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Australian Securities and Investments Commission (ASIC) Brokers 2025

Written By

Paul Holmes

Written By

Paul Holmes

Paul has over 14 years experience in the trading industry, both as a full-time trader and working with leading brokers. He’s traded indices and forex, developed proprietary day trading techniques, and built his own MetaTrader algorithms. He excels at delivering simple-to-follow guides for beginners to experienced traders.  

» Paul Holmes Profile Page

Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Michael MacKenzie

Fact Checked By

Michael MacKenzie

Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.

» Michael MacKenzie Profile Page

Updated

Dec 3, 2024

Are you an Aussie looking for a secure online trading environment? If so, choosing a broker regulated by the Australian Securities & Investments Commission (ASIC) is a vital first step.

Since launching in 1991, it’s proven a robust financial regulator, increasingly holding brokers to a high standard, adding an Investor Alert List, and securing ‘green tier’ status in DayTrading.com’s Regulation & Trust Rating.

Day trade with an ASIC-regulated broker and you can expect:

The Australian Securities and Investments Commission (ASIC) was established in 1991 under the Australian Securities and Investments Commission Act to promote fair and transparent financial markets across Australia.

Following a string of corporate collapses and rising financial misconduct, Australia needed a single body with comprehensive regulatory powers to oversee financial markets. ASIC was born to fill that gap.

ASIC’s powers are broad. It licences financial services businesses and enforces compliance with the Corporations Act, which regulates how companies operate, report, and engage with investors.

ASIC also investigates complaints, such as those from retail traders, and has the authority to prosecute misconduct, impose fines, and even deregister businesses that break the rules.

ASIC’s core mission is consumer protection, ensuring everyone, from individual investors to large corporations, have a fair shot in a secure financial system.

By holding companies like online brokers accountable, ASIC aims to protect consumers, prevent fraud, and maintain trust in the Australian financial market.

Paul Holmes

Author

What Powers Does ASIC Have?

ASIC has a range of powerful tools to enforce financial laws and keep Australia’s markets in check:

• Licensing Power: ASIC issues licences to financial service providers and credit providers, ensuring that only qualified and compliant businesses can operate. Brokers cannot legally provide financial services in Australia without an ASIC licence.
• Investigative Power: ASIC has the authority to investigate any suspected misconduct or breach of financial laws. It can gather evidence, interview witnesses, and demand records from individuals or businesses if there’s reasonable suspicion of wrongdoing.
• Enforcement Power: If ASIC finds misconduct, it can take several actions: issuing fines, suspending or revoking a licence, and imposing penalties. In more serious cases, it can pursue civil or criminal charges, leading to court proceedings.
• Regulatory Power: ASIC sets and enforces standards for company conduct, corporate governance, financial reporting, and disclosures. It can impose conditions on business operations and make sure companies follow ethical and legal guidelines.
• Banning and Disqualification: ASIC can ban individuals from managing companies or providing financial services if they’re found to be dishonest or unethical. This prevents repeat offenders from staying in the industry.
• Consumer Protection Initiatives: ASIC actively creates and enforces policies to protect consumers. It can demand that brokers improve their practices, disclose clearer information, and stop offering risky or misleading products.

What Rules Must An ASIC Broker Follow?

Brokers regulated by ASIC must follow strict rules to maintain transparency, protect consumers, and ensure ethical behaviour in the financial markets.

• Licensing and Authorization: Brokers must hold an Australian Financial Services (AFS) licence to operate legally. To obtain and maintain this licence, they must meet ASIC’s criteria, including financial stability, qualifications, and competency standards.
• Client Money Handling: Brokers are required to keep client funds separate from company funds, holding them in segregated accounts. This helps protect client funds from being used for business operations or other improper purposes.
• Disclosure Obligations: Brokers must provide clients with clear, upfront information about their products, services, fees, and potential risks. This includes issuing a Product Disclosure Statement (PDS) so clients understand what they’re getting into.
• Compliance With Market Conduct Standards: ASIC trading platforms must operate honestly and fairly, avoiding deceptive practices like price manipulation, insider trading, or false advertising. They’re expected to follow high ethical standards and maintain market integrity.
• Risk Warnings: Brokers must provide transparent risk warnings, especially for high-risk products like CFDs which are popular with day traders. This means clients are informed of potential losses, not just potential gains before they start trading.
• Financial Reporting and Auditing: ASIC requires brokers to submit regular financial reports, proving their financial health and compliance. ASIC may also conduct audits to verify the broker’s practices and ensure ongoing adherence to rules.
• Client Dispute Resolution: ASIC mandates that brokerages have a transparent dispute resolution process in place. They must be part of an external dispute resolution scheme, such as the Australian Financial Complaints Authority (AFCA), to address client complaints promptly.
• Ongoing Training and Development: Brokers must ensure their representatives are properly trained and qualified to give financial advice. This rule ensures that clients receive reliable and accurate information and advice.

How Does ASIC Protect Active Traders?

CFD trading in Australia is very popular with active traders, and ASIC has stepped up its restrictions on brokers offering these products in recent years to protect retail investors:

• Leverage Limits: ASIC limits the amount of leverage brokers can offer retail traders. For example, the maximum leverage for major forex pairs is capped at 1:30. For cryptocurrencies, it’s 1:2. This reduces the risk of significant losses by preventing traders from borrowing excessively to fund their trades.
• Negative Balance Protection: ASIC mandates that brokers provide negative balance protection, meaning traders can’t lose more money than initially invested. If a trade goes against a client significantly, their account won’t fall into a negative balance, preventing debt above the initial investment.
• Standardised Risk Warnings: ASIC requires brokers to display clear, standardized risk warnings on CFD products. This ensures that traders know the risks involved, including the high probability of losses, and can make informed decisions before entering the market.
• Margin Close-Out Rules: To prevent excessive losses, ASIC enforces a margin close-out rule. If a trader’s funds fall to 50% of the required margin, the broker must close out the trade automatically. This helps prevent traders from sustaining more substantial losses than necessary.
• Ban on Inducements: ASIC prohibits brokers from offering incentives like bonuses, cash rebates, or “free” trading schemes to attract CFD traders. This discourages brokers from using high-pressure sales tactics or enticing promotions to bring in less-informed traders.
• Enhanced Disclosures: ASIC requires brokers to provide detailed disclosures on CFD products, including information on trading fees, spreads, risks, and how CFDs work. This transparency helps traders understand all aspects of CFD trading, not just the potential rewards.

Has ASIC Fined Any Brokers?

While ASIC may occasionally be criticised for not acting fast enough in some cases, it has a strong track record of enforcement and has acted against several brokers for various regulatory breaches over the years. Essentially, ASIC has increasingly big teeth.

Here are some notable examples where it has flexed its regulatory muscles:

• Interactive Brokers (2023): ASIC took action against the Australian branch of Interactive Brokers, levying a $832,500 fine for negligent and reckless conduct related to suspicious trading by a client.
• Openmarkets (2023): ASIC handed out a $4.5 million fine to Openmarkets for failing to have suitable systems for identifying whether the orders of a client were intended to manipulate prices or create a false impression of active trading.
• Forex Capital Trading (2020): ASIC fined Forex CT $20 million for various breaches, notably unconscionable conduct, conflicted remuneration for sales staff, and failure to act in its clients’ best interests.

Bottom Line

Year after year, ASIC introduces and enforces strict safeguards that online brokers must follow, with the aim of protecting retail investors.

Verifying that a broker is ASIC-regulated is a crucial step to protect your investments and ensure you’re dealing with a reputable and compliant company.

To get started, check out DayTrading.com’s pick of the best ASIC-regulated day trading brokers.