There has been an almost universal consensus across the industry that higher margin requirements are “the new normal” in the forex business in a post-Swiss National Bank world.
One of the key players in the Asian retail markets has taken a different approach to its peers. The Australian subsidiary of the Japanese powerhouse DMM FX is going to provide higher leverage to its clients. The firm states that it is now providing leverage of 1:600, 1:500, 1:400, 1:300, 1:200, 1:100, 1:50, 1:25, 1:10,
1:5, 1:2, 1:1.
The move comes at a surprising time, since just this morning Forex Magnates reported about the Australian Securities and Investments Commission (ASIC) looking into tighter regulatory requirements.
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While ASIC officials have so far been reluctant to make any commitments as to whether to introduce a cap on maximum leverage used by retail FX traders, the regulator has recently made it harder for companies seeking licensing to get regulated in the region.
According to the head of the financial regulatory watchdog in Australia, Greg Medcraft, ASIC has recently been limiting the licensing prospects for firms offering excessively high amounts of leverage.
Mr. Medcraft explained during a parliamentary hearing last Friday, that brokers primarily using Australia for a base of operations to target the Asia-Pacific market will be closely scrutinized.
The company is also aggressively looking to expand its footprint in the region by launching a no-deposit bonus campaign. The approach mimics a strategy adopted by another very successful broker in the region – Plus500 Ltd (LON:PLUS).
The London Stock Exchange listed company has been promoting a no-deposit campaign throughout the E.U. for a while, requiring only SMS confirmation from new clients. The strategy has been a big success for the broker in the region, with new client numbers performing consistently in the quarters after Plus500 added the offer.