ASIC To Roll Out New Forex & CFD Reporting Rules in July

Forex and contracts for difference (CFDs) trading can be profitable but they can also be a risky proposition for many. This is why regulators like the Australian Securities and Investments Commission (ASIC) are wary about these financial instruments.

As a result, financial regulators around the world are always looking at ways to try and tighten up the rules concerning these financial products in order to better protect consumers in the long run. This is why the ASIC has published a new set of rules that FX and CFD traders will need to follow starting from July 2019.

The ASIC is rolling out a set of new rules which are expected to create a fairer and more efficient financial system. The ASIC published its latest market integrity report where it also reminded firms that they needed to be ready to change their reporting formats;

One way that ASIC hopes to do this is by requiring CFDs, forex, and derivatives transactions to use a life-cycle method of reporting. The current method gives the option of using end-of-day snapshot reporting but these rules will phase out by July 1, 2019. Life-cycle tracking gives a more thorough idea of what happened to each transaction.

In a statement, Quinn Perrott, co-CEO Traction Fintech, said

Lifecycle reporting requires you to report the entry into, exit of, as well as any modification of an OTC derivative which occurred during the preceding business day. This is often referred to as ‘intraday‘ reporting.

The current rules give firms the choice of either snapshot or life-cycle reporting. However, the ASIC has specified some assets can be excluded from being reported via the snapshot method and will have to follow the life-cycle reporting format. The main reason for this change is that it thinks that life-cycle reporting will help support in detecting and preventing market abuse while also increasing market transparency.

Increased Focus on Firm Behavior

The ASIC is not just focusing on the reporting habits of trading firms. It will also increase its supervision on how firms behave so that there will be fewer risks of breaches and scams. The aim is to stop firms from engaging in risky behavior that can result in investor losses – which means investors can feel a lot safer in their trading behavior.

The past few months have seen the European Securities and Markets Authority (ESMA) implementing rather strict product intervention measures. This mostly stemmed from the bad behavior of EU brokers and the ASIC is now following suit.