Australia is one of the first countries to adopt forex trading for retail clients, thus, it is also amongst the most advanced in this sector as well. Usually, brokers are more than happy to accept anyone from Australia. However, it is in the client’s best interests to select the best Australia regulated broker, which falls under local jurisdiction. This is to protect the interests and funds of the client from mismanagement by a potentially fraudulent company. It is a well-known fact that the current forex trading market is full of scammer companies, which are trying to squeeze out every bit of funds from their clients before either mismanaging them and losing everything and just keeping their fees or disappearing as a whole. For this reason, it is always recommended do double and triple check the background, certification, reviews, and associates of the broker before we start partnering up with it. The general rule of thumb in Australia is to find Australian Securities and Investments Commission (ASIC) regulated broker.
Apart from this, there’s a strong incentive to trade with a firm that supports deposits and withdrawals in the local currency – Australian Dollar (AUD) in this case. To be fair, this point is only applicable for Australian traders as a lot of people from New Zealand and South-East Asia are also seeking ASIC regulated forex brokers but are not going to deposit or withdraw AUD. These people can just ignore this point and move on to the next one.
Another important factor is a timezone related one. This is mostly due to the fact that the best brokers in the office will mostly be working during the day. Thus, if one requires help during the after-hour trading it will always fall onto some folks who are spending nights at the computers tired and bored. So it is only logical for a person to push for a locally regulated, locally established brokers.
Top Australian FX Brokers and Reviews
Currently, there are over 30 brokers regulated by ASIC, however, a lot of these companies have only a small branch of their company located in Australia. Mainly this is due to the fact that ASIC regulation is a very good trust indicator. Due to this, we decided to do an in-depth research trying to find legit forex companies in Australia.
It is important to note that CFDs are a complex instrument with high-risk high reward stakes. Thus, it is very possible to lose money at a very fast rate. It is stated in researches that around 74-89% of retail traders lose money when trading CFDs. Make sure you understand all of the risks associated with trading before you start operating.
To view more information about the broker simply click a button to land on their website and see their services. Make sure to read the reviews, which can be done without leaving our website. It is important to pay attention to all of the details due to the overflow of scamming broker companies. Unfortunately, there is no easy way to determine which one is what. However, after an in-depth research one can always find one or another flaw and thus understand if the broker is legit or not. This is why you have to always aim for legit forex companies in Australia.
AvaTrade
Minimum deposit
100 USD
Licences
ASIC , FSC, FSCA, FSA, FFAJ, FSRA
Maximum leverage
400:1
Platforms
MT4, MT5
HotForex
Minimum deposit
5 USD
Licences
FCA, FSA, DFSA, FSCA
Maximum leverage
1:1000
Platforms
MT5, MT4, WebTrader
Plus500
Minimum deposit
$100
Licences
FCA, ASIC, CySEC, FSCA, FMA, MAS
Maximum leverage
1:30
Platforms
WebTrader
IQ Option
Minimum deposit
$10
Licences
CySEC, FSA
Maximum leverage
1:30
Platforms
Web
ASIC and Their Regulations
It is obvious that every trader in Australia and South-East Asia should aim for a broker that is regulated by the Australian Securities and Investments Commission. This is due to the fact that it is one of the most trusted regulators in the whole world.
To put it in simple terms ASIC is an independent governmental body, which is responsible for the regulation of the financial market. Their main responsibilities fall in the following areas:
- Derivatives
- Securities
- Protection of consumers
- Corporate governance
- Financial education and literacy
- Insurance products
- Financial Service Companies (FSC)
Out of these Financial Service Companies are where the brokerage firms fall under.
ASIC was first established in 1998 as a replacement for the previous regulatory body Australian Securities Commission (ASC). ASC was the one responsible for regulation from 1991. The preferred method to regulate the financial market was on a regional level. This however changed in 1998 once ASIC took over. This is when the brokers were given the ability to receive their own local license in Australia and thus end up on the Australian forex brokers list. Apart from brokers, as we already mentioned, ASIC also regulates all of the insurance companies, investment funds, and banks in Australia. This is a huge part of their success as it allows them to have a full overview of the financial market and make specific adjustments, which will contribute to the overall health of the market.
ASIC is considered to be one of the world’s most trusted financial regulators due to its age and overall success in their work.
What does ASIC Require From The Brokers?
The first and the most important thing to acquire Australian Forex License from ASIC is to have a locally incorporated and registered company, which does Foreign Exchange operations. So the only way to become licensed you have to fully establish and operate from Australia.
It is worth noting that only Australian registered companies can get the domain .com.au. This however does not mean that the company is regulated by ASIC. So, making sure that the company is legit and doing proper research on “Australian Forex brokers” is an absolute necessity.
So to put it simply, for the company to apply for ASIC’s Australian Forex License they need to have a physical office in Australia and only then they are eligible to submit the application form. More than usually the brokerages, which are serious about their business will also appoint a local director at that due to familiarity with local laws.
After all of the starting requirements are met and the company has local representatives with the official address another requirement needs to be met. This involves locking a certain amount of its capital to serve as a licensed FX broker. For years this was 50,000 Australian Dollars, which is not a small investment by far. Although, there’s another side to it as well. This is only for Straight-through-processing (STP). This is a process, which financial companies use to make their transaction processing time much faster. This means that the STP companies have the same information streamlined through multiple access points. This is the only way to become a legit forex broker in Australia.
In case the broker wants to take the opposite side of the trade, aka become a market maker, the capital is increased substantially to whopping 1,000,000 AUD. Before 2013 this number was locked on 500,000 AUD. Due to these requirements scamming market maker companies basically do not exist. If a company wants to steal money from its customers and disappear it’s basically impossible as they are losing 1,000,000 AUD nor it can be profitable in any way.
Apart from that, after the debacle with the Swiss National Bank, which led to bankruptcy for a lot of brokers ASIC has announced that it will be making the screening process even more rigorous for authorized FX brokers. It is said that not only does the FX broker have to be based in Australia but they have to also hold a license with authority for a number of years. However it is going to be, it is undisclosed, but ASIC has dropped the rate at which it authorizes new forex trading brokers for Australia. This applied to a lot of Australian Financial Licensed brokers that were offering marginal trading, aka FX brokers. Although, such licenses have been authorized and granted to companies from different sectors like lending companies for example.
ASIC Restrictions and Requirements
Unlike the brokers that are authorized by the European Banking Authority (EBA), forex brokers in Australia are not required to have the same rights or restrictions. This means that they are much more likely to have all sorts of different bonuses and benefits for their customers. Some of the most prominent ones are: forex contests, deposit bonuses, no deposit accounts, refer-a-friend promotions, and etc.
In addition to this, the maximum leverage is capped at 500:1. This is very much, unlike EBA’s restriction where the brokers have to keep the leverage under 50:1.
Apart from all of the above, the brokers in Australia are legally required to provide all of the information with maximum transparency starting from the nature of their operations to ending with the risks involved in financial trading. The availability of information is something that differentiates scamming brokers from legit forex companies in Australia.
How Does ASIC Assess Reports of Misconduct?
As a rule of thumb, ASIC records every report of misconduct that they receive. Then the process starts with preliminary inquiries and the assessment of the report itself to see if the law applies to the report and if it has been broken. They usually respond within a month.
ASIC can only take action if the problem is within its area of responsibility. As with lots of government authorities, it is still a bit popularity contest though. As they state on their own website:
“We (ASIC) are more likely to take action when it will be in the wider public interest and in line with ASIC’s objectives of fair and transparent markets and confident and informed investors and consumers. However, we do not generally act for individuals.”
ASIC weighs every individual report using four criteria to create Australian Forex brokers list:
- The extent of the loss or harm done by the unlawful behavior
- The benefits of pursuing the misconduct
- The extent of the effect of misconduct and unlawful behavior on the matter at hand
- The possibility of an alternative course of action
The ASIC decides to take action the decision is communicated to the person who reported the issue. This results in an allocation of specialist investigators or surveillance team within ASIC. However, the exact course of action may not be communicated to you.
In case ASIC decides not to take further action it is still communicated to you. A person can request a consultation about alternative courses of action at this point. This decision does not affect the right of an individual to take a separate lawful action against the misconduct of the regulated broker.
If the person is dissatisfied with the decision of ASIC they can make a follow-up request to review the decision. This will result in an ASIC officer, who was not involved in the original investigation, to take up the case and further research the issue with the ASIC listed forex broker.
Information Gathering by ASIC
Since ASIC regulates Australian companies, financial markets, financial service organizations, and professionals who deal and advise in investments, deposit taking, and credit the Australian parliament has given it a number of ways to collect the data. This is caused by the main goal of ASIC being the transparency, fairness, and the creation of a network of knowledgeable investors and consumers. This is done via monitoring of the compliance with the law and enforcing it when and where necessary.
A lot of times ASIC utilizes its powers to gather all of the necessary documentation and information and then require attendance from the reporter to answer all of the necessary questions and receive assistance.
These powers are very regularly used to conduct a huge number of surveillance and investigations. This includes things like overseeing, licensing, and regulating a number of entities, individuals, and financial services. This includes financial advisers, fund managers, insurance brokers, credit providers, financial markets and their participants, registered managed investment schemes, liquidators, and new forex brokers in Australia. These areas are usually very complex. This is due to the fact that most of the financial transactions are paper-based, which involves huge amounts of people and entities. It is also worth noting that sometimes these companies do not want to provide the documentation to ASIC due to fears of breaching the confidentiality of their customers or face liability when the compulsory request is made.
ASIC also has the ability to get a search warrant and execute the said searches to obtain the necessary documentation from the company, which ASIC is not able to get using other information gathering abilities. It is also a slippery slope for the ASIC itself, since they have to make sure that these warrants are used for ‘proper purpose’ and do not overstep the boundaries of legality. Due to this, there are safeguards placed to ensure that the powers are not misused by the individuals inside of the regulatory body. Thus, making sure that the legit forex companies in Australia stay within the law even after the licensing.
The compulsory information-gathering powers are utilized in two broad areas: surveillance, and investigations of suspected breaches of the law.
Surveillance
The term ‘surveillance’ refers to the activities and the process of information-gathering and analysis of said data about the particular entity to understand the compliance with the law. Surveillance can be done on different companies, individuals, unlicensed entities, and partnerships. This method is extremely useful because it allows ASIC to monitor the activities and have an overall real presence on the market as it involves direct interaction with the individual(s) or entities involved in the financial activity. It can compel the company to disclose the information to ASIC even if the entity is against it.
Surveillance is one of the methods as to how ASIC acquires information about misconduct. Not every misdemeanor has to be reported by an individual as the organization has its own eyes and ears in the market. This is why ASIC is believed to be one of the most trusted regulators all over the world and the companies getting on their Australian forex brokers list are tested and trusted.
Investigations of Suspected Breaches
As ASIC receives a huge amount of reports every year, it has become a necessity to create an investigative team of experts to go through all of the reports and followup on the inquiries. This does not only apply to individual reports but surveillance outcomes as well. These teams are referred to as ‘Enforcement Teams.’ They conduct a formal investigation and enforcement actions against the misconduct.
Enforcement teams receive tasks and get to work. They commence a formal investigation into the suspected misconduct and try to find a correlation between the actions and lawless behavior. If the correlation is found enforcement team gathers appropriate evidence and commerces the civil action, does briefing to the Commonwealth Director of Public Prosecutions (CDPP), and proceeds to lay criminal charges. Another option is to make a briefing to the ASIC delegate and push for the administrative hearing.
During the investigation, enforcement teams utilize all of the information-gathering abilities of ASIC to question all of the involved people who may have information about the misconduct as well as look into the processes undergoing in the suspected entity to make sure no coverup happens by already ASIC approved forex brokers.
The biggest difference between the surveillance and the investigation of suspected breaches lies in the range of information-gathering powers used. Formal investigations are carried out when there has been a suspected contravention of the law. This is when all of the information-gathering powers can be utilized. A surveillance inquiry can only inquire about the documents and compel the disclosure of the information as well as the production of the necessary documentation. Surveillance tests and ensures compliance, while investigation seeks to find whether there is any evidence of misconduct.
Australian Forex Scams
A lot of the scammers have been targeting Australian traders. This is why it is always recommended to check their reviews as well as crosscheck their information on ASIC’s official website. Various unregulated and plain fraudulent new “Australian” forex brokers have been contacting people from all over Australia. This is done via an elaborate strategy of counterfeiting an ASIC license on their website, faking reviews, locations, and other details about the company. In the end, the user has to take a responsible approach and check the information provided by the scammers on every platform possible. This can be done by asking more in-detail information about the whereabouts of the company, their licenses, license number, and etc. Users can also personally contact ASIC and check in with them about the licensing of said broker.
ASIC is very diligent in their efforts to root out such companies. They offer constantly updating information on their websites about licensed financial institutions. Other cases can and should be reported to ASIC immediately so that other people do not fall for the fraudulent and lying offers of the criminals.
The brokers that are not legit forex companies in Australia and approved by the ASIC will not appear on their website. ASIC also flags the broker as dangerous or misleading in case of continuous attempts to contact and enroll Australian citizens. There are quarterly audits done by the ASIC’s surveillance and enforcement teams to make sure that already registered and licensed brokers do not turn fraudulent as this can easily still be the case by jumping through some hoops.
Fortunately in Australia, ASIC does a great job of regulating financial institutions. It is considered to be one of the most trustworthy regulators all across the world. Due to ASIC’s safeguards placed for the companies trying to license themselves, there really is no need for a second regulatory body to confirm the legitimacy of the broker as ASIC is more than enough.
