ASIC Regulation Guide 2023

As anyone considering opening a FOREX account knows, the licensing requirements in place for brokers are important prerequisites. This due diligence is an important preface to any trading activity, as it ensures that financial markets are fair and transparent. These two objectives are at the heart of what FOREX watchdogs do. In what follows, we will present you with all the relevant information about the Australian FOREX regulatory body, the Australian Securities and Investments Commission (ASIC).

ASIC in Brief

The ASIC is an independent commission of the Australian government, charged with the role of supervising and regulating the national corporate sector. Perhaps the most important two roles of the ASIC are to regulate company and financial services and to enforce laws to protect Australian consumers, investors, and creditors. Established in 1981, the ASIC came about following recommendations from the Wallis Inquiry. ASIC's authority and scope are determined by the Australian Securities and Investments Commission Act of 2001.
The ASIC, which reports directly to the Treasurer, is responsible for the administration of all or parts of the following legislation:
  • Corporations Act of 2001.
  • Insurance Contracts Act of 1984.
  • National Consumer Credit Protection Act of 2009.

ASIC Registers

The ASIC methodically stores Australia's company and business name registers, which can be searched over the Internet. There are several types of entities and organizations that can be looked for online, including local companies, registered bodies, foreign firms, associations, managed investment schemes and non-registered outfits. The information that is available consists of current and/or historical information about the organization, including past addresses, previous directors and former names, as well as the organization’s unique identification number (ABN, ACN, ARBN, ARSN). 
Users can also search for types of company or organization (e.g., proprietary company, limited by shares), the date it was registered, the next review date, location of registered office (town or suburb only), and any professional licenses or registrations (e.g., an Australian financial services license or credit license).
ASIC forex Regulation

Understanding the ASIC

The ASIC falls under the umbrella of the Parliamentary Secretary to the Treasurer. The ASIC regulates Australian companies, financial markets, financial services organizations and professionals who deal and/or advise on insurance, superannuation, investments, deposit-taking and credit. The ASIC service centers are located in all of Australia's major cities.

ASIC's Structure

The ASIC is headed by a special commission that is responsible for the ASIC's activities. The commission is composed of a chairperson and several members. The commission decides ASIC's strategic direction as well as its key priorities.

ASIC's Roles

Under the ASIC Act, the financial sector watchdog is expected to:
  1. Maintain, facilitate and improve the financial system's performance.
  2. Promote confident and informed investor participation.
  3. Administer and enforce the law effectively and efficiently.
  4. Process and store information efficiently and quickly.
  5. Make information regarding companies and other bodies public in a timely manner.
The ASIC promotes investor and financial consumer trust and confidence by “educating” investors and the public at large on investor responsibility. The ASIC holds gatekeepers to account, and it also studies consumer and investor behavior and decision making. Further, the ASIC ensures fair and transparent markets by playing a role in market supervision and good corporate governance.

Who Does the ASIC Regulate?

As aforementioned, the ASIC regulates Australian companies, financial markets, financial service organizations, and financial professionals. It also acts as the consumer credit regulator and licenses and regulates organizations such as banks, credit unions, finance companies and mortgage brokers, according to the National Consumer Credit Protection Act of 2009.
The ASIC is also the markets regulator and ensures that financial markets are fair and transparent. It also advises the government when new markets are being considered for authorization. And, as the financial services regulator, the ASIC licenses and monitors financial service individuals. 
The ASIC Website lists the following as powers that fall within its mandate: 
  • Register companies and manage investment schemes.
  • Grant Australian financial services licenses and Australian credit licenses.
  • Register auditors and liquidators.
  • Grant relief from various provisions of the legislation that it administers.
  • Maintain publicly accessible registers of information about companies, financial services licensees and credit licensees.
  • Make rules aimed at ensuring the integrity of financial markets.
  • Stop the issue of financial products under defective disclosure documents.
  • Investigate suspected breaches of the law and, in so doing, require people to produce books or answer questions at an examination.
  • Issue infringement notices in relation to alleged breaches of some laws.
  • Ban people from engaging in credit activities or providing financial services.
  • Seek civil penalties through the courts.
  • Commence prosecutions that are conducted by the Commonwealth Director of Public Prosecutions.

Trading the Markets with ASIC FOREX Brokers

The ASIC is one of the oldest FOREX regulators in the world, a journey that began in 1989 as the Australian Securities Commission (ASC). Over the years, the agency has witnessed a host of changes in the way it operates by adding, among other things, multiple industries under its regulatory oversight. This culminated in its renaming as the ASIC in 1998.
ASIC-regulated brokers are now considered to be one of the best in the industry due to the advanced regulatory oversight and reforms that enabled the ASIC to become a highly preferred regulatory agency. In its latest iteration, the ASIC is responsible for regulating the Australian bourse and acts as an independent regulatory organization for all market participants, including brokers and investors.

What Are the Integral Points of ASIC FOREX Broker Regulation?

The ASIC had a shaky start, prompting the government as well as the private sector, to make serious accusations against it. Although the ASIC is entrusted with the task of regulating companies in both the financial industry and corporate governance, the ASIC’s framework lacked the capability to eliminate financial frauds of a large magnitude. Notwithstanding, the criticisms did pave the way for the ASIC to get its act together and become more involved with its member firms to ensure that all consumer rights were safeguarded under the law. Here are a few reforms that currently help the ASIC to counter financial fraud and malpractice in Australian capital markets:
  1. All ASIC FOREX brokers should have a minimum of AUD1 million in operating capital, an amount that has been raised from an initial figure of AUD50,000 during the early years. The increase in working capital is in line with other renowned regulatory agencies that stipulate a minimum cap on the operating capital to ensure that a broker can sustain sudden market events and high volatility without going bankrupt.
  2. FOREX brokers should be regulated by the ASIC to offer FOREX trading products and allied services to Australian citizens. The ASIC also mandates that brokers should have a representative office in Australia, meaning they cannot operate from remote overseas locations. Such a move forces ASIC-regulated brokers to set up a full-fledged branch in Australia, which improves accountability and confidence among traders investing their money.
  3. The ASIC requires every regulated member to be completely transparent about their financial dealings by asking them to submit periodic audit reports to ensure that companies adhere to a strict code of conduct. The ASIC works tirelessly toward ensuring an open and honest financial marketplace by overseeing the activities of every regulated firm, and the agency is quick to penalize and impose sanctions on any company that has indulged in fraudulent practices.

Why Do Traders Prefer ASIC FOREX Brokers?

ASIC-regulated brokers enjoy a special standing among international traders due to the relatively high number of genuine and honest brokers that operate from Australia, which reflects new and improved ASIC regulations. Australian FOREX brokers are now considered to be on par with other regulatory agencies such as the UK’s Financial Conduct Authority (FCA) and America’s National Futures Association (NFA). Here are a few advantages of choosing ASIC-regulated FOREX brokers:
  • The ASIC takes extra care to ensure that all brokers can guarantee the safety of their client funds by keeping the funds in segregated accounts in the leading banks of Australia.
  • The ASIC does not impose any limit on the maximum leverage, which is known to inhibit the trading freedom of scalpers or high risk traders.
  • The ASIC does not have any contradictory rules of trading such as the FIFO rule or the no-hedging rule, which is one of the major disadvantages of choosing brokers that are regulated by agencies such as the NFA and the Commodity Futures Trading Commission (CFTC).
  • All brokers that are part of the ASIC regulatory framework should offer a fast and efficient platform for trading. Trading should be seamless, and there should virtually be no interference from the broker in a trader’s position. The ASIC has banned brokers from trading “against” their clients, thereby preventing any instances of conflict of interest.
  • ASIC brokers should offer the best in customer satisfaction by ensuring that all consumer complaints are resolved in the best manner possible. Indeed, ASIC FOREX brokers are known to be consistently at the top of broker rankings when it comes to customer satisfaction and a trader-friendly attitude.

Why Do We See a Lot of Brokers Regulated by the ASIC?

Although the ASIC has stipulated strict laws for broker regulation, Australia provides a safe and secure environment for companies with an investor-friendly administration. Australia provides several incentives for enterprises that are willing to set up shop in the country. The rise  in trust and business confidence, together with the country's business-friendly environment, have enticed several international companies to open a FOREX brokerage firm in Australia, thereby increasing the number of ASIC-regulated brokers in the FOREX market.

How to Choose Preferred ASIC Broker?

The ASIC is home to some of the largest names in the industry, as leading FOREX brokers from all over the world have a significant presence in the country. Several mainstream brokers with multiple regulatory statuses are bound to have a valid ASIC regulation, which makes it easy for traders to choose an ASIC-regulated broker without much difficulty. 

What Do I Do If There Is an Issue with a Broker?

The ASIC allows consumers to file complaints straight to the ASIC consumer helpline, which deals with all types of issues such as tip-offs, fraud, financial malpractice and other fraudulent activities. The ASIC also makes it easy for whistleblowers and other consumer disclosures to offer anonymous help to shed light on scams and other shady activities.
The ASIC provides an online resource known as MoneySmart, which offers great tips on how to manage your finances and invest smartly. MoneySmart, which replaced the ASIC's two previous consumer Websites – FIDO and Understanding Money – is an innovative initiative of the Australian government that is at the forefront of educating consumers about their rights and how to stay safe from scams, financial fraud and financial ruin. The ASIC is a highly rated regulatory agency that promotes safe and ethical practices in the FOREX trading industry. Choosing an ASIC-regulated broker will, in all likelihood, enhance your trading success significantly.

Who is Arincen and What Are Our Services?

Put simply, Arincen is a social networking platform that brings together traders and experts to exchange expertise and ideas. Collectively, we evaluate the best FOREX companies in the world while offering a comprehensive suite of services and tools, all in one place, either via a personal computer or a mobile app. Arincen offers a wide range of services, which include: 
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The platform is so rich that you can create your own private portfolio of traders and experts that you like and follow their recommendations and investment sentiments. 
Further, thanks to Arincen, users can keep an eye on market-price developments, as well as the latest news. Users can also benefit from the network’s educational courses, to say nothing of the exciting Webinars – all done in a modern and fast-paced work environment. Get everything you need in one place. Arincen: We Meet to Simplify the Trading World.     
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In sum, as we have argued in the article above, the ASIC does a great job of protecting investors and their rights while ensuring the market continues to be fair and transparent. Australian and other international traders looking at ASIC-licensed brokers are, therefore, spoiled for choice when it comes to the quality of  FOREX brokers on offer. So much so that it is hard to know  with whom to trade, but that is why Arincen is here to help.
Written by
Adrian Ashley
Adrian Ashley is a seasoned business and finance writer. With a corporate career spanning over 20years, he has developed deep experience in such diverse areas as investing, business, finance,technology and macroeconomics. He is passionate about captu...
Edited by
Marwan Kardoosh
The Editorial Department at Arincen makes an important contribution to the world-class content that...
Fact Checked by
Bahaa Khateeb
 Bahaa Khateeb is currently the CEO of Arincen, a start-up Fintech company based in Haifa. Baha...
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