New ASIC client money reporting rules for Forex and CFDs brokers


The Australian regulator has issued new ASIC client money reporting rules for Forex and CFDs brokers. How will the new framework impact brokers in Australia?

11 July, AtoZForex The Australian Securities and Investments Commission (ASIC) has published a new consultation paper for Australian Forex and CFDs brokers. The watchdog’s new document focuses on the new client money rules draft. Starting from April 2018, all holders of Australian Financial Services (AFS) licence will need to follow these rules.

New ASIC client money reporting rules for Forex and CFDs brokers

The new ASIC consultation paper concentrates on the providers of ‘derivative retail client money’. It states that these market participants will have to implement the necessary changes to the ways they handle clients’ funds. The new changes will need to correspond to the requirements of the Corporations Act.

The Australian regulator highlights the specifics of the new client money rules. ASIC new money rules will impose record keeping and reconciliation rules for the brokers with regulation. Also, it will set out the reporting requirements for AFS license holders that provide Forex and CFDs services.

The Australian watchdog stated that the client money rules will need to apply to all derivative retail client money that AFS licensees receive. Yet, there is an exception in the rules – funds that are used to cover exposure on a derivative that is traded on a fully regulated local market, such as ASX 24.

In addition. the brokers with registration in Australia got an invitation from the regulator to provide feedback on the new rules in the near term.

How will new client money reporting rules impact the industry?

The new ASIC client money reporting rules for Forex and CFDs brokers aim to prevent the use of client money by brokers for their own needs. Some of the industry experts have expressed their worries in regards to the operation of straight-through processing brokers. They demand the use of client money to hedge market exposure of clients.

Moreover, the insiders stated that they will need to use their funds for collateral with their prime brokers.

ASIC Commissioner Cathie Armour has commented on the new client reporting rules:

“The client money rules will apply more formal and consistent standards across the derivatives sector and will ensure any discrepancies in an AFS licensee’s client money account are notified to ASIC in a timely manner and that ASIC is able to take appropriate action.”

Through the new rules,  ASIC aims to ensure the greater transparency on the market. AFS license holders will need to report the receipt in detail. Also, the new rules oblige brokers to report the use of derivate retail client money.

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