ASIC Regulated Brokers

ASIC is a regulator for forex brokers located in Australia. Brokers licensed and recognized as Financial Service Providers (FSPs) in Australia must be registered with ASIC and comply with the Corporate Plan of 2018-2022. Just like forex regulators in general, ASIC's basic task is to oversee forex brokers carry out their company's activities fairly and pay attention to the safety of client funds.

The establishment of ASIC departs from the 2015 SNB incident which shook the futures trading industry. This incident caused the bankruptcy of 2 brokers and caused hundreds of brokers big losses. The surviving Australian brokers are proven to have better risk management. From these problems, emerged an idea to revise the broker's regulatory mechanism in handling market challenges. Since then, ASIC has become one of the most competent broker regulation standards worldwide.

Therefore, ASIC has quite strict requirements, including:

1. Risk limitation
2. Bonus Prohibition
3. Consumer Enlightenment.

The risk management protocol at ASIC regulated brokers includes a minimum operational fund of 1 Million USD, a segregated account at a tier 1 bank, and has a physical office that can be visited in Australia. Bonuses are also not allowed because these promotions are often misused to attract new clients without a clear TnC. ASIC also provides an online portal titled MONEYSMART, so prospective traders can first understand the ins and outs of trading. This is an anticipation that the public understands the risks of forex trading and is not trapped in a scam.

Here is a list of ASIC regulated brokers:

Advantages and Disadvantages of Trading in ASIC Regulated Brokers

Despite having basic requirements equivalent to the UK and US, ASIC regulated brokers are more flexible in managing their trading conditions. Unlike FCA which limits maximum leverage to only 1:30, ASIC regulated brokers can provide leverage up to 1: 100 or above. Also, ASIC-regulated forex brokers allow hedging strategies without First-In-First-Out regulations. Many ASIC regulated brokers also offer trading on ECN accounts, with the application of the FIX API. The trading technology allows traders to experience faster and transparent transactions.

It should be noted, since 2019, ASIC has issued a regulation that its brokers can only accept domestic clients and compensation funds apply to traders within Australia. This becomes both a deficiency and an excess. Since most ASIC regulated brokerage clients come from the Asia Pacific region, it is not surprising that these brokers have alternative regulations other than ASIC. That way, traders can get services from companies whose work systems have been recognized by ASIC, but still under the trading conditions required by these alternative regulations.

FAQ

What does ASIC regulated mean?

Being regulated by ASIC means operating under the standards of Australian financial regulator. Brokers licensed and recognized as Financial Service Providers (FSPs) in Australia must be registered with ASIC and comply with the Corporate Plan of 2018-2022.

What are the ASIC rules?

In general, ASIC rules are strictly applied to cover risk limitation, bonus prohibition, and consumer enlightenment. The risk management protocol at ASIC regulated brokers includes:

• A minimum operational fund of 1 Million USD,
• a segregated account at a tier 1 bank, and
• a physical office that can be visited in Australia.

Bonuses are also not allowed due to the risks of misusing them to attract new clients without a clear terms and conditions.

ASIC-regulated forex brokers allow hedging strategies without First-In-First-Out regulations. Most of them offer trading on ECN accounts with the application of the FIX API. But it should also be noted that as of 2019, ASIC has issued a regulation that brokers under its regulation can only accept domestic clients. In this case, the compensation funds would only apply to traders within Australia.

What is the main purpose of ASIC?

Just like other forex regulators in general, ASIC's basic task is to oversee forex brokers carry out their company's activities fairly and pay attention to the safety of client funds.

If you are interested to open an account in one of the brokers in the list above, make sure to try the forex demo account before proceeding to register in the live account.