Australia-based forex platform Vantage FX has decided not to service international clients. The platform took this decision soon after the ASIC started clamping down on firms. Another local broker, IFGM announced a similar move last Thursday.
No-go for Vantage’s clients based abroad
Vantage FX’s local subsidiary Vantage Global Prime will not provide services to clients based outside Australia anymore. In an email sent to its clients on Monday, the broker urged them to close their positions and sign up for its Cayman Islands-regulated entity instead. Vantage talked about regulatory concerns while justifying its sudden withdrawal of service from international clients.
Vantage is the second broker which ceased services to foreign traders within a week. IFGM, another forex broker announced last Thursday that it has started refunding foreign clients and that its services will no longer be available to them.
Why are brokers moving away from foreign clients?
The recent regulatory activity from the Australian Securities and Investments Commission (ASIC) is forcing the brokers to think about their international activity again. Europe has already implemented restrictive regulations, and Australia is following closely into ESMA’s footsteps. Earlier, Australia was seen as a country with more flexible jurisdiction, easier access to banking facilities, and a solid regulator. Now, it is becoming a strict space to operate a business.
The Australian parliament introduced new product intervention measures in April this year, after which the ASIC quickly started to crack down on forex brokers. The new law demands more detailed company data and indicates that companies which provide services to clients based outside of Australia are breaking the law. This criticism is likely to based on the brokers’ intense focus on the Chinese market.
Last month, Chinese authorities told ASIC that no broker could operate in their country legally. They also handed over a list of Australian firms that were trying to woo clients from China. Note that China is a crucial trade partner for Australia, and its support has helped the country avoid recession for about three decades. If China sent a clear message that they do not want Aussie brokers in their territory, it is highly likely that the ASIC will follow the demand.
It is important to note that the ASIC, instead of consulting with the industry first, decided to launch an abrupt attack on the brokers. It asked them to sent a huge amount of business data within a week and banned them from accepting new clients from overseas jurisdictions. The industry has the option to fight this move in court.