If you were ever part of the online casino industry, you are aware of some of the changes that took part in the Australian regulation. You are aware because it affected the world – the Australians now had to deal with international companies in order to be able to play casino games online in Australia. So a number of South African casinos started offering their services there, which benefitted them greatly, because of the transfer of users from one side to the other.
Now, you might be curious about how this related to Forex trading, and we do not blame you. The connection might seem a little strained. But the truth of the matter is, the connection is there and it is stronger than you would think. After all, strict regulation on one industry might result in strict regulation on the other. And the Australian regulation relative to online casinos and casinos, in general, has been rather strict and all-encompassing. If the regulators approach Forex with the same attitude, we might be seeing a big issue with retail trading in Australia in the near future. Let’s discuss where the suspicions and expectations are coming from.
The gaming industry saw a lot of restriction to it in the year 2017 within Australia. To be more specific, the iGaming industry saw a lot of restriction to it and has since been seeing a lot of restriction to it. The restrictions first came as a result of a report by ACMA which revealed a worrying fact for the local governments – around 80% of the Australian population gambles, bets or wagers money at some point throughout the year. The realization drew a sharp reaction from the populace and from the regulators. They saw this as a problem and as a danger to the country, a drain on the ability of the locals to fully participate in the economy. The result was the introduction of some strict restrictions.
Some of these restrictions involved the restriction of several gambling services and physical gambling, as well as some general advertising related restrictions. While these restrictions have a certain, slight effect on the local physical casino industries, they became much more of a hit to the gaming venues. Local online casinos were forbidden from offering their services to the locals altogether.
These regulations by ACMA resulted in the disappearance of a number of online casinos from the local market. Only international casinos were now able to offer their services to Australians, only as long as they were not based in Australia.
The IGA reforms resulted in a loss of many casinos from the market. Now the Australian markets are mostly saturated with international casinos. Even some South African casinos are offering their services to the locals. And since then, even more, restrictions have been placed on marketing for gambling industries, and everything associated with the gambling industry.
And with the continuation of the creation of new regulation is continuing to create issues for the market, but beyond that, it is creating a level of fear for a number of people in the local Forex markets. They have noted that more than once the local regulators have, for some reason, compared Forex to gambling and are now looking to find ways to limit the number of retail brokers operating within Australia.
Forex and Australia
Australia has one of the biggest retail trading populations in the world. The population of Australia has taken to Forex trading very naturally, with large swaths of the population offering the freedom and ease with which they are capable to trade. Many enjoy the analytical skill and mathematical knowledge that goes into trading successfully. And, as a nation, the local traders have been quite successful, doing better than most of the world in the rate of success they see in their trades. And yet, as with all Forex trading, there is a large number of traders who end up
losing money on a day to day basis, even if there is a large number of people who also end up making money.
Seeing the rate of loss has caused some political representatives to become nervous and see it as a way to advance a political agenda. In their belief that trading might be nothing more than gambling, they have caused the rise of the rhetoric that the industry needs to be even more restricted than it is.
And yet, it should also be noted that the Australian regulatory body which takes care of licensing brokers and overseeing their operations is one of the strictest and most reliable in the world. It has managed to keep one of the most straightforward and honest broker markets going for many years now. And all this with regulation that does not go beyond anything more than required.
And yet, there are still those who would prefer to see even more regulation as a way of “protecting” the population from bad decisions that can be made with the trading world.
Such regulation would be irreparably damaging to the industry and should be cause for concern for the entire world. As if the Australian regulatory context becomes stricter, the rest of the world might follow. And yet there is still hope. ASIC has been keeping an eye out for any possible changes taking in the world and have found the European ESMA reforms to be most impressive to them. The recent European reform resulted in the separation of trader classes within the retail trading world, with professional traders and average traders now receiving different opportunities.
Professional traders have access to the kind of high leverage that will never be available to the average trader. The average trader leverage offers will be capped off at 1:30. In order to prove that users are professional, they will have to provide a number of documents, including the reports of the capital available to them, records of them working for professional Forex trading firms or records of them having legitimate dealings with the broker for many years.
If two of the three are fulfilled, the users will be able to qualify for professional traders and thus get access to the high leverage. But without proof, they will remain as average traders. ASIC was also impressed by the prohibition on bonus and no deposit bonus offers to users. This kind of regulation, while seemingly detrimental to the industry, prevents many users who do not have the money to afford to trade from actually getting involved with the trading. So, if Australia learns from the best examples by Europe, and avoids their mistakes, there might still be hope for the Forex retail broker industry in the country.