ASIC Forex brokerage authorization scores only 44% of success

Between July 2017 and June 2018, the success rate of ASIC Forex brokerage authorisation has reached 44% as it has granted 303 new licences and 455 licence variations.

March 1, 2019 | AtoZ Markets – The Australian Securities and Investments Commission (ASIC) has announced on Thursday that it has published an assessment report that describes the key regulatory issues. It also gives an overview of ASIC’s activities regarding licensing and professional registration applications between the period of July 1, 2017, to June 30, 2018, in the country.

ASIC Forex brokerage authorisation scores 44% success rate

During the one year period, the regulatory agency considered 1,728 Australian financial services (AFS) licence applications; comprising 1,226 received during the relevant period. From this, 758 were approved, which is a 44% success rate. Other applications that were considered include credit licence and registrations.

The number of AFS licensees increased significantly during the relevant period. A large number of limited AFS licence applications were lodged in the lead-up to the end of the transition period on 30 June 2016, and the finalization of these assessments that flowed through into the relevant period.

Overall, excluding the limited AFS licence applications in the past two financial years, the average annual rate of increase in the number of AFS licensees remains around 2.6%, from the end of the AFS licensing transition period in March 2004. With limited AFS licensees included, the average annual rate of increase rises to 3.4%.

Forex brokers, trading venues as well as financial firms need to acquire an AFS licence before they are allowed to legally operate within Australia.

Application for an AFS licence takes more than 150 days

In the meantime, brokerages need to consider the amount of time it takes to obtain a license when thinking of opening up operations in Australia.  The amount of time depends on the complexity of the business structure, thus, requiring considerable additional work.

Regarding new AFS licences, 74% of submitted applications were finalised within 150 days, while 88% of applications were finalised in 240 days. Moreover, 75% of applications for AFS licence variations were finalised within 150 days, whereas 86% of applications were completed with 240 days, leaving 14% unattended in this time frame.

While sharing his thought on the process, the Executive Director at ASIC, Warren Day stated:

“ASIC’s Licensing function provides the first gateway to ensuring applicants seeking an AFS licence or Australian credit licence (ACL), and auditor-related professional registration meet minimum standards to offer regulated services. We help protect consumers by ensuring an appropriate level of scrutiny is applied to these applications.”

ASIC says “No” to some applicants

It is also worthy of note, that ASIC declined to accept six responsible managers nominated by the AFS licensee on the ground that they lack the knowledge and skills required to meet the organisational competence obligations.

A total number of 202 AFS licence applications were withdrawn prior to the time ASIC made a formal determination.

The Australian watchdog has also refused seven new AFS licence applications and four AFS licence variation applications during the relevant period. ASIC says the number of applications rejected would have been much higher if applicants had not withdrawn their applications in response to the regulator’s feedback rather than proceeding to a formal determination.

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