With the recent regulatory turmoil in Australia hitting the industry hard, we decided to take on a venture to find out what are different brokers changing to adapt to the new environment. To find out what brokers are doing with their overseas clients, the Finance Magnates Intelligence department has sent out an email to the top 20 Australian brokers looking for a way to open an account as a non-AU resident. The survey was done anonymously.
Among the 20 brokers we asked whether they are allowed to onboard new clients from overseas, ten brokers didn’t respond in any way. Among the remaining 10, the vast majority of the Australian industry marked no changes to the way they handle EU clients.
While we didn’t verify their plans about Chinese clients, we’ve been hearing that brokers are proactively moving those accounts to offshore jurisdictions in an effort to prevent any regulatory backlash.
7 Brokers Continue Accepting EU Clients
Back to the survey results, we found out that only three brokers denied service to new overseas clients. The remaining seven companies have been happy to onboard these customers, despite the impending change to the Australian market with product intervention powers.
Regardless of whether customers of Australian brokers are from overseas, soon the regulator in the Land Down Under is expected to change the rules of the game. With its newly minted product intervention powers, ASIC is expected to ban products that it deems toxic in the coming weeks.
To date, there is no specific information as to what those might be; however, the vast majority of the market is expecting a complete ban of binary options and some limitations to CFDs. As previously emphasized by Finance Magnates, one senior executive in the industry from a major brokerage shared privately that he is hearing about a complete ban on CFDs for retail investors.
Aussie Brokers on Overseas Clients Survey, Source: FM Intelligence
Product Intervention Powers
The Australian regulator has clearly underlined that it plans to limit access of retail investors to products which are likely to cause financial harm to the consumer. With EU brokers statistics being pretty gloomy when it comes to the profitability of retail clients, the drastic step of closing the market to such customers is still on the table.
The ASIC is currently consulting with the industry and is looking for feedback from both brokers and clients in the coming weeks. The decision on the use of product intervention powers on the part of the brokerage is expected to be taken no later than August.
