The Australian Securities and Investments Commission (ASIC) hasn’t been very welcoming of new retail forex broker license applications for quite some time now. The last such permit was granted by the regulator in 2017, with only one other being finalized in 2016.
Today Finance Magnates can confirm that a brand new licensee started operating in the market with official authorization from the Australian financial watchdog. Fortrade is the latest company to acquire a new regulatory license after a two-year pause on the part of the local watchdog.
The news signals a shift in the stance of the regulator towards retail forex brokers, at least for the time being. That said, the ASIC is also expected to follow suit and adapt to the global regulatory trends. After the Australian financial watchdog changed client money rules in 2018, the Australian parliament is at present discussing a bill which is set to grant product intervention powers to the ASIC.
Exorbitant License Prices
Late last year, Finance Magnates reported on a trend in the land down under – regulatory licenses have become particularly expensive, reaching exorbitant values. The news that the ASIC is still granting new permits for retail forex brokers, could have an impact on asking prices.
While the safe-haven status of the Australian license is at present an appealing proposition, the global push for a synchronized financial regulatory framework has been taking shape since the aftermath of the Global Financial Crisis of 2008.
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The regional advantage of having an Australian license have been significant until recently. But the local regulator is very well aware of what brokers are looking for when having a local permit. ASIC is likely to monitor activities of Australian retail brokers on the European market closely.
Just as any other G-20 financial regulator, the ASIC has a history of communicating with foreign counterparts, and retail forex is not an exception. Years ago, local firms have been actively targeting Japanese clients, the resulting communication with the JFSA, led to a shift in policy on the part of Australian brokers towards Japanese clients.
For the time being the ESMA doesn’t appear to be proactively taking a stance to limit European clients from opening accounts with foreign brokers. That, however, could be temporary, especially as complaints from unregistered brokers have been on the rise in recent years.
In the meantime, Australia is still a safe haven, and Fortrade is the first company in a while to be granted a new license. The firm is already operating with several regulatory permits, including one from the UK FCA, Belarus, and now Australia.
Over the past couple of years, Fortrade managed to leap ahead of its many competitors in the mid-size brokerage segment. The company posted £16.1 million of revenues for 2017 in October last year. That number was preceded by a rampant 2016 when the firm had £15.9 million of revenues.
With the tighter regulations in the EU, the company is diversifying its business. After a diligent process, the UK broker is becoming only the first firm to get ASIC’s stamp of approval to offer retail forex in two years, and this is great news for the industry.