Best Forex Brokers in Australia

History of Forex trade in Australia

The government started its active participation in the Forex industry in as early as 1989, a testament to the fact that the trade isn’t new to the Australian market. Its involvement has nonetheless concentrated its activities in this industry to just the regulation part. Initially, the trade was confined to the big financial firms that facilitated the Forex exchange services for equally big financial industry players.

The Australian Forex market has, however, evolved to accommodate brokerage firms that allow for the participation of the ordinary citizen. Such a fact has only been made possible by the advancement of technologies as well as the uptake of the trend by leading Forex markets of the world including the North American, European, and Asian markets.

This evolution has ensured that the Australian traders move from only dealing with foreign currencies to trading in the local currency. The country has also solidified its place in the global Forex market, evidenced by the fact that the local currency, Australian dollar AUD, can now be paired directly with leading global currencies like American Dollar, British Pound, and Japanese Yen.

How is this market regulated?

The Forex trade in Australia, as well as any other part of the world, is as risky as it is lucrative. The advancement in technology and exposure of the trade to most people led to the entry of both well and ill-intended brokers. To protect the Australian investor, the government stepped in to regulate the industry with the establishment of the Australian Securities and Investments Commission (ASIC) in 1998. Its involvement in the trade has helped bring sanity and guarantee the safeguard of investor interests in the industry.

What is the ASIC mandate?

ASIC is the principal regulator for all the financing companies in Australia including the Forex brokers. The body is charged with the responsibility of registering and ensuring disciplined operational activities for the Forex brokers in areas of corporate governance, insurance, and investor protection. It also oversees the company operations to prevent fraudulent consumer exploitation.

 ASIC is additionally charged with the responsibility of coming up with a set of guidelines that informs the conduct of different industry players. Such guidelines also come in handy when maintaining uniformity for all Australian Forex brokers.

ASIC guidelines:

1. Forex brokers operating in Australia must maintain a $1 million operating capital.
2. Forex brokers must file annual audit reports with the agency.
3. Brokerage firms should maintain liquid working funds that allow for faster processing of withdrawals.
4. Regulating trading times as well as the products to be traded in the country.

Brokerage firms operating in the country have continually faulted the regulator for what most of them refer to as strict enforcement of some of these rules. On the other hand, the agency defends its actions by referring to the regulations as safeguards against consumer exploitation. With regards to the maintenance of the operating and working capital deposits, the agency argues that every broker operating in the country must be able to process high volume withdrawals without inconveniencing their clients.

Trading times in Australia

Australia strategic location exposes the Forex traders operating in the country to all the three big markets. The country’s operational independence then allows it to participate in all the three markets make it possible for Forex brokerage platforms to run on for 24 hours each day. Traders in Australia are also able to take advantage of the increased trade activities experienced during session overlap for the main Forex markets in New York, London, and Tokyo markets.

Trading accounts and products allowed in Australia

Australia Forex brokers offer various trading accounts dedicated to both the individual and institutional clientele in the country. A trader starts by choosing between a micro, standard, or VIP account that is often based on their initial trading capital. The brokers are then free to offer their desired leverage for the accounts with the friendly regulatory rules allowing them to provide leverages of between 1:200 and 1:1000 for these accounts.

The accounts can then trade different products including currency pairs and contracts-for-difference (CFDs) as well as bitcoin. These products can then be traded on such platforms as Meta Trader, c Trader, and Web Trader. Note that ASIC has one of the most flexible leverage rules allowing firms to offer products at a leverage of about 1:500 as opposed to such other markets like the US that have capped it at 50:1 and 20:1 for major and minor currencies respectively.

How to become a licensed Forex broker in Australia?

The fact that Australia is not a prominent Forex market hasn’t stopped the numerous Forex brokers from setting up shop here. Its business-friendly regulations have also attracted key Forex brokerage companies seeking to expand operations to the Australian market. Some of the factors these companies consider favorable in this country include:

1. A huge population of willing investors.
2. Business incentives and benefits like tax reliefs and improved trading options.
3. Market flexibility in terms of higher leverage and availability of ECN accounts for the low investors.
4. Proper regulations that help prevent unhealthy competition.

However, even with the friendly business environment, you must first fulfill some legal and ethical regulations outlined by the ASIC if you are to register your brokerage firm here.

Forex brokerage requirements

The ASIC is rather strict when it comes to registering the Forex brokerage firms in the country. You must have an AFSL certification that authorizes you to offer Managed Discretionary Accounts (MDA) for your clients. In most cases, the regulations you must fulfill to before earning the certificate also depends on the services you hope to offer. For instance, the standard process applies to firms seeking to provide binary options, CFD, and margin FX services. Traders trying to offer ECN services to the retail clients are subjected to a more onerous process.

For starters, you must only engage the services of skilled and experienced managers to run the brokerage company operations. These managers and firm directors must have worked for over three years with local AFLS registered firms, hold necessary educational qualifications and denounce association with any other AFSL registered trader.

ASIC also requires that you deposit with them your proof documents that often include the description of the business and the detailed account of all the services you hope to provide. You should also present the agency with the Forex firm’s organizational chart as well as the company’s financial resources statements. Currently, the agency also requires that you also furnish them with details of your agreements with your liquidity providers as well as guarantees on the stop loss provided to clients.

Understanding the Australian Forex market

Even before you consider applying for the AFSL license, and running off with the idea of establishing a Forex brokerage firm in Australia, ensure that you have a thorough understanding of the market. You, for instance, need to have a clear understanding of the different Forex products allowed in the economy and the regulations associated with each. Most importantly, familiarize yourself with the different actions considered unlawful in the economy as well as the punitive repercussion each attracts and how to avoid them.

How to trade with the Australian Forex traders

Australia isn’t short of Forex brokers who offer well-packaged products that cater for investors from all walks of life across the world. Under the close watch of ASIC, the country now boasts of one the most secure global trading environments. This security has since prompted the introduction of numerous trading options including binary options, CFD and even the ECN trades that are unique to the Australian Forex market.

How does the Australian Forex market compare to the rest of the world/scams

Australia leads the pack when it comes to markets with the largest pool of trading options, especially after the introduction of ECNs for the low capital investors in the country. The market regulations set in place by ASIC ensures that the Australian Forex brokers meet the qualities of modern day traders. These controls have also gone in a long way in dissuading brokers from engaging in fraudulent activities to concentrating on earning commissions and spreads.

However, despite the strict regulations, some industry players feel that ASIC hasn’t done enough to protect its investors, especially when it comes to trading capital protection. In this case, ASIC only requires the brokers maintain a $1 million operating to caution against inconveniences arising from withdrawals. In this case, the regulator falls short of the investor protection bar set by leading Forex markets across the world.

Note that regulators in Canada (CSA), United Kingdom (FSA), and even Cyprus (CySEC) offer investor compensation. This implies that should a broker decide to wind down or declares bankruptcy the compensation fund ensures that investors recover a part of their trading capital. Therefore, the main difference between Australian Forex brokers and the rest is that while they offer investor compensation, ASIC works to prevent the solvency of a broker.

Review of top brokers in Australia

AXITrader

AXITrader was established in 2007 and has over time evolved into one of Australia’s leading Forex brokers. The firm is fully licensed by ASIC and adheres to its guidelines. The company has time and again been lauded by international Forex regulators for its reliability and as well as having the best spreads.

Vantage FX

The Melbourne based Forex trader has proven to be one of the most reliable traders today, a fact that has earned him recognition and awards from industry regulators. The firm is continually rebranding itself as one of the safest and most secure trading platforms currently available. For instance, Vantage FX argues that their customer trading funds are deposited in segregated accounts, different from the operational fund account to caution them from market shocks.

Pepperstone

Peppperstone is currently one of the world’s top online Forex brokers given the ultra-modern technology the company uses to guarantee safety as well competitive spreads. This has earned it awards in the categories of companies with the most transparent and secure trading environment. The firm also follows a strict observance of the Forex regulator’s guidelines with regards to audit and risk management. Most importantly, the firm uses fiber technology that guarantees not only safety but also the ultra-fast execution of trade commands.

PLUS500

PLUS500 is a globally acclaimed CFDs trader that specializes in such financial instruments as Forex, commodities, ETFs, and stocks. The firm also has one of the most competitive market capitalizations, currently valued at over $1 Billion, and operating through multiple subsidiaries across the world. Though the broker is registered and headquartered in London, it maintains an active office in Australia under the ASIC’s regulations.

Bottom line

The fact that there are numerous well-managed, trustworthy and Forex brokers in Australia makes the process of choosing the best broker quite overwhelming. Unlike in most other markets around the world, you can bet on the strict ASIC regulations to keep the unscrupulous traders at bay thereby giving you peace of mind when making this all-important decision.

Start by checking the reviews of the companies you seek to trade with. You can also engage professional traders and investors within your network for advice on the best trading platforms. Most importantly, turn to reliable review platforms as topbrokers.com for expert advice about the best traders currently available in different markets, including Australia.