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RoboForex, a retail FX broker originally registered in New Zealand, has recently made steps towards establishing its Australian business, with the next logical step being obtaining a regulatory licence in the most favored of the Antipodean nations for conducting FX business.
A quick check with ASIC Connect, the online information service of the Australian Securities and Investments Commission (ASIC), shows that RoboForex received an Australian Business Number (ABN) in June 2014. Since New Zealand’s Financial Markets Authority came into being, with it bringing a full framework for regulation of FX brokerages in New Zealand, a number of FX brokerages have opted to eschew New Zealand in favor of becoming licensed under Australia’s well respected set of regulatory principles.
Back in January 2013, New Zealand’s officials sent a letter to all industry participants in its jurisdiction, stating that they will be required to adhere to specific rules, and that they will be required to be regulated by a bona fide financial markets regulator rather than simply have their name placed on the Financial Services Provider’s register without the need to even have physical offices in New Zealand or be subject to compliance inspections and regulatory filings as had previously been the case.
Indeed, Australia has carved out a reputation for good business ethic, a secure financial markets economy and first class customer protection. As a result of this, and its high status among trade partners in the Asia Pacific region, it would be logical to consider that if a retail FX brokerage must go to the expense and effort of gaining regulation and adhering to it, then Australia would be a sound choice.
Getting an ABN is not itself equal to obtaining an AFS licence from the ASIC, as ABN is more of an administrative formality, issued by the Australian Taxation Office. It is usually helpful for claiming Goods and Services Tax (GST) credits and for confirming the identity of the business. However, most companies wishing to set up operations in Australia make use of this formality as it allows you to register an Australian domain name – without it, it is very difficult to conduct business. Although the company has registered itself as an ABN, it could well represent the first formality toward gaining ASIC regulation.
This is not the first step that RoboForex has made towards setting up operations in Australia. In the end of 2013, the broker filed an application for establishing a private company and got its Australian Company Number. The business, under the name RoboForex (AU) Pty Ltd, is now enlisted in the register of ASIC.
RoboForex already has subsidiaries licensed in New Zealand and Cyprus but the company’s wish to grow in Australia can hardly be attributed to a mere desire to expand. In fact, the business of the existing companies operating under the RoboForex brand seems diverse and successful enough – amid the latest additions to the company’s portfolio are its own social trading platform CopyFX and its recently launched binary options trading service RoboOption.
More likely, the interest in Australia is underpinned by the aforementioned recent regulatory changes in both New Zealand and Cyprus. Cyprus has dealt a few blows to the retail Forex industry, in particular to the market makers, of which Cyprus is home to many. In January 2014, the Cyprus Securities and Exchange Commission (CySEC) declared certain bonuses given out by investment firms to traders as unlawful. In 2013, New Zealand’s Financial Markets Authority stunned the Forex world with a set of restrictive rules that demanded all Financial Service Providers (FSPs) to have physical premises in the country to provide on-site compliance. As a result of failing to meet this demand many FSPs were deregistered forthwith.
A recent example of an FX brokerage which cited regulatory concerns as the main factor for leaving behind its New Zealand FSP status earlier this year, although for different reasons from those heading to Australia, is EXNESS, emphasizing that certain firms which were originally registered in New Zealand prior to the transfer of FX firms from the FSP to full regulation are unable to operate within their previous parameters and remain in New Zealand. Thus, EXNESS headed to St Vincent and the Grenadines, whose requirements resemble those of the now obsolete Financial Services Register in New Zealand. The list of other FX firms registered in New Zealand but later expanding in Australia also includes XM.com – a brand of Trading Point Holdings. The company obtained an ASIC licence in February 2014.
Meanwhile, the Australian retail Forex landscape has been quite dynamic over the past months. FX firms MXT Global and Vantage FX combined their operations in June, whereas less than a fortnight ago AvaTrade announced the acquisition of the Australian client base of YouTradeFX. Apparently the Australian retail Forex market remains a lucrative target for brokers.