The regulations prescribed by ASIC (Australian Securities and Investment Commission) for brokers has seen many in the field bow down to the regulator with regards to overseas accounts. However, some firms are taking a different approach, namely moving specific accounts to off-shore subsidiaries.
The problem that is looming for the brokers in Australia is that they will be required to submit a substantial amount of information on their clients and many have chosen to inform their clients that their accounts will be closed by the deadline given by the Australian financial watchdog.
Island nations a popular jurisdiction
The major brokers, on the other hand, have taken a different approach. Axitrader, IC Markets, and OANDA Australia have informed their overseas clients that their accounts are going to be facing some changes. The first two, Axitrader and IC Markets, have given their customers the option of migrating their accounts to some of their overseas subsidiaries. Locations in St. Vincent and the Grenadines and in the Seychelles were open to customers of these two major brokerages.
A large number of brokerages are still operating normally, albeit without including their fairly substantial Chinese userbases. This follows on from earlier this spring where ASIC asked for legal opinions form brokers on how they enabled onboarding of overseas customers. Many firms have indeed gathered legal opinions on how they service those clients who are not in Australia.
Certain brokers have given ASIC documents that show that they are legally allowed to operate in China. The relationship between ASIC and the Chinese financial watchdog has deteriorated in recent times – and the deterioration of this relationship has hurt the retail brokerage industry in a big way. Many of the brokers, including the big ones, have given negative opinions of ASIC saying that the regulator has been abusing the powers that it wields.
These negative opinions have not swayed the Australian regulator in the slightest, and it is still preparing to enforce its powers of product intervention in the very near future.
No guarantees given by the top dogs in the industry
Both Axitrader and IC Markets have told their clients that they may be able to to keep their Australian based account going – however, this will come at a significant increase in risk. Namely, that is because they will not guarantee that the traders will be able to continue operating under the same trading conditions as before – most notably with regards to leverage they used to enjoy.
Other brokers are moving accounts of their overseas clients off-shorte automatically so that they need not do anything. In fact, this would be the best way for many to handle things as many of the clients would probably leave their accounts in the same place until the last possible date. This would increase the problems when needing to migrate a large number of accounts all at once and could give undue hardship to smaller brokers.
The larger brokers are all applying for European licenses to give their clients other options as well as being able to enter the crowded but lucrative European market.