Best Forex Brokers Leaving Australia
Australia is being “picked off” by online forex brokers that are able to obtain a local licence and offer clients extremely high leverage of up to 500 times, the corporate watchdog says.
Greg Medcraft, chairman of the Australian Securities and Investments Commission,said the issue had been raised with the country’s top financial regulation forum, which comprises ASIC, the Reserve Bank, Treasury and the Australian Prudential Regulation Authority.
“We’ve discussed this more globally, and we are being picked off as a jurisdiction that allows very high leverage, 500 to 1,” Mr Medcraft said at a parliamentary hearing on Friday.
“We’re doing what we can in terms of vetting those who apply for licences in this area, particularly those that don’t have a [true] connection with Australia that are operating outside of Australia.
“It is an issue that’s been discussed recently at the Council of Financial Regulators.”
Asked if participants in the foreign exchange market were sophisticated enough to understand the risk, ASIC Commissioner Cathie Armour said there was an “open issue”whether Australia should take the approach of other countries about limiting the amount of leverage.
The US, Japan and Hong Kong have capped leverage. The watchdog has taken action against some Australian-based brokers. In October 2014, ASIC forced one of Australia’s foreign exchange brokers, Pepperstone, to exit the Japan market, after it was found not to have the appropriate licence. Pepperstone was offering clients leverage of up to 400 to 1, significantly above the regulatory maximum in Japan of 25 to 1.
Given the high leverage allowed in foreign exchange trading, ASIC’s Ms Armour said Australia was “quite fortunate” that brokers here had been able to operate effectively during the significant shock caused by the de-pegging of the Swiss franc in January.
High leverage creates the potential for greater profits, but also greater losses. January’s 30 per cent spike in the Swiss franc after its central bank dropped a peg with the Euro was one of the most dramatic moves ever in currency markets, and resulted in widespread losses for traders, brokers and investment banks.
For a trader with 400 times leverage, the instant 30 per cent move resulted in a 1200 per cent loss, which exceeded the balance of most traders. Fxstay , the world markets’ largest online foreign exchange broker, was forced into a distressed sale while British-based Apari declared insolvency.
The popularity of online foreign exchange trading has surged as technology has allowed individuals to bet on currency moves. Daily turnover has more than doubled from $136 billion to $380 billion since 2007 as speculators optto trade foreign exchange markets that operate 24 hours a day. But foreign exchange markets are largely operated on the often opaque and unregulated over-the-counter basis.
Australia has become a hotbed of the global retail forex broking industry by virtue of its trading culture, and a safe jurisdiction for locally based players to market themselves to traders around the world. Such is its popularity that daily turnover at some of Australia’s largest brokers can exceed the entire cash equities volume of the ASX on a given day.
This Article Wrote For www.TopForexBrokers.com By Fxstay
- UK Stocks To Buy
- Social Trading Platforms
- Best Stock Trading App For Beginners
- Stock Market Apps For Android
- Penny Stock Trading App
- Best Online Stock Broker For Beginners
- Best Online Stock Trading Sites
- Best Stock Trading Site For Beginners
- Online Stock Market Investing
- Online Stock Trading Websites
- Investing Stocks Online
- Top 10 Hotels Near Times Square New York City
- Foreign Exchange Trading App
- Best Trading Platform For Beginners
- Currency Trading Platforms Reviews
- Best Online Trading Platforms
- Penny Shares UK
- Auto Insurance Quotes Comparisons
- IQ Option Binary Options Review
- Buy Stocks and Shares UK
- Best Trading Platform UK
- Alvexo Review
- Plus500 Online Trading Platform
- Forex Trading Australia Reviews
- UK Stock Brokers List
- Online Stock Brokers UK
- Best Stock Trading App UK
- Buy Shares Online UK
- Buy Shares UK
- Forex Economic Calendar
- Online Stock Trading UK
- Best Online Trading Platform UK
- Online Forex Trading Australia
- Best UK Forex Brokers
- Metatrader 4 Reviews
- Forex Trading South Africa Reviews
- Australian Forex Brokers Review
- Penny Stock Trading For Beginners
- MT4 For MAC Review
- Stockbrokers In South Africa
- Social Trading Platforms To Invest In 2020
- Best Online Trading Platform Australia
- Online Stock Trading Canada
- Stock Trading South Africa
- Buy Stocks Online Canada