Using a regulated broker is possibly one of the most important trading decisions you’ll make. There are unfortunately a lot of scams and scammers operating online and a trading profit isn’t worth anything if you don’t ever get your money back. Reports of unscrupulous brokers disappearing overnight are all too common and it can be hard establishing what is the best approach to stay safe.
Regulatory authorities, which police the financial markets, have adopted a carrot and stick approach. The stick includes punishments for unscrupulous and fraudulent firms and individuals. The carrot is that they operate systems where bona fide and well-run businesses can apply to be regulated and gain a rubber stamp of approval.
Pepperstone Group Limited is authorised and regulated by ASIC. Address: Level 16, Tower One, 727 Collins Street, Melbourne VIC 3008.
eToro Australia Pty Ltd is regulated by the Australian Securities & Investments Commission (ASIC) and a Corporate Authorised Representative (CAR) of Gleneagle Asset Management Limited.
Address: eToro AUS, Level 33, Australia Square, 264 George Street, Sydney, NSW 2000, Australia.
Plus500AU Pty Ltd is licensed by ASIC and holds AFSL license #417727.
Address: Plus500AU Pty Ltd, P.O. Box H339, Australia Square, Sydney, NSW 1215, Australia.
AvaTrade is one of the best regulated brokers in the market and operates globally under license from Tier-1 authorities, including FCA (UK), FSRA (Abu Dhabi), FSCA (South Africa), the FSA in Japan and the Central Bank of Ireland.
Ava Capital Markets Australia Pty Ltd is regulated by the ASIC and operates under license number No.406684. Client funds are held in segregated accounts so that in the unlikely event AvaTrade fails, client funds are protected.
Regulatory details as per the Admirals Australia website: “Admiral Markets Pty Ltd (ABN 63 151 613 839) holds an Australian Financial Services Licence (AFSL) to carry on financial services business in Australia, limited to the financial services covered by its AFSL no. 410681. The information on the Admiral Markets Pty Ltd`s website (www.admiralmarkets.com.au) is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation”. (Source: Admirals)
International Capital Markets Pty Ltd (ACN 123 289 109), trading as IC Markets, holds an Australian financial services licence (AFSL No. 335692). Address: Level 4/50 Carrington St, Sydney NSW 2000, Australia.
FP Markets is regulated by the Australian Securities and Investment Commission (ASIC) Australian Financial Services Number – 286354.
The company holds an Australian Financial Services Licence (AFSL) and is fully licensed to provide financial services.
Address: First Prudential Markets Pty Ltd, Level 5, Exchange House 10 Bridge St, Sydney, NSW 2000, Australia.
Australian CFD accounts (opened pursuant to IG’s Margin Trading Australian Customer Agreement), opened prior to 15 November 2020 are also provided by IG Markets Limited.
Australian CFD accounts opened from 15 November 2020 are provided by IG Australia Pty Ltd. Address: Level 15, 55 Collins Street, Melbourne VIC 3000. ABN 93 096 585 410. This entity is authorised and regulated by ASIC and has Licence No. 515106.
Trading Point of Financial Instruments Pty Ltd is authorised and regulated by the Australian Securities and Investment Commission (AFSL 443670).
Address Level 13, 333 George Street, Sydney, NSW 2000, Australia.
FXCM Australia Pty. Limited is the holder of an Australian Financial Services Licence (number 309763) which was issued by the Australian Securities and Investments Commission (‘ASIC’) in Australia.
There is fierce competition among brokers, but well-run firms can still prosper if they find the right niche in the market. Reputable firms that have a profitable business model are in it for the long-haul. They do, however, need a way of distinguishing themselves from the crooks.
They also need their clients to stick around, and that includes client interests being protected. Most brokers make the majority of their revenue from trading commissions, so the greater the number of traders, the better it is for them. Proper brokers don’t make money if you lose, they make it if you trade.
In Australia, the regulatory body overseeing the financial markets is the Australian Securities and Investments Commission (ASIC), which is considered a Tier-1 regulator. It is an independent commission set up in 1998 by the Australian Government. As the country’s national financial regulator, ASIC's role is to regulate company and financial services, and enforce laws to protect Australian consumers, investors and creditors.
Investors and traders who use a broker that is regulated by the ASIC can take a degree of comfort from the following features:
Leverage terms by asset type for ASIC-regulated firms supporting retail CFD trading:
The list of what ASIC demands of regulated brokers extends far beyond the above items. The details do also change as new policies come into place, but the general direction of travel is that rules and regulations are becoming tighter with the aim being to protect the end-users.
The rules, regulations and consumer protection are worthy aims, but firms need to work hard to gain and keep an ASIC licence.
To become a regulated broker, firms need to set up a framework that is not only ASIC-compliant, but they must also invest in staff and systems to send ongoing reports to the regulator. This is all very costly, so any broker that goes to the trouble of gaining a licence can be expected to be aiming to be in the broking business for a long time.
The application process itself takes months and involves significant costs. It requires firms to submit extensive documentation outlining details about the business. Topics covered include background checks on the key staff involved and demonstrating the firm is capable of complying with the rules and regulations and reporting obligations.
If you’re looking to place cash with a broker which isn’t going to disappear overnight then using one which is ASIC regulated is a good start. In fact, there’s little upside from wiring money to anyone who is not authorised, no matter what promises they make.
Being regulated is one piece of the jig-saw and those brokers who are ASIC regulated need to generate enough business to cover their costs. This means they have developed exceptional services to attract clients. Some offer premium-grade research, others focus on trading infrastructure to ensure super-fast trading.
Trying a demo account of the below ASIC regulated brokers is not only safe, but will help you learn more about trading and what each broker offers. With so many regulated brokers in the market, there’s no harm in shopping around until you find a best fit.
Firms and regulators put a lot of effort into establishing what can make trading and investing safer. This takes some of the hard work out of choosing a broker. If you’re new to trading or an old hand, selecting a broker that is ASIC regulated is a sensible first move.