Forex Brokers and Regulatory Info for Australian Residents

Brokers for Australians

IMPORTANT: Effective March 28th, 2021, the ASIC has implemented new leverage restrictions and additional retail client protections for brokers regulated by the ASIC and who service Australian residents. This WIKI page is reflecting the broker landscape POST this change. 

Australians have two directions they can go when selecting a broker: Locally regulated brokers with local Australians offices, or offshore brokers with no connection to the Aussie regulatory framework.

That means that any broker who might have offshore office that is not affected by the new ASIC rules, but also holds an ASIC license locally, would have to keep their Australian resident clients onshore and service them under the ASIC entity with ASIC set trading conditions. 

As stated, local brokers are overseen by the ASIC, Australia's national regulator, and ASIC is responsible for regulating not just forex but most tradable securities in Australia. By choosing an Australian regulated broker, you'll have a local regulatory body to work with should anything go wrong with your broker.

ASIC sets leverage and product restrictions for all regulated brokerages in Australia. ASIC and the Australian retail forex market uniquely classifies all retail forex products (for trading, not delivery,) as CFDs, and thus, there might be some terminology confusion when seeking out information on forex and CFD trading. While not incorrect, given that CFD is a very loose term related to any contractual obligation between two parties on the difference in price of a tracked asset, most literature and marketing from international brokers will define forex trading differently than how a CFD is defined.

The ASIC might sound restrictive, but they also require brokers to offer retail clients quite a bit of protection on their accounts and for their funds. Such protections for retail traders include:

• Negative balance protection - In the event that a shock market move or weekend gap creates a negative balance in your account, you will not be responsible for paying it back. You will be zero'd out. This is quite good as it is less common to see such protections offered by brokers in modern times.
• Seg funds for client deposits - This is a great practice where brokers are unable to use client funds for operational expenses (happens a lot with unregulated brokers,) and instead have to keep funds separate in a seg fund account at a local Australian bank. This helps shield a client's funds should the broker go out of business.

Leverage is set by the ASIC as follows:

• Forex Majors - 30:1
• Forex Minors - 20:1
• Major Index CFDs and Gold CFDs - 20:1
• Other commodity CFDs and Minor Index CFDs - 10:1
• Share CFDs and Other Underlying Assets - 5:1
• Digital Assets - 5:1

Note: Margin closeout is set at a 50% initial margin rate. That means if you are required to post $100 of initial margin to control a position, once your account equity drops below $50, the position will be liquidated.

Australian residents may opt to qualify for Professional Trader status, where they will lose some client protections (like negative balance protection,) but gain leverage across all assets classes up to 500:1. This is a valid option to Aussie traders who do not wish to take the risk of going offshore and use a foreign broker.

Onshore Brokers / ASIC Regulated

Pepperstone AU

Pepperstone was founded in 2010 and quickly grew to become one of the largest forex brokers in the world thanks to execelent execution quality and great customer service. Pepperstone is well regualated and has a history of doing right by their clients.

• Regulation: Regulated in Australia by the ASIC (also has entities regulated in the UK by the FCA, in the Bahamas by the SCB, and in Dubai by the DFSA)
• Pricing: Competitive spreads of 0-0.2 on Razor ECN account, and average spreads of 1.2 pips on Standard account
• Leverage: 500:1 in all regions except for the UK / Europe where FCA regulations set leverage at 30:1
• Account Minimums: $200 USD or AUD for all account types
• Products: Forex, CFDs on Equity Indicies, US Dollar Index, Commodities, Crypto, and US Shares
• Platforms: MetaTrader 4, MetaTrader 5, **cTrader** (*cTrader also comes with cAlgo, a C# based algotrading platform for automated trading*)
• Notes:
  • Islamic account types (swap/interest free) available
  • NEW - Currently running an [introductory offer where your first 20 trades are commission free.](https://geni.us/pepperstone20trades) *Not available to UK or European residents*

AxiTrader

AxiTrader was founded in 2007 and expanded to the UK in 2012.

Interactive Brokers

The Australian branch of Interactive Brokers, a multi-asset broker that is positioned to service active and experienced traders who are well capitalized.

• Regulation: Regulated in Australia by the ASIC (also has global entities regulated by multiple bodies around the world.)
• Pricing: Competitive spreads on Forex Majors, ECN style execution with the ability to interact with other client's orders
• Leverage: as set by the ASIC
• Account Minimums: $2000 USD or equivalent to place marginable trades (which is required for forex.) You will need to deposit more than this if you are planning on trading FX actively
• Products: Shares / Stocks (most major exchanges around the world can be accessed,) Futures, Options, Forex, and CFD products on many assets and indices
• Platforms: Trader Workstation (TWS)
• Notes:
  • IMPORTANT - Minimum commission on forex trades is $2USD, that means smaller trade sizes might not be economically viable to trade through IB. If you're not trading at least one standard lot minimum per order, you might be better off trading with a broker who caters to smaller account sizes

Offshore Brokers / Regulated or Registered Outside of Australia

BlackBull Markets

Blackbull was founded in 2014 and is one of the faster growing fintech companies in New Zealand. They are not regulated by the ASIC, and are setup as a financial services company in New Zealand (registered with NZ local authorities.) This is an important note because technically they are just registered corporation and follow financial services laws, but aren't FMA regulated as a Forex broker (and many broker comparison sites get this info wrong.) While officially the team at Volatility.RED will always encourage the use of properly regulated brokers, BlackBull Markets does have their registrations in order and works with a 3rd party for dispute resolution. Given the Aussie and NZ financial industry relationship, this may still be acceptable for Aussie residents to find proper recourse should anything go wrong.

• Registration: Registered (key word) in New Zealand as a financial service company with the Financial Services Provider Registry (FSPR)
• Pricing: Decent spreads of ~0.1-0.3 on EUR/USD (plus commissions) and comparable spreads to most competitive Aussie brokers on their ECN Prime account, and spreads starting from 0.8 pips on their ECN Standard account without commissions
• Leverage: 500:1 for Aussie residents
• Account Minimums: $200 USD or AUD for all account types
• Products: Forex, CFDs on Equity Indicies, Oil, Nat Gas, Gold, and Silver
• Platforms: MetaTrader 4, MetaTrader 5, and MetaTrader's respective mobile and web apps
• Notes:
  • Islamic account types (swap/interest free) available