Announcements were made on March 23rd that the Australian Securities & Investments Commission is altering their priorities following the Covid-19 Pandemic. They’ll begin focusing new regulation protocols on accounting for the numerous challenges that’ll be prompted with this virus. The period which these new regulations will be enforced is slated for September 30th. Resources during the time will be used to control the pandemic and financial market. Risks to consumers could be drastic, with ASIC also concerned about criminal actions and market integrity. Implementing these new regulations will be time-critical matters, requiring the full workforce behind ASIC.
Short-term activities operated through the Australian Securities & Investments Commission have been terminated. These activities will be determined by their associated importance to the financial market. Activities already cancelled include ASIC Consultations, Regulator Reviews and Certain Regulatory Reports. Brokers and firms won’t be required to provide Internal Dispute Reports, Executive Remuneration Reports, Consultation Papers or Resolution Guidance Reports.
Official statements were provided through ASIC. That statement reads: “ASIC is committed to working constructively and pragmatically with the firms we regulate; mindful they may encounter difficulties in complying with their regulatory obligations due to the impact of COVID-19.”
Potential Postponement of Leverage Restrictions
Investors holding accounts in the Foreign Exchange and CFD Markets have begun questioning if ASIC will implement leverage restrictions moving forward. It wasn’t confirmed if these announced requirements are considered time-critical matters for the operator. ASIC released consultation papers to brokers and firms across Australia, informing them that product intervention measures similar to the ESMA would be imposed. It’d force a singular leveraging ratio of 20:1 to all FX and CFD trades. Postponing these requirements won’t be obliged by investors.
Equity Indices would inquire heightened leveraging restrictions listed at 15:1. These imposing valuations would increase a third time with Commodities, being restricted with its leverages at 10:1. Gold Commodities receive a specific exclusion, with an implemented ratio of 20:1. Equities and Cryptocurrency Assets face the most severe leverage ratios, with those respectively slated to become 5:1 and 2:1. There have been numerous delays in this regulation being enforced. Covid-19 could prompt an additional twelve months or longer in a delayed response from ASIC with product intervention measures.
The Director of Traction Fintech, Sophie Gerber, provided official statements regarding this manner. She stated: “The media release from ASIC makes it clear that they will be sending updates to affected persons about specific consultations that had been running before the coronavirus outbreak. Therefore we would expect an email to come through to recipients of the Market Supervision mailing list with any news about the CFDs consultation paper. At this stage, we haven’t seen any guidance from ASIC regarding the implementation of the leverage restrictions. It is, however, possible that ASIC may stay silent on this particular consultation since it has been so contentious.”
Gerber continued these remarks to reporters by expressing: “The product intervention proposal has already been highlighted as having a significant negative impact on tax revenues for the Australian economy, with Australian CFD providers being large taxpayers and stable employers. Offshoring clients to other jurisdictions means less tax revenue for the Australian Government and a shift in jobs. With the Australian Government’s expensive stimulus packages for shielding the economy from coronavirus continuing to be announced, it would seem sensible for the Treasury and regulators to delay measures which will reduce tax earnings for the Government.”