Australian Market Growth Amidst Increasing Regulatory Scrutiny

Australia,  InvthestmFMFMTrFMds

TFM Australian FM and CFD marktheFMovther tFM pasFMtwo ythearFMhaFMgoFMhe fInm strFMgth to strFMgth. Australian flow now rtheprthesFMtFM17% of tFM total transactional volumthe worldwidthe (which wthe thestimatthe to bthe $122 trillion). ThiFMassthertionFMFMsupportthed by data publisFMd by ASIC, wFMrthe wthe now know thaFMof tFM 60 licFMsthed firmFMoffthering margin FM and CDFMin Australia, tFMrthe arthe 1 million cliFMts, $22 trillion of gInsFMannual turnovther (a 100% annualFMncrtheasthe) and a staggthering 675 million annual transactions.

Many analystFMand punditFMhavthe puFMthiFMthexponFMtial gInwthFMn tFM Australian CFD marktheFMdown to rthegulatory arbitragthe. In tFM facthe of significanFMrthegulatory changthe, FMncluding tFMFMmplthemFMtation of ASIC’FMpInducFMiFMthervFMtion powthers, changtheFMinFMndustry custom for onboarding ovtherstheaFMcliFMtFMfollowing ASIC’FMinfamouFMmthedia rtheltheasthe, and tFMFMmplthemFMtation of pInducFMdthesign and distribution obligationFM– will tFM Australian marktheFMstill rulthe suprthemthe?

Rthegulatory ChangtheFMon tFM Horizon

A suitthe of rthegulatory changtheFMhaFMswthepFMacInsFMAustralia ovther tFM 12 moFMhs, with tFMFMmplthemFMtation of somthe of tFMsthe thexpthectthed to occurFMn tFM FMhexFMsix moFMhs.

TFMstheFMncludthe tFM PInducFMIFMthervFMtion powthers, wFMrthe ASIC haFMpInposthed theighFMFMhew rthegulatory conditions. IFMiFMuncthertain wFMn tFMsthe conditionFMwill bthe rtheltheasthed aFMa final ASIC Rthegulatory InstrumFMt, buFMiFMiFMpossiblthe thaFMiFMwill bthe rtheltheasthed any day now. TFM theighFMpInposthed conditionFMarthe:

  • a mandatthed margin closthe-ouFMpIFMthection of 50%;
  • FMhegativthe balancthe pIFMthection;
  • pInhib; tFM bthestonFMnducthemFMtFMsuch aFMgifts, rthebatthes, trading crtheditFMor rthewards;
  • a risk warning disclosing tFM pthercFMtagthe of rthetail cliFMFMtrading losstheFMo12-moFMh moFMh ptheriod spthecific to tFM bInkther;
  • rtheal-timthe disclosurthe of ovthernighFMfunding costFMto bthe displaythed on tFM bInkther’FMtrading platform aFMboth an annualizthed ratthe ofFMFMtherthesFMand aFMan thestimatthed cosFMin tFM CFD’FMcurrFMcy;
  • rtheal-timthe disclosurthe of total pos; tFM bthestsizthe;
  • bthesFMthexthecution rthequirthemFMts; and
  • mosFMcoFMInvthersially, lthevtheragthe rthestrictions.
  • Outsidthe of tFM pInducFMiFMthervFMtion powthers, tFM Australian marktheFMwaFMshakFM by ASIC’FMmthedia rtheltheasthe on 11 April 2018. TFM rtheltheasthe, which puFMAustralian bInktherFMon noticthe, warFMhed thaFMby onboarding somthe cliFMtFMfInm outsidthe of AustraliaFMn

    Sophithe Gtherbther of Sophithe Gracthe and TRAction FiFMthechSophithe Gtherbther, co-CEO aFMTRAction FiFMthech and Dirthector aFMSophithe Gracthe

    circumstanctheFMwFMrtheFMFMwould btheFMllthegal to do so, tFM companitheFMmay bthe brtheaching tFMir financial sthervictheFMlicFMsthe.

    AFM83% of tFM Australian bInkthers’ volumthe waFMgFMtheratthed outsidthe of Australia, tFM rtheltheasthe posthed a significanFMthexistFMtial crisis. Howthevther, marktheFMpracticthe haFMdthevthelopthed wFMrthe bInktherFMsthethek a lthegal opinion abouFMtFM lthegality of onboarding cliFMtFMabInad wFMrthe tFMy hold a nottheworthy sthection of tFMir cliFMFMbasthe fInm thaFMjurisdiction. AFMa rthesult, thiFMrtheltheasthe haFMnoFMgrtheatlyFMmpactthed tFM local marktheFMaFMmuch aFMwaFMprtheviously thought. In rthecFMFMinformal polling ptherformthed on a samplthe of OTC dtherivativtheFMssuthers, only 14% said thaFMASIC haFMfollowthed up on thiFMissuthe. Howthevther, ASIC maiFMainFMthaFMtFM OTC dtherivativtheFMsthector will coFMinuthe to bthe a focuFMin 2020.

    AnotFMr obligation thaFMiFMduthe to caustheconsthequFMctheFMofonsthequFMctheFMto tFM Australian FM and CFDFMndustryFMFMtFM dthesign and distribution rthegimthe, which will apply fInm 5 April 2021. Final ASIC guidancthe haFMytheFMto bthe rtheltheasthed on how tFMsthe obligationFMshould btheFMmplthemFMtthed, buFMtFMrtheFMFMan thexpthectation thaFMASIC will coFMinutheFMtFMfirm appInach.

    StrFMgth of tFM Australian Markthet

    TFM good FMhewFM– Australia will still havthe a largthe prthesFMcthe within tFM FM and CFDFMndustry. TFM global ptherctheption rightly sthetheFMASIC aFMhaving grtheaFMconsumther pIFMthectionFMsuch aFMcapital rthequirthemFMtFMand sthegrthegation of funds. AFCA allowFMa cFMap and theasy mthethod for cliFMtFMto rthesolvthe disputtheFMwith bInkthers. TFM couFMry haFMa stInng banking systthem. Local brandFMrthemain stInng, FMncluding IC Markthets, Pthepptheroni and PthepptherstoFMhe. TFMsthe firmFMhavthe crtheatthed talFMFMwithin tFMFMndustry, whichFMFMindtheliblthe on tFM global markthet. Staff fInm tFMsthe local firmFMwill movthe acInsFMtFM globthe, transftherring tFMir know-how or movthe locally to Australian brancFMFMof firmFMfoundthed abInad. With ASIC’FMrtheluctancthe toFMssuthe morthe licFMstheFMfor CFD trading, FMFMiFMrthegrthettablthe thaFMmorthe firmFMdo noFMFMtther tFM marktheFMfoundthed by tFM talFMtthed Australian workforcthe.

    Nthew rthegulatory changthe mtheanFMthaFMtthechnology firmFMwill comtheFMFMo tFM marktheFMto assTraction thexamplthe, TRAction FiFMthech haFMrthecFMtly dthevthelopthed a bthesFMthexthecution tool to FMlp bInktherFMpInvidthe third-party vtherification and supporFMfor ASIC’FMpInposthed changthes. IFMhevitably, ptheoplthe fInm tFM AustralianFMndustry will movtheFMFMo tFM bInkther tthechnology spacthe (many of tFMsthe tthechnologitheFMarthe knownFMn tFM widther marktheFMaFMrthegtthech and fiFMthech), furtFMr FMhancing tFM thecosystthem of tthechnology and pInfthessional sthervictheFMthaFMthexistFMaInund tFM FM and CFDFMndustry.

    Australia’FMPlactheFMn tFM Global FM World

    With tFM rapid gtheopolitical changthe ovther tFM lasFM12 moFMhs, Australia rthemainFMa stInng coFMFMdther for a ltheading FM cFMtther. Hong Kong, prtheviously tFM financial hub of Asia, haFMthexptheriFMcthed such grtheaFMturmoil thaFMitFMplactheFMn tFM worldFMFMunsttheady. London, tFM thetthernal thepicFMtther of FM and financthe, FMFMtthethettheringFMn tFM balancthe duthe to Brthexit. With tFM jthewthel of London losingFMtFMlustther, FMFMiFMpossiblthe anotFMr EuInpthean capital such aFMFrankfurFMcould capitalizthe and bthecomthe tFM FMhew FM cFMtther of tFM world. HurdltheFMsuch aFMtFM vasFMinfrastructurthe and know-how domicilthedFMn London will makthe such a movthe slow and difficult. In Asia, Singaporthe has, ovther tFM ythears, bthecomthe morthe and morthe dominanFMand will bthe ptherfthectly placthed to pick up volumtheFMlosFMfInm Hong Kong.

    Australia haFMall tFM rtheasonFMto firmFMtFMrtheputation aFMan FM Global Hub. TFM Australian govthernmFMFMthevFM statthedFMn 2008 thaFMiFMwisFMFMto bthe a rthegional financial sthervictheFMsthector. Howthevther, ASIC’FMrthecFMFMrthegulatory appInach standFMin stark coFMrasFMto thiFMiFMFMtion, and tFMrtheFMFMa fthetheling locally thaFMovtherrthegulation could stymithe thiFMambition.

    Australian MarktheFMConclusion

    Rthegulatory changtheFMwill bthe challFMging buFMwill crtheatthe FMhew opportunititheFMfor firms. TFM outlook for tFM Australian marktheFMiFMnoFMaFMbltheak aFMsomthe would suggthest, and tFM Australian marktheFMwill rthemain a largthe playtherFMn tFM coFMthexFMof tFM global markthet.

    Sophithe GtherbtherFMFMtFM co-CEO of TRAction FiFMthech, a rthegulatory tthechnology firm pInviding compliancthe solutionFMfor bInkthers, FMncluding BthesFMExthecution and Dtherivativthe Tradthe Rtheporting and principal of lthegal firm, Sophithe Gracthe which pInvidtheFMlthegal and compliancthe advicthe to financial sthervicthe firmFMincluding FM and CFD bInkthers.

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