A well-known Sydney-based broker, HighLow Markets, has recently announced that it will stop supporting international customer accounts. The new move comes in preparation for dealing with the soon-to-arrive product intervention measures by Australian regulator, ASIC (Australian Securities and Investments Commission).
The broker informed its clients of the new decision via email on Monday, July 8th. They also stated that the regulatory changes are the reason for the move, also saying that the company will no longer register new traders from outside of the country. As for the existing accounts, they will all be closed effective immediately.
The company apologized for such an abrupt move, stating that their international clients will be notified if regulatory circumstances happen to change in the future. Although, at this point, something like that seems highly unlikely to happen.
ASIC aims to ban toxic products
The regulatory changes that caused the broker to make such a move come as part of ASIC’s plan to ban all products that the regulator considers toxic. Something similar already happened in Europe, and now, Australia also seeks to ban binary options, as well as CFDs (Contracts For Difference).
The country’s watchdog published a consultation paper with the proposed changes back in June of this year, stating that it aims to gather the public’s input until August 7th. After that, the decision to the regulatory guide will be made, and likely published in September of this year.
The change will impact HighLow Markets, as well as numerous other brokers directly, forcing them to change the way they conduct their business operations. Those who fail to adapt might even suffer the same consequences as brokers in Europe did, meaning that many will have to either close down shop or relocate to another country. Meanwhile, their clients will also have to seek out other services to reach higher leverage.
Australian brokers must make a choice
But, as mentioned, the ASIC did not make its decision final as of yet, and another consultation regarding the changes to its guidance will be held later this year.
Even so, changes are quite harsh and sudden, with Australian brokers not only having to prepare for changing their products but also having to suspend onboarding international clients. The regulator has decided that it is not appropriate for the firms to offer their services to those living in countries in which the brokers are not regulated.
This has been the main reason why HighLow Markets had to suspend all international accounts, and only allow Australia-based clients to continue using the firm’s services. Although, if the regulations come to pass, even they will have limited options.
Other brokers have already started making similar moves. IFGM was the first Australian broker to start closing accounts of its international clients. As for Vantage FX, the broker only stopped providing services to that outside of Australia.