Forex Brokers and Regulatory Info for Australian Residents: Difference between revisions

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==Brokers for Australians==
==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.  
<blockquote>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. </blockquote>


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.  
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.  

Revision as of 07:30, 30 March 2021

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

Note: You will notice that most "onshore" broker service and spread offerings are alike. Even their websites appear to have mostly the same layout and style. This is a result of the competition found within the retail Australian forex market, and most brokers seek to match their local competition on price and service offerings. As one finds a price point that works, the others match in kind. Such competition has created some of the best retail pricing seen in the industry, and years ago Australian brokers were some of the first to provide more competitive pricing on the global stage. Yay for competition!
On a more funny note, this rush to match and emulate the competition has also created a bit of a copy-cat type environment. A team member of Volatility has screen caps of one rather popular Aussie broker literally copying the HTML template of another, as evident by the HTML comment code still showing notes and copyright of the other company. We won't say which broker did this, and who they copied, but the whole thing was rather comical.


Pepperstone AU

https://pepperstone.com/en-au/

Pepperstone was founded in 2010 and quickly grew to become one of the largest forex brokers in the world thanks to excellent execution quality and great customer service. Pepperstone is well regulated and has a history of doing right by their clients. The team behind Volatility.RED has extensive experience working with Pepperstone as clients feels strongly that Pepperstone will serve as an excellent broker choice for retail and institutional clients of all sizes. Pepperstone has some of the best execution quality in the industry.

  • 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 - Great global regulatory coverage!)
  • Pricing: Competitive spreads of 0-0.2 on Razor ECN account, and average spreads of 1.2 pips on Standard account
  • Leverage: As set by the ASIC as listed above
  • 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. cTrader in general is a great alternative to MetaTrader and a real competitive advantage for Pepperstone AU
  • 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)


Axi

(formerly AxiTrader)

Axi was founded in 2007 and expanded to the UK in 2012. Axi Group has won many awards and is in the global top 10 by retail industry rankings.

Note: While some team members of Volatility.RED have personal experience using Axi as a broker, and have had only had positive experiences as a client of the broker, we will be ending this listing early due to the following recent regulatory actions against Axi:

  • License suspension in 2020 by the ASIC (which was successfully appealed by AxiTrader and they kept their license in good standing)
  • License suspension in 2019 with New Zealand's FMA as a result of violating New Zealand's Financial Markets Conduct Act

Again, our team's personal experience has only been positive, but given the above we will be doing more research before providing further details about the broker and their respective account offering.

As always, we are highly encouraging our readers to do their own due diligence on any broker before opening an account.


VantageFX

https://vantagefx.com

VantageFX / Vantage Group was founded in 2009 by a team who strives to earn their client's trust. Vantage offers common MetaTrader platforms, but recently released their own unique mobile app that stands apart from what you find with MetaTrader Mobile. This sets them apart from other Aussie options if you're a mobile only user and want something different.

Note: To anyone who used vantage from ~10 years ago, their offering has changed significantly and has become quite competitive in recent years. The major changes include a much faster execution time than their previous infrastructure provided. If you used them 8-10 years ago and felt they weren't great, they are worth revisiting again.
  • Regulation: For Aussie residents, VantageFX is regulated in Australia by the ASIC. Vantage Group has other entities that service residents of other countries that may fall under different regulatory bodies.
  • Pricing: Competitive spreads of 0-0.2 on their RAW ECN account, and average spreads of 1.3 pips on Standard STP account
  • Leverage: As set by the ASIC as listed above
  • 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, Vantage Mobile APP
  • Notes:


Oanda AU

Oanda is one of the oldest retail online brokers still around. They were founded in Toronto, Canada in the late 90's and grew globally from there. Oanda's offering in Australia is a bit different than their offering in other regions of the world, so as to remain competitive with other Aussie brokers. Oanda is also known as one of the largets market maker style retail brokers around, meaning they set their own prices on currency pairs and do not offer an "ECN" type account that might source quotes from an external market source. That said, their pricing is still generally fair.

A team member of Volatility.RED with experience using Oanda in another region notes their pricing and offering are often not quite as competitive as other options available, and encourages people to use their Oanda Desktop application instead of MetaTrader should you choose Oanda as your broker. That is not saying Oanda is a bad choice, but they just follow a different model than most Aussie brokers. Perhaps that model works better for you and your trading style, so don't be afraid to check them out.
  • Regulation: For Aussie residents, Oanda is regulated in Australia by the ASIC. Oanda has other entities that service residents of other countries that may fall under different regulatory bodies.
  • Pricing: 0.1 pips minimum (but often floats greater than this) + commission on Oanda's CORE account, and average spreads of 0.6 pips and up on their Premium Account
  • Leverage: As set by the ASIC as listed above
  • Account Minimums: No minimum deposit
  • Products: Forex, CFDs on Equity Indicies, Commodities, and Metals
  • Platforms: Oanda Desktop and MetaTrader 4 only.


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 as listed above
  • 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

https://blackbullmarkets.com

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