Is online Forex/CFD trading legal in Australia at all? The short answer to that would be yes. The longer one is: yes, but you should make certain you’re dealing with an ASIC-licensed entity.
ASIC is the Australian Securities and Investments Commission, whose areas of responsibility include online financial services, derivatives and securities – not to mention consumer protection. Why do you want your broker to be ASIC regulated? Simple: ASIC will only act as a consumer protection watchdog for you, if the broker with which you are trading is under its authority.
The Australian Forex/CFD/Cryptocurrency landscape is an intricate one, where at least three different types of brokerages peddle their services. There are unlicensed, unregulated brokerages with a global reach, whose services may indeed be accessible to Australian traders too. Then, there are financial service providers who are not based in Australia, but who are licensed by ASIC to peddle their products there. Finally, there are Australian born-and-bred operations, firmly under the authority of ASIC.
|Broker||Features||Min Deposit||EURUSD Spread|
|74% of clients lose money. Capital at risk. US Clients: Yes Regulated : Yes||
||$100||from 0.1 Pips||
Sign Up 74% of clients lose money. Capital at risk.
|Your capital is at risk US Clients: Yes Regulated : No||
– Trade 15 cryptocurrencies
|Your capital is at risk US Clients: No Regulated : Yes||
||$25||From 0.4 pips|
Most serious global brands have set up Australian subsidiaries for their operations in the country, meaning registered Australian companies, with their physical addresses in the country.
Of these, the first type (unlicensed, unregulated) brokers pose the biggest dangers. If you are even a tiny bit versed in the ways of the trading industry, you are well aware of the scams and crooked operators working their “magic” out there. Just imagine what such scammers will do to your deposited funds, with no authority watching over them.
Brokers in Australia that are licensed by ASIC and that operate out of a physical location within the country, are generally trustworthy and always accountable. ASIC is indeed considered to be one of the most exigent national financial regulators in the world.
ASIC is an independent government body, the primary role of which is to make sure that Australian companies and financial service providers do indeed comply with the laws that protect creditors, investors and traders.
The organization was established in 1998. Its operational framework was set through the Australian Securities and Investments Commission Act of 2001.
ASIC maintains a register containing all the names of companies, associations and managed investment schemes registered in the country. If the name of your broker is not in this registry, you should go and look for another one.
ASIC’s predecessor was the ASC (Australian Securities Commission), which was established way back in 1991.
Over the course of its brief but eventful history, ASIC has seen some ups and downs. It was even the target of a class action lawsuit in 2015-2016 for allegedly failing to properly act towards protecting consumers in the Storm Financial incident.
In 2016, ASIC acted against four Australian banks for incorrectly influencing benchmark interest rates, but drew more ire on account of being too late to act in the case.
Though its official website is asic.gov.au, ASIC runs a dedicated website for financial guidance and tools, called MoneySmart (moneysmart.gov.au). This portal does not just offer investment advice and relevant news for investors, it also features a list of companies one should not deal with.
It goes without saying that this list is valid whether you’re looking to trade Forex from within the country or from a different location. Before registering an account with a broker, see if you can find it on ASIC’s “blacklist” at MoneySmart.
While ASIC will register offending entities on its blacklist, provided they are reported by those scammed, it is frank about not being able to recover monies sent to operators/brokers based outside its jurisdiction. This is indeed why it is doubly important to check with the regulator BEFORE you commit any money to a trading venture.
That said, brokerages licensed by ASIC are obviously safe to deal with.