There has been no small level of complaints against the new leverage rules in the UK and the EU, which has increased the capital requirements of traders who want to trade with these brokers. Frustrated forex traders are now looking towards Australia, where the ASIC-regulated brokers as shown on this list still offer leverage as high as 1:500, even as they operate in a well-regulated environment.
So what kind of environment does the Australian Securities and Investment Commission (ASIC) provide for traders? ASIC’s Corporate Plan of 2018-2022 spells out some of what ASIC hopes to achieve in the time period covered by the plan. Among the key performance milestones include:
- Promoting behavioral change among financial service providers so that investors and consumers can get fair treatment.
- Stronger levels of compliance with Australia’s investment laws.
- Driving transparent reporting practices among providers.
- Ensure that complaints and disputes are handled properly.
- Maintain integrity and trust in the system by taking swift and decisive action against broker misconduct.
An entire section was taken out in the plan to define what ASIC views as misconduct. These include the selling of investment products to clients whose risk appetite does not match the risk levels carried by these products, as well as unfair treatment of investors. Failure to disclose, or poor/ineffective disclosure of risk levels of investment products is also frowned on.
So what ASIC has basically done is to put the onus of providing a safe environment for trading squarely on the shoulders of the financial services firms that it regulates. ASIC has so far, not meddled with the leverage provided by brokers it regulates, so many ASIC-regulated brokers still provide their traders with generous leverage of up to 1:500. This makes them a great alternative to the UK/EU brokers, especially for those traders who do not want to stray outside the “big four” regulators (the others being FCA, CFTC and CySEC).
What You Can Expect from an ASIC-Regulated Broker
What benefits can you expect to get when trading with an ASIC-regulated broker?
- You get full disclosure about any financial product being introduced on a trading platform. No surprises. ASIC takes the issue of disclosures about forex products pretty seriously, and errant brokers can expect to get some very heavy punishment.
- Your funds are segregated and placed with the strongest banks in the country. So you are sure that your funds will not be used by the brokerage to fund their operations.
- You will not be given any “bonuses” that ultimately snare you into not being able to withdraw any money pending the completion of trade volume requirements that come in fine print.
- ASIC seems to have a gentleman’s agreement in place with the Japanese financial regulators not to allow cross-marketing of trading products by financial service firms in one country to the other.
- You get access to trading in a very safe environment.
- You may be able to seek compensation from the compensation fund setup to provide relief to traders who have suffered losses as a result of broker-induced factors. The National Guarantee Fund is one of such funds.
It can be fairly concluded, that nowadays ASIC-regulated brokers provide a stable regulated environment as well as healthy leverage for you to trade with. Moreover, traders also get access to low spreads and low minimum account opening requirements.