ASIC deals massive blow to Australian CFD industry
ASIC deals massive blow to Australian CFD industry, but is it really that bad?
If you can please share your views, it would be greatly appreciated.
Check this thread out....
There has been some discussion going on about this on the thread
i disagree with ASIC and the proposal they ' re making , trying to decrease leverage and taking a similar stance to ESMA
long story short , the overhaul of financial regulation started with the fall of Bear Sterns , Lehman Brothers and the 2008 subprime financial crisis , then it spread to brokers
but retail FX has nothing to do with that financial supervision overhaul and decreasing retail FX and CFD leverage will not add protection but will only kill retail FX , as ESMA did
Leverage turns traders into gamblers? I suppose if you're susceptible to sliding into gambling, then the nanny state regulators are here to protect you (from yourself).
But, if your're susceptible to gambling, why not take another gamble on one of the less regulated brokers.
It is a nice gesture when brokers offer high leverage, no one is forcing anyone to use it.
Should we not live in a world where people would have to take responsibility for managing their own risk?
What is next? Don't worry folks, you don't need to use your brain any more, regulators will do your thinking for you. Decision making and risk assessment was vital for mankind evolution, when we stop using these parts of the brain, in a few generations we'll all be a lot stupider for it.
Whilst I am 99% confident ASIC will hold to its 20:1 leverage, I decided to send them my comment on the matter.
Given ASIC are determined to reduce leverage so as to "protect" the vulnerable, I believe the proposal I present is a win:win.
If you wish to add your signature to the same document and send it to ASIC (by Sept 30), feel free.
As a retail trader, I completely reject ASIC's intended restrictions in the retail sector.
For me, these measures are only restrictions for retail, without any benefit for this group.
I see only pretended reasons to preserve traditional structures (e.g. classical stock exchanges) and their beneficiaries.
In other words, ASIC is trying to prevent, or at least make more difficult, the shift from retail to CFDs that are cheaper for retail.
The attempt to strengthen the operational basis of brokers at the expense of retail can also be assumed.
On the other hand, the protection of retail against losses by restricting leverage is a pretended reason that lacks any basis.
In effect, a retail trader must hold more money with the broker under the desired restrictions in order to realize the same profits, with the result that most traders, since they generally incur losses, will then lose even more money.
What ASIC should do instead:
- leverage should be limited to 100, so that a Negative Balance Protection can still be set up;
- set up a Negative Balance Protection;
- prevent dubious advertising of retail products;
- absolutely ensure that brokers work fairly;
- binary options treat like all other forms of gambling.
There is no such thing as a "skilled" trader in retail forex.
No trader using leverage above 5 can be considered as "skilled".
Since 99% of all retail traders are addicted gamblers, regulation should adress the behaviour of this group.
If you belong to extremly rare species of "skilled" traders you welcome these regulations.
Retail forex is a negative sum game for losers.
So if you won 100€ in 2 years risking 1€ per trade you should ha e more leverage than someone who won 300.000 taking greater risks. Even if the first does it as hobby and the second is professional.
The 10% drawdown doesn't make sense. I could be risking my whole account in each trade and you don't know if that's even a 1% of my total wealth.
Leverage is a knife, is not bad if you understand how to use it.
The best angle is to convince them that you dont require their protection, because you can trade,
and so deserve a higher leverage.
Of course any claim you can trade will need to be measured; the metrics determined by ASIC.
Understand "gambler's ruin" - case closed.
I might write a letter to this ASIC guy and propose plebs get no leverage whatsoever. Only traders who have traded a monthly volume of 30 mio or greater for a minimum of 24 consecutive months deserve the privilege to trade with leverage (brokers discretion). That should knock this problem of 'retail traders' on the head.
Try applying for a loan at your local bank, tell them it is for trading Forex on margin.
what ASIC seems not to understand , is the fact that there already is a cap on leverage :
brokers offering 500 : 1 will do so only on small accounts , ie max 10000 -- 20000
on bigger accounts they will offer max 100 : 1
and on really big accounts they will offer max 50 : 1 , 30 : 1 , 10 : 1
so what is the point of banning 500 : 1 leverage altogether on all accounts ? that 500 : 1 is just the good tool for traders who know what they ' re doing with their money and with their trading , so much so , that traders already have the option to choose by themselves , whether they want to trade at 10 : 1 or at 500 : 1 leverage , nobody forces them to trade at 500 : 1 , they can switch to a lower leverage as they please
the best thing ASIC would do , would be to just leave things as they now are , and maybe get some proper education on trading before trying to regulate what they know nothing about
sorry ASIC , no offense intended , but you should really brush up your trading courses and maybe get some first-hand trading experience too , because quite likely , none of you has ever traded the markets
When USA limited leverage to 50:1.. I was very disappointed.. but was amazed by the "free trading market" in EU... until rather RECENTLY.. when they did it WORSE, limiting 30:1, and that was not their target level at all, they settled at this for now... I then searched and found that AU(stralia) still offers 500:1 for example. Was very happy that at least some (major) country from "first world" has this option... But now this... It looks like ASIA is now our last resort... and some exotic places...
At least until they ban citizens from "first world" to trade anywhere else...
I have no problem with "protecting people" but I do not like this being excuse to restrict people to have a chance... They could protect people in another way and not to take the tools/potential from everyone!
Not so sure about Russia, they seemed to exploit mistake of other countries so I am amazed they do not offer 500:1 etc.. to attract the traders.. Or they do?
I think they limit to 50:1 also?
We are in the last decade of Forex, there will be further cuts to leverage worldwide. That will dead it off finally.
In 2008 most brokers would state "95% of clients lose money".
In 2019 its more like 75% and some of the PoP brokers be around 65%.
More people are winning I recon 2% of retail are consistent, where 10yrs ago less than 1% nearer to 0.
I know a retail trader regularly executing 200 mln in daily volume around $5-6k in commissions.
We live in a class based hierarchical society, I truly believe all this is to do with old money trying to shut down new threats.
, they have to raise barriers to entry, only vetted employees of FCA regulated Institutions will be able to trade.
I've got 2 professional accounts, so I'm fine. But also planning my exit strategy (Stocks and Futures).
Australia is a full bore communist mafia police state. Every time someone makes some money, the government commissars want to steal it.
Having said that, if you have $USD100K in your account, you should only trade about 8 standard lots. Therefore at 20:1 leverage you’ll have a maximum deposit of $40K on 8 lots. However, it should be a minimum of 33:1 leverage.
This just means more money will flow out of commie Australia.
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