Australian Securities and Investments Commission has recently released a consultation document, where it stated it would be looking to impose strict controls on the Forex industry in order to change how it works at the moment.
According to ASIC, the decision to look into the changes came as a result of the understanding that the Australian population ended up losing significant amounts of money in 2018 because of the way the Forex industry currently operates within the country. The regulator has said that they will be considering intervening in the industry in order to stop binary options trading from being a major part of the industry altogether, as it has been seen as nothing but a dangerous “gamble” every time a trade is made.
Refocusing the industry
ASIC revealed that in the year of 2018, Australian clients ended up losing money north of $490 million, which is a significant number, considering the size of the industry in the country. The regulator said that this was the result of a number of people continuing to work with binary options while seeing them as an investment opportunity, while the regulator itself believes binary options trading isn’t much more than gambling. ASIC has thus decided to look into banning binary options trading within the country outright, which would be a step forward in the industry, according to them. The regulator is instead going to be promoting the trading of CFDs, which is, in their opinion, much more reliable and much more akin to actual investment. The refocusing of the industry will have a significant effect on the landscape of Frex in Australia, or at least so hopes the regulator. But even with CFDs, ASIC is going to be imposing certain restrictions in order to help traders to not get roped into trades that might not be beneficial to them. As the industry considers the changes, many companies, especially that have already asked for updates from one of the Australian gambling software providers, are considering this to be damaging to the industry.
There have been cases of traders being pressured into traders by brokers, which the brokers knew would end up being not beneficial to the traders at all. These instances have been reported by a number of traders over the years, and have been some of the reasons that CFD trading is getting to be more restricted within the country as well. The decision to do so has been met with some very positive remarks from the officials within the country, but they are not the only ones that get a say in the situation within the country, and how these things are going to continue within the country in the future.
Resistant to change
Still, while ASIC is doing their best to slowly introduce the regulations, Forex brokers are seeing that trouble is coming. Binary options are some of the most lucrative revenue sources for the companies in the Forex industry. They are quick, easy and attract large numbers of people. Forbidding them will mean that brokers will have to adapt their operations and start providing a service that is different in the way it provides revenues to the brokers. This means additional fees and less accessibility for the general population, but this is all conjecture so far. The real results of ASIC’s decision will be made clear in the near future when companies start trying to adapt to the situation.
But, the refocusing of the industry is not something that many Forex brokers within the country are looking upon favourably. One company, that has only just received its order of updating software from one of the local software providers, says that this will be causing damage to their revenues. According to them, the investment in software that was specifically designed for the Forex industry as it is today will be lost and no money will be made off of it, as a result of ASIC’s decision to impose regulations. While some companies within the industry continue to complain about the Australian decision, ASIC responds that the decision has not been finalized yet, and the advisory document that has been released should act as sufficient warning. It was released because the regulator intended to provide companies with sufficient time to react to the changes and prepare to adjust their operations.