ASIC to Reduce Retail FOREX Trading Controls

The Australian Securities and Investments Commission (ASIC) may bring down the leverage for retail foreign currency trading. Australia intends to go after the United States, Japan, the US and other areas in putting a ceiling on maximum leverage presented to traders within the span of 50 to 100.

The issue on leverage ratios was reopened by regulators after exposure to negative account balances experienced by FOREX brokerages brought about by the Swiss National Bank’s abandonment of the 1.20 cap on the common currency last January.

Excessively high leveraged trades are very uncertain for clients.

Nonetheless, there is a new outlook with regards to FX brokerages that offer high leverage.

ASIC chairman Greg Medcalf declared Australia is preferred by online FOREX brokers which function under ASIC with maximum leverage of 1:500 compared to Western nations like the United States which have restricted leverage to drastically lower levels.

The commission is very moderate when it comes to FX brokerages and warned clients on the consequences of trading retail currency through online platforms.

Australia is said to be a preferred destination Western FOREX companies partly due to the country’s systematized business environment and excellent regulatory supervision.

It is also near the Asia-Pacific region and boasts of the capability to provide investors from China with high leverage and appealing terms. Australia has strong trade relations with Asian nations whose trading population as a rule do not manifest the same adherence to middle-of-the-road trading practices compared to investors from Japan.