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Breaking: Australian Parliament Passes Product Intervention

  • #141
  • Oct 27, 2020 8:05pm Oct 27, 2020 8:05pm
Quoting doji
Who here thinks this global trend is the result of lobbying by exchanges that want over-the-counter fx trading to disappear? (On the other hand, in the crypto space, what's apparently happening is the opposite: decentralization.) I'm wondering if eventually, Swiss brokers like Dukas and Swissquote will follow suit?
Been dealing with this in the US since 2010, you hit it right on the head. The exchanges are in the pockets of the regulators, all political bullshit . So for past 10 years I've traded at "unregulated" offshore brokers. Ironically, trading conditions were much better and I've never had any issues. Now the US regulators have stuck their overreaching arms and are forcing these brokers to stop accepting US clients as well. They blocked all payment processors and credit/debit cards, so had to move all money by crypto the past 4-5 years, now they're on a regulate crypto kick, so I can trade with Oanda, IG or Forex.com and pay 4 times the spread I was offshore. Yeah, sure looks like the regulators are looking out for the trader
  • #142
  • Oct 27, 2020 9:55pm Oct 27, 2020 9:55pm
Quoting pipmaster77
{quote} Been dealing with this in the US since 2010, you hit it right on the head. The exchanges are in the pockets of the regulators, all political bullshit . So for past 10 years I've traded at "unregulated" offshore brokers. Ironically, trading conditions were much better and I've never had any issues. Now the US regulators have stuck their overreaching arms and are forcing these brokers to stop accepting US clients as well. They blocked all payment processors and credit/debit cards, so had to move all money by crypto the past 4-5 years, now...
Hi pipmaster77,

I am from Malaysia. Who are the "unregulated" offshore brokers that you traded through over the past 10 years please?
Much obliged.

Rajandaas
  • #143
  • Oct 29, 2020 12:46am Oct 29, 2020 12:46am
Quoting KoiFish
{quote} Unfortunately I think suggestion time may be over.
Indeed... and opinions are useless now. Time to deal with the hard facts. I spoke to Pepperstone 2 days ago and they are just going with it. No one is prepared to stand up to ASIC. It feels like "big brother" is showing his hand and gazumping the average citizen so they don't succeed in Forex. It's a deliberate shafting, not about protection at all even though they're the reasons being stated for the changes. It will take place March next year in 2021. It looks like going offshore is the only way and I've started making inquiries.
The news was a disappointment for me and I'm disappointed in my country. Australia is now being controlled by a bunch of corrupt crony capitalists who have no interest in helping the people of Australia. All I can do is to look at alternative opportunities as 30:1 is almost useless to me. If I'm making $1000 dollars a month on a $10,000 500:1 leverage account for example, I now need $166,000 to make that $1000 using 30:1 leverage. It's a joke.
  • #144
  • Oct 30, 2020 8:06am Oct 30, 2020 8:06am
Some light in this tunnel.


https://www.afr.com/politics/federal...0201028-p569ah


One concern inside the government is that under Mr Shipton, ASIC commissioners have become quasi policymakers through regulatory interventions and speeches on areas such as responsible lending, financial services and climate change.

The government would prefer that ASIC limit its interventions to strict enforcement of the law and chasing corporate crooks.

Finally someone in gov sees/ being lobbied that ASIC is overstepping its boundaries.
  • #145
  • Oct 30, 2020 10:25am Oct 30, 2020 10:25am
Quoting Bicarus
Some light in this tunnel. https://www.afr.com/politics/federal...0201028-p569ah One concern inside the government is that under Mr Shipton, ASIC commissioners have become quasi policymakers through regulatory interventions and speeches on areas such as responsible lending, financial services and climate change. The government would prefer that ASIC limit its interventions to strict enforcement of the law and chasing corporate crooks. Finally someone in gov sees/ being lobbied that ASIC is overstepping...
Yes, the NFA/CFTC in the US definitely oversteps there boundaries as well. They want to regulate the entire globe.
  • #146
  • Oct 30, 2020 6:30pm Oct 30, 2020 6:30pm
Quoting Bicarus
Some light in this tunnel. https://www.afr.com/politics/federal...0201028-p569ah

One concern inside the government is that under Mr Shipton, ASIC commissioners have become quasi policymakers through regulatory interventions and speeches on areas such as responsible lending, financial services and climate change.

The government would prefer that ASIC limit its interventions to strict enforcement of the law and chasing corporate crooks. Finally someone in gov sees/ being lobbied that...


Putting a former investment banker in charge of ASIC, what could possibly go wrong

https://www.abc.net.au/news/2017-10-...dcraft/9057190
  • #147
  • Edited 3:02am Oct 31, 2020 2:26am | Edited 3:02am
Quoting Bicarus
Some light in this tunnel. https://www.afr.com/politics/federal...0201028-p569ah One concern inside the government is that under Mr Shipton, ASIC commissioners have become quasi policymakers through regulatory interventions and speeches on areas such as responsible lending, financial services and climate change. The government would prefer that ASIC limit its interventions to strict enforcement of the law and chasing corporate crooks. Finally someone in gov sees/ being lobbied that ASIC is overstepping...
You know, I have noticed a disturbing trend recently. Where/who/what I call the "Elite" deem it their business to be our collective moral compass.

These people include but are not restricted to well heeled CEOs of our major companies (banks!! oh, the hypocrisy) , the media, various malevolent groups/alliances who seek and find attention in a beguiling manner, but also as in this case and many others, bureaucrats who live in bubbles (who themselves are pretty well heeled).

I want them to just piss off and stop preaching to me. Stop treating us like children and imposing your woke belief system onto me.

Its all very Orwellian.
  • #148
  • Nov 1, 2020 6:13am Nov 1, 2020 6:13am
Even if the ASIC gets the same powers as the ESMA, there is not going to be much of an impact If there hadn't been any such occurrences the there would still be some concerns. i have observed it from both sides and I do not seen any significant change in the outcome of how things are going to work. he ASIC can have all the power it ants but the ESMA wi stick with me. The government has done us good by allowing the ASIC to use the powers after two years. That si a very long time and enough for use to be prepared for whatever may come out of it. All that we can do now is hope for the best and look forward to when those two years end.
  • #149
  • Nov 1, 2020 4:03pm Nov 1, 2020 4:03pm
Quoting Brannel
Even if the ASIC gets the same powers as the ESMA, there is not going to be much of an impact If there hadn't been any such occurrences the there would still be some concerns. i have observed it from both sides and I do not seen any significant change in the outcome of how things are going to work. he ASIC can have all the power it ants but the ESMA wi stick with me. The government has done us good by allowing the ASIC to use the powers after two years. That si a very long time and enough for use to be prepared for whatever...

Hi B,

I am not really certain what you define as “impact” here.

But imo the only definition as I see it is … “outcome”

Outcome is the issue because (mathematically) if a trader now wishes to continue at the same lot size level of trading they are currently using for the same profit levels (and yes, loss) then they MUST do what EU traders did under ESMA and what Japanese traders did under their similar leverage reduction ruling is …....

DEPOSIT EXTRA MONEY into their a/c (to facilitate the same trading level vs their original leverage).

This is the “outcome” of the ruling.

And an OUTCOME that ASIC would have been fully aware of during their decision making process as it is exactly what happened overseas.


So I won't beat around the bush here.

The ruling will cause THIS outcome if any trader wishes to continue at the same level they were prior to the ruling.

(Of course they might reduce their lot size trading, stop trading, OR move to an unregulated offshore broker with its own inherent issues, not just of brokerage safety but “banking” transaction costs at both the deposit and the withdrawal stage - it is not just a currency rate change but the added transaction fee at the banking end).

This is why my submission to the original ASIC proposal (via my broker’s input area about this discussion) was that current solvent a/c traders be allowed to continue with their current (negotiated) leverage with their broker that was agreed upon at the time they opened their a/c.

(Else it is a little like already buying a ticket to a rock concert for $500 to get a front row seat then ASIC saying you now have to move your seat in the "middle of the concert" and take a $50 seat 50 rows back because you can’t afford to lose $500 by wanting the front row seat - all this despite the fact that the $500 is YOUR money which you probably worked - to earn - to spend how you choose - in a free society).

However.

For any NEW trader opening an a/c in Oz I do agree that this new 1:30 leverage should be issued for this new trader.

Firstly, during their learning stage with FX, they will be trading at a lower lot size level as they meander through the minefield they have entered.

Secondly, once they have completed their “training period” over a set period of time and have reliably maintained a solvent a/c then they could apply for any higher leverage, should a broker wish to provide this as part of their personal business model offering to their customer.

But not until they have proven able to remain solvent.

This solves ASICs perceived problem of the new trader blues, and allows experienced traders to merely CONTINUE with their current arrangement.

But hey, a blanket ruling for ALL traders was the myopic ruling ASIC will invoke.

AND they will know that increased deposits will be the outcome in many cases.

Such is the regulatory world we are now living in.
  • #150
  • Nov 2, 2020 1:13pm Nov 2, 2020 1:13pm
Quoting Drolph
But your practical example demonstrates the problem pretty good. So here is the question: Which way do you take more risks to trade your desired lotsize considering the whole amount of money you have to deposit at a given broker. 100k with an australian entity or 10k with the Seychellen one? In both ways the broker could theoretically run away with your money or go bust. In both cases a regulation is more or less useless.
What makes you think so? That they could "run away with your money". Shouldn´t client be kept in segregated accounts with high rates australian banks (in case you are trading with a reputable larger AU based broker). Not sure about the Seychelles.
  • #151
  • Nov 2, 2020 1:26pm Nov 2, 2020 1:26pm
If you are wearing a tin foil hat, you might be right.

Otherwise think bigger. I can only repeat - you are trading with a broker, not a regulation!

So if you use a reputable broker for years via ASIC entity, why should he run away with your money just because you are using another entity with the SAME REPUTABLE broker!?

Especially as every reasonable client would quit trading with them once this goes public. It just does not make sense.

Fact is I can name more scams from european brokers than (reputable) Seychellen ones. Trading is risky. Compared to that the risk of having your broker running away with your money is more or less nonexistent. Just use common sense choosing your broker and concentrate on the true risks of losing your money.
  • #152
  • Nov 2, 2020 1:46pm Nov 2, 2020 1:46pm
Quoting Drolph
If you are wearing a tin foil hat, you might be right. Otherwise think bigger. I can only repeat - you are trading with a broker, not a regulation! So if you use a reputable broker for years via ASIC entity, why should he run away with your money just because you are using another entity with the SAME REPUTABLE broker!? Especially as every reasonable client would quit trading with them once this goes public. It just does not make sense. Fact is I can name more scams from european brokers than (reputable) Seychellen ones. Trading is risky. Compared...
Yes, you are right. I would also prefer trading with less capital funded to my brokers account as a total but keep having the ability to make use of higher leverage at any point i might need/want to. Doesn´t mean you have to. Actually you can also control your risk at opening smaller position sizes, setting stop losses and so on. Or stop with life at all, then you have zero risk. Somehow leverage is like a knife you can kill somebody but does that now mean we all need regulations restricting us from having knifes in our kitchens because some idiots could do some bad things with it?

Do you know if Seychelles entities will keep offering higher leverage or any other alternative for 2021? For the last few years i am trading with IC under the AU and ASIC, never had any issues with them, not sure how things will affect me next year.

thanks for your comment, regards.
  • #153
  • Nov 2, 2020 5:13pm Nov 2, 2020 5:13pm
I posted this over a year ago explaining how regulation and leverage has nothing to do with risk. If one cannot control their own risk, shouldn't be trading in the first place. We do not need regulators telling us how to use our money.

Simple math. Let's assume one has 50,000 of "trading capital". Trading standard lots of 100k would be 2:1 leverage. If i use a 500:1 broker and use 100 pip stop, I only need $200 to open the trade, but $1,000 to cover the 100 pips I'm risking. With a 20:1 broker, I need $5,000 just to open the trade. Why would I wish to put $5K with broker when I'm only risking 1K. Now let's say I have 4 trades open all same standard lot with 100 pip stop, I put in 4k with my 500;1 broker, I need 20K just to open 4 standard lot positions with 20:1 broker. I still have the same amount of trading capital as the trader with the 20:1 broker. My capital just sits in my bank account as opposed to the broker account. These numbers are for illustration, but what I'm saying is I use 2:1 on my actual trading capital although I'm using much higher leverage of what I actual have on deposit with broker. Still risking the same and using the same leverage of my actual capital as the trader with the 20:1 account. It's really a matter of where you want your money parked.

  • #154
  • Nov 3, 2020 2:38am Nov 3, 2020 2:38am
Quoting lddd
{quote} Yes, you are right. I would also prefer trading with less capital funded to my brokers account as a total but keep having the ability to make use of higher leverage at any point i might need/want to. Doesn´t mean you have to. Actually you can also control your risk at opening smaller position sizes, setting stop losses and so on. Or stop with life at all, then you have zero risk. Somehow leverage is like a knife you can kill somebody but does that now mean we all need regulations restricting us from having knifes in our kitchens because...
IC for example offers a quite comfortable solution. They have built a framework for clients to choose their entity on their behalf. So you can switch to the SC entity without changing accounts or broker in this case. Trading under SC will keep the leverage without restrictions.
  • #155
  • Nov 3, 2020 2:40am Nov 3, 2020 2:40am
Quoting Drolph
Trading under SC will keep the leverage without restrictions.
Yes. Just for how long?
  • #156
  • Nov 3, 2020 2:54am Nov 3, 2020 2:54am
Quoting lddd
{quote} Yes. Just for how long?
Long enough to allow them evaluating further alternatives.
  • #157
  • Edited 5:00am Nov 3, 2020 4:06am | Edited 5:00am
Quoting Drolph
If you are wearing a tin foil hat, you might be right. Otherwise think bigger. I can only repeat - you are trading with a broker, not a regulation! So if you use a reputable broker for years via ASIC entity, why should he run away with your money just because you are using another entity with the SAME REPUTABLE broker!? Especially as every reasonable client would quit trading with them once this goes public. It just does not make sense. Fact is I can name more scams from european brokers than (reputable) Seychellen ones. Trading is risky. Compared...
it is not so much about where client deposits are held. Sure, they may still be segregated. But they are not subjected to the same regulatory oversight.
I can give you an example.

as a interbank trader, let me weigh in. personally, i put more weight on #2 than #1.

#1
ASIC forbids Australian entities from utilizing client deposits for hedging (ie, whenever you execute a trade, the broker is executing it on the interbank(supposidly it is large enough to arrive there) with their own money , any profits and losses are in the broker's name where they do account reconciliation at the end of day)

Offshore regulators do not have such ruling(so funds are held in segregated acccounts, but brokers are allowed to directly use it as colleteral with counterparties)
Attached Image (click to enlarge)
Click to Enlarge Name: zz.JPG Size: 72 KB

#2
back in 2013, ASIC consulted MAS on how to run a automated trade repository. MAS ended up whitelabelling its solution to ASIC - thru the trade repository reconciliation MoU.
https://download.asic.gov.au/media/2...e-mou-2014.pdf
https://news.bloomberglaw.com/securi...epository-data
https://www.financemagnates.com/fore...-reforms-loom/

since then, every regulated broker operating in Australia, automatically reports all trades taken throughout the day to this repository. btw this repository is not solely for fx, but it covers every asset class.

this repository scans each and every entry and flags any outliers trades against interbank prices in Singapore and vice versa, Singapore scans each against AU interbank pricings.(since 2014, Switzerland/Esma/Uk/Nz/Japan/Korea have all signed onto the Singapore eco system. basically all trades in any of these regions are scanned against a aggregated feed derived from the participating nations's interbank)

This ensures brokers in these jurisdictions are providing best execution and are not utilizing virtual dealer plugins/arbitrage pricing.

if you are using a AU broker and had a dispute with them, escalating the matter to AFCA/ASIC or any of the participating authorities. they will pull the trade order data off this repository and investigate from there.

similarly as #1, offshore regulators do not require / enforce such immense trade reporting standards.


question arises then
1) will a broker in the name of "good will" be willing to continue this trade reporting? - if yes, then for what? given that participating regulators no longer has jurisdiction/am required to lift a finger to investigate the moment you are run thru the offshore entity.

2) will a broker in the name of "ethics" continue to execute at best price/practice or will it be the respawned era of the VDP? - if yes, then for what? given that majority of retail clients orders are never large enough to reach the interbank and are booked in house. if it does, then wont #1 come back into play?
  • #158
  • Nov 3, 2020 4:47am Nov 3, 2020 4:47am
Good train of thought.

But having a look aside from this theoretical point of view it does not play a major role for me.

The possibility for me as an european trader to get support from ASIC in case of a dispute is very limited even now. And my argument of the brokers motivation to stay away from any shady measures remains intact. Once a broker gets caught doing dirty stuff he will lose most of his regular revenue from retail clients totally independent where it is regulated.

I guess you know FXPig right?

They are a good example of serious and sophisticated address for offshore retail trading. Clearly crap regulated, but offering a fair and transparent trading model with nice to haves like different liquidity pools. And they are in the game for quite some time now.

https://www.forexpeacearmy.com/forex.../www.fxpig.com

Their reviews are way better than many top regulated entities.

I am not sure if this already was mentioned, but besides all the disadvantages you can save money using offshore brokers since licensing under ASIC,ESMA and co are heavily expensive. Guess who is paying for these costs in the end?

All in all it is not black and white - there are pros and cons for both sides of the medal. I just do not like the general panic or excitement when it is about offshore trading.
  • #159
  • Nov 3, 2020 5:26am Nov 3, 2020 5:26am
Quoting Drolph
Good train of thought. But having a look aside from this theoretical point of view it does not play a major role for me. The possibility for me as an european trader to get support from ASIC in case of a dispute is very limited even now. And my argument of the brokers motivation to stay away from any shady measures remains intact. Once a broker gets caught doing dirty stuff he will lose most of his regular revenue from retail clients totally independent where it is regulated. I guess you know FXPig right? They are a good example of serious and sophisticated...
In the US, the regulated brokers are the shadiest in the world. Oanda and Forex.com and IG. I used Trader's Way and FXChoice, both non-regulated and didn't experience anything shady in 6+ years. In the US, the brokers are in the pockets of the regulators to force all trading be done onshore, no matter how they try to disguise it as "protecting" the trader.
  • #160
  • Nov 13, 2020 12:53am Nov 13, 2020 12:53am
https://www.smh.com.au/business/mark...11-p56dis.html


Interesting.

Long read. Looks like ASIC were bludgeoned over their handling of the Binary trading area of CFDs, in relation to leverage.

And then decided to lump FX in with the same pot.

I might have to read it a second time though lol.

(Have ASIC even talked to a forex trader I wonder?).

--------------

Former ASIC senior executive and Hayne Royal Commission adviser Pamela Hanrahan has slammed ASIC for taking too long to tackle the problem.
"ASIC should devote more staff and effort to its licensed population," says Hanrahan, a professor of commercial law and regulation at UNSW.

ASIC defends its record on this front, saying it has taken a number of enforcement actions against retail derivatives providers and its 2020-21 business plan prioritises enforcement. It also says new powers allowing it to ban products only came into effect in April 2019.

"ASIC’s enforcement actions against retail OTC derivative issuers have resulted in a number of civil penalties and court orders to freeze client funds, reinforcing ASIC’s commitment to reducing client detriment and protecting retail client monies."

It says the $75 million penalty against AGM Markets and its related parties will be a deterrent for other rogue operators. (AGM a Binary Option house)

ASIC moved on the sector in October, announcing long-awaited leverage caps on CFDs - a policy flagged in August last year before it became held up in consultations with industry.

When releasing that new policy, ASIC acknowledged it was out of step with its international counterparts, saying: "It brings Australian practice into line with protections in force in comparable markets elsewhere."

But despite initially planning to ban the most dangerous of these products, binary options, ASIC held off.

ASIC’s belated attempts to shut down this multibillion-dollar market will come too late for customers of Herzog and his network.
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