The CEO of Pepperstone has questioned whether ASIC is using its powers appropriately.
Following in the footsteps of ESMA, the Australian financial regulator, the Australian Securities and Investments Commission (ASIC), is planning on adding restrictions on CFD trading and completely banning binary options. While the latter is no surprise, are ASIC’s measures regarding CFD’s in the country’s best interest?
In a letter made to the Australian government’s Select Committee on Financial Technology and Regulatory Technology, Pepperstone, a foreign exchange (Forex) broker, has argued that perhaps this is not the case.
In particular, the Chief Executive Officer (CEO) of the Aussie broker, Tamas Szabo, said in its submission to the committee that it is worried that Australia is moving away from its key advantage which is “a principles-based regulatory environment that is flexible, stable and supporting of innovation.”
ASIC measures will make Australia less attractive
In particular, Szabo highlights that the ASIC’s product intervention measures are likely to have a “material impact on Australia being a jurisdiction of choice for innovative products.” He also outlines that the measures appear to be at odds with their initial intention.
Namely, when the product intervention measures were first being considered by the Financial Systems Inquiry (“FSI”) back in 2014, the authority said the measures should be used as a last resort. Moreover, the FSI said that: “If the power is used effectively, it should not significantly affect innovation.”
However, Pepperstone’s CEO suggests there is some evidence that ASIC has not been meeting these requirements since inheriting its product intervention powers.
This includes the regulator using the power to recommend eight major aspects of law reform to the CFD and forex industry, using the powers before considering the design and distribution obligations, and the watchdog considering to use the powers more frequently rather than allowing current regulatory requirements to stand.
“No financial services firm, particularly a FinTech firm, can operate in a regulatory environment that may change materially in unexpected ways. This is especially harmful when the regulatory intervention impacts the core features of the products that can be offered to investors.”
ASIC needs to be more careful
Pepperstone isn't alone in thinking that ASIC's regulations have the potential to hurt Australia's financial industry and stifle innovation. Speaking to Finance Magnates, Sophie Gerber, a Director at Sophie Grace and TRAction Fintech stated that the regulator's proposed measures could harm innovation in the country.
“I definitely think that the points that Pepperstone have made have validity," Gerber said. "I think for the long term the respectability of ASIC as a regulator and Australia as a desirable country, they need to exercise circumspection in the way they use their powers because if they are perceived as using it in a harsh and arbitrary manner I think it has the potential to really damage innovation and willingness to set up business in Australia for Australians and foreigners.”
Furthermore, Gerber argues that ASIC is focusing on the wrong issues, and believes Leverage is very unlikely to be the enemy the watchdog seems to believe.
“I don’t agree with ASIC’s use of power at this stage. ASIC and the Australian government need to be careful what overall this power means for Australia and for the Australian financial markets. I don’t see a justification at this stage for the measures to be harsher than ESMA. My observation is that there are powers and tools available to ASIC to address some of the underlying issues in the market without the use of this product intervention.
"I don’t think the underlying issue is leverage, I think the underlying issue is businesses operating outside of the current regime (unlicensed or incorrectly licensed, inappropriate sales practices, conflicted remuneration to name a few) and not being stopped or punished.”
Pepperstone’s recommendations
In the submission, Szabo also provides recommendations on how Australia can remain competitive and have a thriving financial technology industry. Specifically, he recommends that:
regulators must take care to ensure that regulatory intervention does not impact innovation or unnecessarily restrict the products that can be offered in Australia without good reason;
product intervention measures should be taken as a ‘last resort’ and only used in the most serious of cases once all other avenues of enforcement have been exhausted; and;
the Government and regulators should actively work towards establishing regulatory certainty, which will allow firms to innovate in an environment where they know the established boundaries and have comfort that those will not change unexpectedly.
When Finance Magnates reached out to the broker, Pepperstone declined to provide further comments.
Following in the footsteps of ESMA, the Australian financial regulator, the Australian Securities and Investments Commission (ASIC), is planning on adding restrictions on CFD trading and completely banning binary options. While the latter is no surprise, are ASIC’s measures regarding CFD’s in the country’s best interest?
In a letter made to the Australian government’s Select Committee on Financial Technology and Regulatory Technology, Pepperstone, a foreign exchange (Forex) broker, has argued that perhaps this is not the case.
In particular, the Chief Executive Officer (CEO) of the Aussie broker, Tamas Szabo, said in its submission to the committee that it is worried that Australia is moving away from its key advantage which is “a principles-based regulatory environment that is flexible, stable and supporting of innovation.”
ASIC measures will make Australia less attractive
In particular, Szabo highlights that the ASIC’s product intervention measures are likely to have a “material impact on Australia being a jurisdiction of choice for innovative products.” He also outlines that the measures appear to be at odds with their initial intention.
Namely, when the product intervention measures were first being considered by the Financial Systems Inquiry (“FSI”) back in 2014, the authority said the measures should be used as a last resort. Moreover, the FSI said that: “If the power is used effectively, it should not significantly affect innovation.”
However, Pepperstone’s CEO suggests there is some evidence that ASIC has not been meeting these requirements since inheriting its product intervention powers.
This includes the regulator using the power to recommend eight major aspects of law reform to the CFD and forex industry, using the powers before considering the design and distribution obligations, and the watchdog considering to use the powers more frequently rather than allowing current regulatory requirements to stand.
“No financial services firm, particularly a FinTech firm, can operate in a regulatory environment that may change materially in unexpected ways. This is especially harmful when the regulatory intervention impacts the core features of the products that can be offered to investors.”
ASIC needs to be more careful
Pepperstone isn't alone in thinking that ASIC's regulations have the potential to hurt Australia's financial industry and stifle innovation. Speaking to Finance Magnates, Sophie Gerber, a Director at Sophie Grace and TRAction Fintech stated that the regulator's proposed measures could harm innovation in the country.
“I definitely think that the points that Pepperstone have made have validity," Gerber said. "I think for the long term the respectability of ASIC as a regulator and Australia as a desirable country, they need to exercise circumspection in the way they use their powers because if they are perceived as using it in a harsh and arbitrary manner I think it has the potential to really damage innovation and willingness to set up business in Australia for Australians and foreigners.”
Furthermore, Gerber argues that ASIC is focusing on the wrong issues, and believes Leverage is very unlikely to be the enemy the watchdog seems to believe.
“I don’t agree with ASIC’s use of power at this stage. ASIC and the Australian government need to be careful what overall this power means for Australia and for the Australian financial markets. I don’t see a justification at this stage for the measures to be harsher than ESMA. My observation is that there are powers and tools available to ASIC to address some of the underlying issues in the market without the use of this product intervention.
"I don’t think the underlying issue is leverage, I think the underlying issue is businesses operating outside of the current regime (unlicensed or incorrectly licensed, inappropriate sales practices, conflicted remuneration to name a few) and not being stopped or punished.”
Pepperstone’s recommendations
In the submission, Szabo also provides recommendations on how Australia can remain competitive and have a thriving financial technology industry. Specifically, he recommends that:
regulators must take care to ensure that regulatory intervention does not impact innovation or unnecessarily restrict the products that can be offered in Australia without good reason;
product intervention measures should be taken as a ‘last resort’ and only used in the most serious of cases once all other avenues of enforcement have been exhausted; and;
the Government and regulators should actively work towards establishing regulatory certainty, which will allow firms to innovate in an environment where they know the established boundaries and have comfort that those will not change unexpectedly.
When Finance Magnates reached out to the broker, Pepperstone declined to provide further comments.
Devexperts Checks Off Type 2 SOC 2 Audit for Enhanced Data Security
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!
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
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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:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
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!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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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
📣 Stay updated with the latest in finance and trading!
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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