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Breaking: Australian Parliament Passes Product Intervention

  • #81
  • Aug 27, 2019 8:27am Aug 27, 2019 8:27am
Quoting mikeeating
what are the options for England and NZ? are they also capped in leverage?
IG does 200:1 for NZ, but with ASIC on it, I highly doubt NZ will be far behind. EU people have gone to offshore brokers (like ICM/IG AU), not clear where they will go now.
  • #82
  • Aug 28, 2019 2:47am Aug 28, 2019 2:47am
officially: last i heard. AU brokers are gonna collectively pushing for a 50 leverage limit.

water cooler talk: this entire debacle has nothing to do with consumer protection. but actually due to lobbying by the big 4. -G,C-Cmarkets,O--da,F--M
simply because if u look at news outlets, they were the first to respond to ASIC, supporting the cuts.
https://www.financemagnates.com/fore...-on-asic-cfds/
https://www.financemagnates.com/fore...-restrictions/


also lets not forget what happened in 2016. eerily similar.

for those not aware, i'll drop a link.
https://www.smh.com.au/politics/fede...31-glxgza.html
  • #83
  • Aug 28, 2019 5:06am Aug 28, 2019 5:06am
Quoting Bicarus
officially: last i heard. AU brokers are gonna collectively pushing for a 50 leverage limit.
water cooler talk: this entire debacle has nothing to do with consumer protection. but actually due to lobbying by the big 4. -G,C-Cmarkets,O--da,F--M simply because if u look at news outlets, they were the first to respond to ASIC, supporting the cuts.
https://www.financemagnates.com/fore...-on-asic-cfds/
https://www.financemagnates.com/fore...-restrictions/
also...

Hi Bicarus,

With respect to the present debacle (referring to ASIC's proposed margin FX / CFD leverage of 1:20), how does it actually benefit the the lobbying big 4?

Forgive me for coming of as thick - I assume the objective is to drive their competitors like IC,FP AXi, Global Prime,Pepperstone etc out of business by reducing their smaller/numerous retail clients ?

Please do let me know if I am missing anything.
  • #84
  • Edited 6:24am Aug 28, 2019 5:55am | Edited 6:24am
Quoting ssk1284u
{quote} Hi Bicarus, With respect to the present debacle (referring to ASIC's proposed margin FX / CFD leverage of 1:20), how does it actually benefit the the lobbying big 4? Forgive me for coming of as thick - I assume the objective is to drive their competitors like IC,FP AXi, Global Prime,Pepperstone etc out of business by reducing their smaller/numerous retail clients ? Please do let me know if I am missing anything.
for a start, as i stated, it is watercooler talk. so kindly please take it with a grain of salt.

the big 4 are multi national dealers, if you read their t&c. unless you are using them as a prime then it might be a diff story
they are already operating in accordance with some of the strictest regulators. MAS,FCA,FSA-JP. so are not fazed with a 20 leverage limit.

these 4's SEA base of operation is located in Singapore.

now. assume that AU in the name of regulatory arbitrage enforces the same as SG. where do you think most of the AU clients will move to? Given that the MAS, insures deposits up to $75k SGD with SDIC.

Essentially AU brokers in general would lose overseas client base + AU citizens that decide to move to SG or take the risk to go offshore for leverage.

it is a win/win for AU regulators, because if a AU citizen move his funds to Singapore. MAS and ASIC has a MMoU on derivative trade reporting. So essentially you still owe the australian goverment taxes.

and in Singapore. Guess how many cfd brokers are operational. the answer is 4.

AU brokerage industry is extremely saturated, according to ASIC there are 60+ regulated firms. Whilst because of high capital requirement by regulators, SG only has 4.

So in short. its okay for these 4 to lose part of their clientele in Australia (not forgetting this pool of clientel is also shared by homegrown brands)

While in Singapore these 4 will gain the full exposure of clients that make the move, less those that decide to prioritize leverage over safety of funds.

Essentially, willingness to sacrifice an arm to gain a foot.
  • #85
  • Aug 28, 2019 7:06am Aug 28, 2019 7:06am
another thing to note,

i do believe that at least 1 AU broker had foresight and caught wind?

back in 2016, when product intervention powers were first put to parliament in australia.

Axicorp, immediately poached the CEO of O--da APAC in Singapore, perhaps to lead the company in acquiring a licence in sg?

That broker's head of institutional is now also in Singapore, a board director of a vc/private equity firm, raising capital for regulatory obligations?

As of now, there is a registered company with that same broker's name in Singapore.
  • #86
  • Aug 28, 2019 7:31am Aug 28, 2019 7:31am
Thanks Bicarus, very interesting insights. Much appreciated.
  • #87
  • Edited Sep 6, 2019 1:42am Sep 5, 2019 10:41pm | Edited Sep 6, 2019 1:42am
...This thing about more regulations in retail forex... Let me get to the core issue.

The fundamental question and answer is as follows.
Q. If you are a retail forex broker, how can you live with yourself knowning that all your customers will evenually lose money ?
A. Very well I reckon. And thanks to all retail forex traders for your donations!

...Therefore more regulation is necessary, you can't keep stupid from jumping off a cliff but at least you can put up some guard rails ...
  • #88
  • Sep 11, 2019 4:18am Sep 11, 2019 4:18am
Quoting Mingary
...This thing about more regulations in retail forex... Let me get to the core issue. The fundamental question and answer is as follows. Q. If you are a retail forex broker, how can you live with yourself knowning that all your customers will evenually lose money ? A. Very well I reckon. And thanks to all retail forex traders for your donations! ...Therefore more regulation is necessary, you can't keep stupid from jumping off a cliff but at least you can put up some guard rails ...
Just recieved from my broker Pepperstone,

Dear Client

What you need to know
ASIC recently put out a proposal that's relevant to the products you trade. We’ve put together a summary of the proposed reform below to help you understand the changes and how they affect you.

1. Proposed changes to leverage caps: a key focus of the proposal is leverage restrictions, which will affect the amount of margin retail clients are required to deposit to trade CFDs or FX. Here’s how the proposed changes look:

• 20:1 leverage on currency pairs and gold = 5% margin

• 15:1 leverage on major indices = 6.67% margin

• 10:1 leverage on commodities (excluding gold) = 10% margin

• 2:1 leverage on cryptocurrency-assets = 50% margin

• 5:1 leverage on shares or other underlying assets = 20% margin

2. Compulsory margin closeouts: If the funds you hold in your account fall to less than 50% of the total initial margin required for all of your open trades, there's a requirement to close out your positions.

3. Other changes you should know: there are a number of other proposals that could affect you, including disclosures, prohibitions on inducements (e.g. trading rebates and gifts) and displaying of risk warnings, as well as negative balance protection for clients. You can read the full release here or visit our website for more details.

When will this happen?
This is just the start of the regulatory reform journey, so the most important thing for you to know is that nothing has changed at this stage. ASIC’s consultation process ends on 1 October 2019, after which point ASIC will consider all feedback and make a decision. Any changes to leverage can come into effect 20 days after that decision is made, while other changes will be implemented in the three months following the decision.

Will I be affected?
The ASIC proposals will impact retail clients only, not wholesale clients. You can register as a Pepperstone Pro, which means wholesale classification with additional benefits. To register, you’ll need to meet the following eligibility criteria as certified by an accountant:

• You have net assets (including property, savings, super and any other assets you own) of at least AUD $2.5 million OR

• You have gross income for each of the last two financial years of at least AUD $250,000.

Our position on this matter
Protecting our clients is our priority and we’re considering all aspects of ASIC’s recommendations. While we’re always looking for ways to improve, we’re concerned that some of the suggestions are restrictive and may not result in the outcome that ASIC is seeking. We’ll be providing detailed analysis and assistance to ASIC to help promote the proper balance between investor protection and investor opportunity. We’ll also keep you informed as soon as things develop and give you plenty of notice of any changes that impact the service we provide you.

Can I have my say?
Absolutely. ASIC is seeking feedback from both issuers and consumers of CFDs and FX, and as you’re a consumer impacted by these proposals, we encourage you to do this. You can provide a submission to ASIC on its proposals here.

Do you have a question?
We’re here to help. Find out more about becoming a Pepperstone Pro, the ASIC proposals or get in touch at [email protected] with us today.

Kind regards,
The Pepperstone team

https://download.asic.gov.au/media/5...ugust-2019.pdf
https://pepperstone.com/au/asic-product-intervention
  • #89
  • Sep 11, 2019 4:32am Sep 11, 2019 4:32am
Quoting Dingoman-two
{quote} Just recieved from my broker Pepperstone, Dear Client What you need to know ASIC recently put out a proposal that's relevant to the products you trade. We’ve put together a summary of the proposed reform below to help you understand the changes and how they affect you. 1. Proposed changes to leverage caps: a key focus of the proposal is leverage restrictions, which will affect the amount of margin retail clients are required to deposit to trade CFDs or FX. Here’s how the proposed changes look: • 20:1 leverage on currency pairs and gold =...
i believe this email is only sent to clients whom are AU residents with the option to go pro.

for those not residing in AU. your option is to go to the UK entity as a pro (req much lower than au) or to await the dubai licence approval.
https://www.financemagnates.com/fore...-dfsa-license/
  • #90
  • Sep 11, 2019 4:34am Sep 11, 2019 4:34am
What are the options for AU and NZ? I also have British passport so maybe I can use that
life is a reflection of what we allow ourselves to see
  • #91
  • Sep 11, 2019 4:42am Sep 11, 2019 4:42am
Quoting mikeeating
What are the options for AU and NZ? I also have British passport so maybe I can use that
uk pro requirements are relatively simple as compared to AU's wholesale defination.

You’ll need to meet two out of the following three criteria in order to qualify as a professional client:
Ask your account manager if this option is avail.

  1. Professional experience: You must have worked in the financial sector in a professional position (which requires knowledge of CFDs or spread betting) for at least one year.
  2. Investment portfolio: You are required to have a ‘financial instrument portfolio’ (defined as cash deposits and financial instruments) of €500,000 or more. Acceptable instruments include cash, stock portfolios, stocks and shares ISAs, trading accounts, mutual funds, and SIPPs. Managed company pensions, non-tradeable assets, property, luxury cars, or physical gold are not acceptable.
  3. Trading experience: You must have placed 40 trades of significant size in the last year. Significant size is £10,000 notional for equity trades and £50,000 for everything else. Buying £10 of FTSE and then closing it counts as one single trade.


that said, i'd still urge anyone to submit their responses to ASIC..

  • #92
  • Sep 11, 2019 5:25am Sep 11, 2019 5:25am
Quoting Bicarus
{quote} i believe this email is only sent to clients whom are AU residents with the option to go pro. for those not residing in AU. your option is to go to the UK entity as a pro (req much lower than au) or to await the dubai licence approval. https://www.financemagnates.com/fore...-dfsa-license/
Thank you for that Bicarus, i didn't know that was on the cards, but as we all know the higher the leverage is, the better it is for the brokers when the client loses, So is that a good thing for us smaller trades, because it sounds like they ( the brokers ) could send us broke a lot easier, by using the old spiking trick more often then not because this is where the easy money is IMHO

  • #93
  • Sep 11, 2019 5:54am Sep 11, 2019 5:54am
Quoting Dingoman-two
{quote} Thank you for that Bicarus, i didn't know that was on the cards, but as we all know the higher the leverage is, the better it is for the brokers when the client loses, So is that a good thing for us smaller trades, because it sounds like they ( the brokers ) could send us broke a lot easier, by using the old spiking trick more often then not because this is where the easy money is IMHO ...
why im urging AU residents to submit their responses is because they ARE your regulators. so your voices hold much more weight than overseas clients.

that said, i believe the dubai entity is not open for AU residents. only for overseas clients. (same way how uk residents cannot open accounts with their uk broker's offshore entity) Hence the email u showed was only directed at clients with AU citizenship.

regarding your comment, i believe the opposite holds true.
simple economics, if the broker is doing well, they will do their utmost best to provide service and comply with regulators. but by cutting of 80% of their profits via leverage cuts. this then open the door to funny business.

attached is a part copy of the response to ASIC from a collective of traders. I believe that they share your concerns.

Attached Image (click to enlarge)
Click to Enlarge Name: Capture.JPG Size: 108 KB



regards
Bicarus
  • #94
  • Sep 11, 2019 6:07am Sep 11, 2019 6:07am
Quoting Bicarus
{quote} why im urging AU residents to submit their responses is because they ARE your regulators. so your voices hold much more weight than overseas clients. that said, i believe the dubai entity is not open for AU residents. only for overseas clients. (same way how uk residents cannot open accounts with their uk broker's offshore entity) Hence the email u showed was only directed at clients with AU citizenship. regarding your comment, i believe the opposite holds true. simple economics, if the broker is doing well, they will do their utmost best...
if the broker is doing well, they will do their utmost best to provide service and comply with regulators. but by cutting of 80% of their profits via leverage cuts. this then open the door to funny business.


Exactly what i was trying get out there thank you my friend,

There maybe another possibility, and that would/could be the brokers may want to educate their clients the right way instead of feeding us B/S**T, AHH MAYBE NOT.
THAT MAYBE ASKING TO MUCH
  • #95
  • Sep 11, 2019 6:33am Sep 11, 2019 6:33am
Pepperstone says stop out level will be 50 percent margin? I thought stop out was going to 100 percent.

So if it requires 5000 to open 1 lot, you won't get stopped until equity reaches 2500.

I wonder if I can find an accountant who will agree the Torana in the shed is an antique and worth a million dollars
  • #96
  • Sep 11, 2019 7:04am Sep 11, 2019 7:04am
Quoting BubaYaga
Pepperstone says stop out level will be 50 percent margin? I thought stop out was going to 100 percent. So if it requires 5000 to open 1 lot, you won't get stopped until equity reaches 2500. I wonder if I can find an accountant who will agree the Torana in the shed is an antique and worth a million dollars
XU1
  • #97
  • Sep 23, 2019 9:52pm Sep 23, 2019 9:52pm
https://deloitteau.au1.qualtrics.com...FFa3QifQ%3D%3D

deloitte au has been appointed by a large broker. clients potentially affected please follow link and fill in survey. deadline 24th sept 2359 AEST

If you choose to participate, Deloitte will collect some Personal Information about you, such as your email and pay bracket. The survey results will be shared with our client in the form of a report. This report may be further provided to ASIC who may make the results publicly available. Your response will be aggregated into groups and will not be reported on if they contain less than six responses. As a result, your answers will not identify you individually.

regards
  • #98
  • Dec 18, 2019 1:44am Dec 18, 2019 1:44am
https://sophiegrace.com.au/afsls/asi...investor-test/


backstory for those that are not aware.

what is price and value test?
basically when a broker gives you 100 leverage, u need only $5,000 deposit to qualify as wholesale investor. $5,000 * 100 = $500,000 (value)


now, this criteria is moot.

to qualify as a wholesale in AU u must pass either of only these 2.
1) 2.5m asset
2) 250k salary for past 2 years

all in all, ASIC is smart. and with this move, i believe that the big ball is really gonna drop soon.
  • #99
  • Dec 18, 2019 2:32am Dec 18, 2019 2:32am
Quoting Bicarus
https://sophiegrace.com.au/afsls/asi...investor-test/ backstory for those that are not aware. what is price and value test? basically when a broker gives you 100 leverage, u need only $5,000 deposit to qualify as wholesale investor. $5,000 * 100 = $500,000 (value) now, this criteria is moot. to qualify as a wholesale in AU u must pass either of only these 2. 1) 2.5m asset 2) 250k salary for past 2 years all in all, ASIC is smart. and with this move, i believe that the big ball is really...
What do you mean moot? Nobody in retail makes that much money ! And this is not even considering new people getting started. They are not smart, they are literally copying what other regulators have done - nothing smart about that.
  • #100
  • Edited 11:43pm Dec 18, 2019 3:27am | Edited 11:43pm
Quoting Starcraftmaz
{quote} What do you mean moot? Nobody in retail makes that much money ! And this is not even considering new people getting started. They are not smart, they are literally copying what other regulators have done - nothing smart about that.
smart in the sense they have blocked the loophole which brokers may use to provide clients high leverage in Australia..

drawing a clear segregation between retail and wholesale.
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