any limitations as regards the leverage that the Forex brokers in Australia can offer to their clients, but as far as taxation is concerned, all the gains/ losses accrued are liable for assessment as per the terms of the 1997 Income Tax Assessment Act.
Forex brokers licensed by ASIC provide better support to their clients. The big banks in Australia are made responsible for keeping the funds of clients of licensed Forex brokers.
This ensures additional safety as far as client’s funds are concerned. This is because segregated accounts ensure not only a strong overall protection but also negative balance protection at times.
Another aspect that the ASIC stipulates is the operating capital adequacy norm that licensed Forex brokers have to necessarily abide by in order to provide financial services in the country. ASIC regulated brokers are required to have a minimum of A$1 million as operating capital.
Though the primary role of ASIC is to regulate the activities in the financial sector, it is vested with several other responsibilities as well. For example, it oversees the corporate governance, monitors the operation of financial services companies, and protects clients’ rights and privileges, among others.
In addition, the ASIC is responsible for controlling the trader’s funds insurance and protecting investors’ personal information. This means that the activities of regulated Australian Forex brokers will be continuously monitored and warned if irregularities are observed.
Further, the ASIC is different from other agencies around the world in that they provide educational material on their website. In their portal MoneySmart, they provide information on best ways to invest funds.
Through Federal agencies, the ASIC entertains consumer complaints. The agency encourages companies in resolving disputes at broker level. If the investor fails in obtaining a favorable response, they can approach the Financial Ombudsman or the Court.
Summarising, these are the different ways in which the ASIC enhances consumer trust and investor confidence among Forex brokers. This, in turn, ensures safety and security for Forex traders.
Forex brokers that are not regulated by the ASIC cannot be expected to provide the right kind of protection to their clients. Therefore, choosing to work with ASIC Forex brokers is important when it comes to succeeding in currency trading in more ways than one.