Plus500 Responds to ASIC Restrictions
The Australian and Investments Commission has indicated they’ll be enforcing old and new restrictions to brokerages. Multiple firms have already responded to these claims from ASIC, including their largest broker Plus500. The new limits will cause for nationwide bans on selling binary options to retail clients. These new regulations would also restrict the selling of contracts-for-difference in Australia. This all comes after ASIC received higher powers to enforce regulation from the government. In an interview held back in 2018, a representative with the regulator that 80% of citizens trading in Australia have lost money on CFDs and Binary Options. It’s estimated that retail clients and traders lost $490 Million in 2018, and $1.5 Billion since trading became more popular in Australia. The chances of the Australia and Investments Commission backing down from their proposed restrictions is unlikely.
Plus500 responded through their CEO, AsafElimelech, by stating: “Plus500 welcomes robust and consistent regulation, which provides a level playing field for all operators to compete on the strength of their customer offering and service levels. The Company looks forward to the outcome of this consultation and the regulatory certainty this will bring to an important market.”
The IG Group & CMC Markets Respond
These upcoming restrictions are similar to the European Securities and Markets Authority product intervention measures. Numerous brokerages moved operations to Australia to avoid these unfair laws. The announcement that ASIC could be doing the same has become a significant deterrent for Plus500, CMC Markets and the IG Group. For Plus500, these new regulations will affect 15% of their overall revenues. Australia is one of the brokers most substantial markets. The leverage limits ban on binary options and contracts-for-difference could result in Plus500 leaving the Australian market.
It’s the job of the Australian Securities and Investment Commission to defend trading citizens in their nation. Considering that in the last two years, the number of active clients in Australia has doubled to a million, the demand for increased regulation by government officials is severe. Luckily, not all brokerages are worried about the upcoming legislation. CMC Markets and the IG Group have already accounted for the proposed restrictions in Australia. This legislation will affect the brokerages, but due to accumulated cash reserves, will be able to survive in the upcoming market. Unfortunately, for brokerages like Plus500 who fear the future changes, shares and revenue will continue to drop. Just this week their shares in Australia fell by 4%.