The new rules are likely to commence in October 2024.
It shows ASIC's focus on tightening its grip on local market operations.
The Australian Securities and Investments Commission (ASIC) is moving towards tightening rules for foreign financial services companies with Australian operations. From October 2024, foreign brokers dealing with Australian retail clients will likely have to report their local transactions to the Aussie regulator.
ASIC to Bring Reporting Rules for Foreign Brokers
ASIC first proposed the derivatives transactions rules in a consultation paper published in November 2020 and then came up with further clarifications in a consecutive consultation paper on May 2022. It has finalized the new rules, according to a response paper it published last month.
"At this stage, our interpretation is that if brokers are targeting Australian clients in any way, in addition to its current activities, ASIC is likely to step up its enforcement to ensure those brokers comply with Australian laws where needed," Sophie Gerber, a Principal of the legal firm Sophie Grace and the Co-CEO of TRAction Fintech, explained to Finance Magnates.
"Incorporating reporting requirements into these scenarios where a firm comes within the parameters of ASIC regulation is an important additional regulatory tool because it creates scope for ASIC to see the extent of this activity, which would be difficult for them to ascertain otherwise."
ASIC Closes Regulatory Loopholes
This came as many brokers have the view that they are not regulated in Australia and, therefore, don't have any registration requirements in the country. The commencement of the new rules will cement ASIC's enforcement requirements in the Aussie law, or else the firms might face a cease and desist order.
Currently, ASIC overlooks the activities of all the financial services companies that have obtained an Australia Financial Services (AFS) license. However, no law prohibits offshore brokers or financial services firms from onboarding Australian clients.
However, the existing ASIC rules were drafted in 2015, and the market has changed significantly. Now, the re-write of the rules shows the regulator's broader interest in the transaction activities of Australian retail clients with foreign brokers.
Moreover, ASIC kept the scope of the upcoming rules broad. Any firm conducting operations from Australia (regardless of which customers are being onboarded), accepts or has accepted Australian retail clients, or targets Australian clients needs to ensure they review their requirements for doing so and continuing to do so in the future.
"As the rules commence and ASIC begins its enforcement processes, we anticipate that over time it will lead to a shift in how foreign brokers onboard and deal with Australian clients. Firms that already have an AFSL in their group structure may re-direct Australian clients to their AFSL entity and not permit them to onboard with any other group entity where they may currently be doing so," Gerber added.
Check out the latest FMLS22 session on the regulation roundup.
Two Major Reporting Re-Writes
The timing to implement the new reporting rules is also well-thought-out. It aligns with the upcoming EMIR Refit that will come into effect in early 2024, thus allowing global firms to allocate their resources for re-writes in transaction reporting at once.
ASIC is considered one of the reputed financial market supervisors. The new rules are being introduced in the near future since ASIC has already brought restrictions to the retail trading market over recent years. AFS license holders can only offer leverage up to 30:1 and implement other marketing restrictions. Furthermore, the regulator temporarily banned the offering and selling of retail binary options.
"These enhanced provisions being implemented by ASIC come at a time when other regulators around the world are starting to look more closely at the offshore activities of firms that they are regulating (or their other group entities), e.g. UK and St Vincent's. There seems to be a clear move by regulators to try and regain some control over the retail activity, which was effectively sent offshore by product intervention and leverage restrictions," said Gerber.
The Australian Securities and Investments Commission (ASIC) is moving towards tightening rules for foreign financial services companies with Australian operations. From October 2024, foreign brokers dealing with Australian retail clients will likely have to report their local transactions to the Aussie regulator.
ASIC to Bring Reporting Rules for Foreign Brokers
ASIC first proposed the derivatives transactions rules in a consultation paper published in November 2020 and then came up with further clarifications in a consecutive consultation paper on May 2022. It has finalized the new rules, according to a response paper it published last month.
"At this stage, our interpretation is that if brokers are targeting Australian clients in any way, in addition to its current activities, ASIC is likely to step up its enforcement to ensure those brokers comply with Australian laws where needed," Sophie Gerber, a Principal of the legal firm Sophie Grace and the Co-CEO of TRAction Fintech, explained to Finance Magnates.
"Incorporating reporting requirements into these scenarios where a firm comes within the parameters of ASIC regulation is an important additional regulatory tool because it creates scope for ASIC to see the extent of this activity, which would be difficult for them to ascertain otherwise."
ASIC Closes Regulatory Loopholes
This came as many brokers have the view that they are not regulated in Australia and, therefore, don't have any registration requirements in the country. The commencement of the new rules will cement ASIC's enforcement requirements in the Aussie law, or else the firms might face a cease and desist order.
Currently, ASIC overlooks the activities of all the financial services companies that have obtained an Australia Financial Services (AFS) license. However, no law prohibits offshore brokers or financial services firms from onboarding Australian clients.
However, the existing ASIC rules were drafted in 2015, and the market has changed significantly. Now, the re-write of the rules shows the regulator's broader interest in the transaction activities of Australian retail clients with foreign brokers.
Moreover, ASIC kept the scope of the upcoming rules broad. Any firm conducting operations from Australia (regardless of which customers are being onboarded), accepts or has accepted Australian retail clients, or targets Australian clients needs to ensure they review their requirements for doing so and continuing to do so in the future.
"As the rules commence and ASIC begins its enforcement processes, we anticipate that over time it will lead to a shift in how foreign brokers onboard and deal with Australian clients. Firms that already have an AFSL in their group structure may re-direct Australian clients to their AFSL entity and not permit them to onboard with any other group entity where they may currently be doing so," Gerber added.
Check out the latest FMLS22 session on the regulation roundup.
Two Major Reporting Re-Writes
The timing to implement the new reporting rules is also well-thought-out. It aligns with the upcoming EMIR Refit that will come into effect in early 2024, thus allowing global firms to allocate their resources for re-writes in transaction reporting at once.
ASIC is considered one of the reputed financial market supervisors. The new rules are being introduced in the near future since ASIC has already brought restrictions to the retail trading market over recent years. AFS license holders can only offer leverage up to 30:1 and implement other marketing restrictions. Furthermore, the regulator temporarily banned the offering and selling of retail binary options.
"These enhanced provisions being implemented by ASIC come at a time when other regulators around the world are starting to look more closely at the offshore activities of firms that they are regulating (or their other group entities), e.g. UK and St Vincent's. There seems to be a clear move by regulators to try and regain some control over the retail activity, which was effectively sent offshore by product intervention and leverage restrictions," said Gerber.
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
TradeStation and Coincheck Drive Monex's 850% Profit Surge
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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