ASIC licensing report update: We rejected all 3 Retail Forex broker applications in 2015


Australia’s financial regulator ASIC released an updated report on license applications during the first half of 2015, and it contained more bad news for the Retail Forex sector.

ASIC listed the retail OTC derivatives (i.e. Retail Forex) sector as being one it continues to closely monitor, alongside the related digital (robo) advice providers.

In fact, ASIC confirmed that it had rejected all three new license applications in the Retail Forex sector which it received during the first six months of the year.

The rejections are, in our view, good news for the existing leaders in Australia’s Retail Forex brokerage sector, including AxiTrader, Pepperstone, Invast, IC Markets, SynergyFX, and Core Liquidity Markets, as potential competitors are seeing a very high regulatory barrier-to-entry into the Australian market.

Back to the report, ASIC also went out of its way to point out that of the AFS licenses it suspended or cancelled during the period two were Retail Forex brokers (Rainbow Legend and Australian Capital Markets Advisory Services, or ACMAS).

In ASIC’s words:

We continue to see a number of applicants seeking various authorisations relating to over-the-counter (OTC) retail derivatives including margin foreign exchange (FX).

As mentioned… we continue to pay particular attention to proposed new entrants to this market sector. This includes consideration of the applicant’s business model, their organisational competence and responsible managers, their contractual and outsourced functions, and their risk management systems and processes. The Licensing team continues to liaise closely with other ASIC stakeholder teams and other regulatory agencies (both local and overseas) regarding personnel, systems, related parties and associates, as well as operations they may conduct in foreign jurisdictions.

The Licensing team dealt with three applications during the relevant period relating to ‘deal issue’ and/or make a market in OTC derivatives involving margin FX.

Of these applications:

  1. one was voluntarily withdrawn after being advised that we were minded to recommend refusal of the application;
  2. the other two were both refused by an ASIC Hearing Delegate following a hearing; and
  3. one of the applications referred to in point 2 above was appealed to the Administrative Appeals Tribunal (AAT) but the appeal was subsequently withdrawn by the applicant and dismissed by the AAT.

To see the ASIC report on First Half 2015 click here.

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ASIC licensing report update: We rejected all 3 Retail Forex broker applications in 2015

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