Domestic vs Foreign retail forex brokers in Australia on client funds segregation issue: AFR

There was an interesting article in today’s Australia Financial Review (or AFR), Australia’s leading business publication, on the goings on down under in Retail Forex.

Entitled Turnbull government should not be swayed by online forex cowboys, the AFR outlines a budding lobbying war taking place between the domestic Australia-based retail forex brokers, and the foreign brokers who have been growing their franchises in the country.

Not surprising.

Australia continues to grow as a preferred destination for Retail Forex brokers. The country’s own market has been growing, but more importantly the country is a perfect base for serving fast growing Asian currency trading markets, in particular China. Australia’s financial regulator ASIC is viewed as a credible and trustworthy overseer, there are many potential employees who speak many different (Asian) languages, a modern banking system – for these and other reasons Australia will continue to be a major forex battleground.

We believe that 2015 as a very good year for Australia’s leading retail forex brokers, AxiTrader and Pepperstone. Top foreign brokers targeting Australia, mainly from the UK, have also reported rising results down under – for example IG saw 21% growth in Australia so far this year.

We had reported back in 2014 that a group of these foreign brokers had joined to form the Australia FX and CFD Forum, excluding the local brokers. Well now the domestic firms have themselves formed the ‘Australia CFD and Margin FX Association’, to push back against lobbying efforts being made by the foreign brokers. The main issue at hand seems to be whether or not to require the segregation of client funds, something which has become common in other leading regulated jurisdictions, primarily the EU and the US.

Some excerpts from the AFR article include:

The CFD and FX Forum, an alliance of foreign online broking firms… has lobbied tirelessly for laws that limit brokers’ use of client funds to hedge against their own risk…

The newly created CFD and Margin FX Association represents the interests of local operators that don’t want limits imposed.

Over the past two years the corporate watchdog [ASIC] has taken a much keener interest in the industry and has ceased to grant new licenses.

The original AFR article can be seen here.

Another good article summarizing the policy paper making the rounds regarding the segregation issue can be seen at today’s Sydney Morning Herald.


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