IFGM closes overseas Forex accounts: More ASIC brokers will follow?

IFGM FX broker in Australia has initiated the closure of accounts of selected clients that were on-boarded from abroad. 

May 17, 2019, | AtoZ Markets - Australian Forex broker IFGM is the first one in the country that began closing accounts of clients who are based outside Australia. The company has begun informing the clients out of Australia that they will be refunding their clients' funds that are held with the brokerage.

Australian IFGM broker initiating refunds for their overseas brokers

The information about the move was announced several weeks after the Australian Securities and Investment Commission (ASIC) called out the Forex brokers in Australia that they should be more mindful when providing their financial and trading services to the clients outside the country. Previously in April, the parliament of Australia approved new product intervention law, it was followed by the regulator requesting data from the brokers that are holding AFS license. The regulator requested data from the brokers that are focused on targeting customers overseas.

Some brokers in the local financial industry started coordinating actively as a response to the regulator’s efforts. The companies are bowing regulatory pressure within the increasingly complex regulatory environment that was recently introduced in the country.

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Brokers that depend on overseas customers might be in trouble

Seemingly the Australian regulator wants to make some changes in the retail industry that involves customers outside Australia. However, ASIC wants to examine the data first. The regulator is seeking data before making any follow-up decisions regarding the practices in the retail brokerage industry. The Australian watchdog has signaled brokerages that they have limited time before the end of June to provide their plans on how to handle customers from overseas.

The representatives of ASIC have been vocalizing their opinion publicly about the high leverage offered to retail clients by Australian firms. Australia-based brokers are fairly popular among the retail traders in the European Union, especially after ESMA has introduced low leverage cap and among the Asian traders as well. Hence, the brokers that highly depend on overseas clients are considering different options.

At the moment, there is no regulatory certainty about how the market will be developed. However, some companies are considering their options before the upcoming product intervention measures are presented. Previously last year, there was a high demand for AFS licenses since there were no strict limits on product offerings to retail customers.

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