The Australian Securities and Investment Commission, or ASIC for short, is one of two competent regulators in the Australian financial market. Of course, certain minimum standards must also be observed here, which in many cases are very similar to those in Europe or the United States. The ASIC regulates not only brokers but also other financial service providers and credit institutions.
Australian brokers are considered among the most reliable in the Forex and CFD investment sector in online trading, for the execution model, for the quality of services and for the strict requirements imposed by the National Regulator.
All Australian brokers are regulated and authorized by the ASIC, the main regulatory authority for all non-bank financial companies, which has managed, in the difficult objective, to ensure greater security of operations, as well as greater financial transparency.
ASIC rules have imposed very high standards on Australian brokers, making them, in fact, among the most solid and reliable. Below is the comparison table of the selected brokers, continue below to understand what the advantages are and for more detailed information on the individual brokers.
Why choose an Australian broker: safety and main regulations
Australian ASIC regulated brokers are required to comply with various regulatory policies designed to minimize all cases of fraud and fraudulent financial practices by brokers.
The ASIC started its regulatory activity in 1989, but the modern version of the Australian Securities and Investments Commission and related regulatory policies were developed in 2001, as a consequence of the numerous requirements posed by online financial markets and the strong growth of online trading.
Here are some of the main rules imposed by ASIC on Australian brokers or operating in Australia:
#1. The ASIC has prevented any trading company from operating in Australia without a valid ASIC license. Australian brokers, therefore, need to have a verified ASIC license to work. The ASIC has also warned citizens of the negative effects of trading with non-regulated entities. In addition, it is also known to promptly block all websites and online brokers that turn to Australian traders without the consent of the ASIC.
#2. The ASIC has established a minimum operating capital of 1 million Australian dollars for all Australian brokers, with the aim of increasing the capital adequacy of the companies. A higher minimum operating capital ensures that the company is better able to withstand market fluctuations. It is also essential (for brokers) to maintain customer orders on the market in the event of high volatility events, without having to face debt or bankruptcy risks due to uncontrollable amounts of a negative balance in your customers’ accounts.
#3. ASIC brokers must not have any conflict of interest with their customers. This is one of the main reasons why the majority of Australian brokers choose the ECN or STP mode for the execution of orders. Australian Forex brokers are popular for their Direct Market Access trading accounts (with direct access to market prices), which have no conflict of interest. DMA trading via ECN/STP not only offers direct access to liquidity providers but also offers better spreads and lower trading costs than market maker brokers.
#4. Brokers in Australia are subject to detailed audits by independent auditors, and the ASIC then periodically reviews all audit reports to ensure that the broker complies with all applicable regulations.
#5. The segregation of customer accounts is another protective measure imposed on ASIC broker, in order to prevent any form of financial discrepancy. Australian brokers must keep the company’s funds separate from clients’ capital, and in the event of an ASIC request, brokers must show evidence of segregation. With segregated accounts, in the event of a broker’s default or other legal issues, it is easy for the ASIC to ensure that client funds are protected from the broker’s redundancies.
#6. ASIC addresses financial scams rigorously and encourages traders and investors to act as whistleblowers against any company that commits financial crimes. The ASIC also carries out surprise investigations and intervenes with the suspension of the license and heavy penalties for companies that demonstrate non-compliance with the regulations.
Choosing an Australian broker, therefore, guarantees additional protection thanks to insurance systems and consumer protection plans, which have the specific objective of protecting their funds against problems such as insolvency and bankruptcy.
The best quality of ASIC broker assistance service
ASIC brokers have a reputation for being among the best from the point of view of the assistance service, a crucial and determining element of the real professionalism of a broker. For both private and small capital traders and professionals, Australian brokers are recognized for being able to offer more efficient customer support services.
ASIC also plays a vital role in ensuring that all investors have a good understanding of the different aspects of the financial markets and investments as a whole. The programs and educational initiatives of the ASIC are created with the aim of informing the customer and fighting scams, helping investors to have a better understanding of the risks connected to the financial markets.
Advantages of Australian brokers over the restrictions of European regulators
The major European regulators impose restrictions on trading conditions such as restrictions on the maximum leverage and the number of maximum positions that can be opened. The ASIC, on the contrary, does not impose any restrictions of this type, leaving the investor the freedom to negotiate on the markets of interest.
Most Australian brokers, in fact, offer a high leverage of 1: 500, a condition not comparable to brokers regulated by European authorities.
Investors, therefore, have full freedom to use all trading strategies, including hedging and scalping, without any restrictions. Moreover, since most Australian brokers offer ECN/STP accounts, traders are allowed to operate on the markets even during highly volatile events and market sessions without limitation.
Average minimum deposit for opening an account with an Australian broker
Most Australian brokers require a minimum deposit of €100 to €500 for opening a standard ECN/STP standard account. Subsidized conditions and VIP accounts also have different requirements depending on the broker, trading volumes, and available capital to be invested.
Although brokers in Australia are required to meet high capital requirements, they still have several commercial advantages that allow them to lower costs and offer convenient trading accounts.
After all, the feasibility of the business depends on the broker’s ability to make profits, and the ASIC understands that creating a business-friendly environment is critical to ensuring the long-term sustainability of any financial services company.