Change is coming to the financial regulatory environment in Australia.
This is thanks to the new bill that just passed and now only requires formal approval to become a law. The Design and Distribution Obligations and Product Intervention Powers Bill will give the Australian Securities and Investments Commission (ASIC) sweeping powers to influence the local retail market, similar to what the European Securities and Markets Authority (ESMA) can do in the EU.
The greatest power that the bill gives ASIC is its product intervention powers. This allows it to choose which financial products can be offered to retail clients.
The ESMA’s restrictions on binary options and forex trading in Europe are an example of this. This means that ASIC can do something similar for the Australian market but not immediately as these potential regulations will not be fully implemented until 2021. Despite this, ASIC can start deliberations on what limitations they want to place on the market.
Experts think the restrictions that they place will be similar to those in Japan, the US, and the EU. This will be most likely be carried out in order to ensure that Australia will be fully synchronized with all of the other G20 countries when it comes to financial regulations. This can have a significant impact on the market, especially when it comes to forex.
The bill is only waiting for the Royal Assent procedure, which is when the governor-general signs the bill, before it can be sent to the Australian Senate for approval. The bill’s aim is to give ASIC the power to control the financial products available in the market, especially if some of them are deemed as harmful to customers.
Full Examination
When the bill becomes law, ASIC will not just be looking at retail brokers when it comes to determining what to regulate. It will also look at credit practices. The law is supposed to cover any and all harmful financial products available so predatory credit and loans can come under this definition.
It is not all that bad as some experts are optimistic about the move.
In a statement, a spokesperson for the London-based CFD Trading & Compliance Forum, said
Too many complex and risky products have been mis-sold to consumers where there is a discrepancy & imbalance in their risk profile and requirements. The measures will mean that Australia is no longer viewed as an easy target for global providers that aim to circumvent or bypass the leverage restrictions in other locations.
