Global Forex Market Report in the First Half of 2020 III (Global Forex Regulatory Framework: Asia and Pacific Region)
Source: Fazzaco
2.6 Australia— Asian investors dominateData showed that overseas clients amounted to over 80% in Australia’s retail FX investors, among whom Asian investors took the lion’s share.Australia also had a huge amount of brokers. According to fx110.com, there were more than 500 licensed brokers under the regulation of ASIC.2.6.1 Withdrawal from China’s marketIn April 2019, ASIC announced that according to Chinese laws, “any unauthorized institution that conducts forex margin trading without approval [in China] shall be deemed to be in violation of the law. It is also illegal for any client (entity or individual) to entrust an unauthorized institution to conduct forex margin trading.” By June 1, 2019 , 13 brokers withdrew from China’s market or shifted to other regulatory organs.Later, many brokers such as IC Markets, RubixFX, AUGS, and fpmarkets declared that after restructuring, they could still accept overseas clients including Chinese clients while strictly following ASIC’s new rules.Tamas Szabo, the CEO of Pepperstone, said in a fierce tone in a submission to the committee that “ASIC was moving away from its key advantage”; Sophie Gerber, director of the Sophie Grace and TRAction Fintech, said ASIC’s new rules were stifling the creativity of Australia’s financial industry.2.6.2 More difficult to apply for licenseLong disclosure of license issuance and rapid expansion of the market helped raise the price of ASIC-regulated CFDs license, making it more difficult for retail FX and CFDs brokers to acquire license. Since the second half of 2018, any company who wanted to be a broker under ASIC regulation should pay $4 million (or 27 million yuan).Moreover, tradable license influenced the good faith of Australia’s financial market. In this February, ASIC decided to cancel an Australian Financial Services Licence (AFSL) or Australian Credit Licence (ACL) where the licensee failed to commence its business within six months.Partial list of brokersXMEightCapIC MarketsFP MarketsFXTRADING.comGO MarketsTrademaxVantage FXVT Markets 2.7 New Zealand— Focused by Chinese investorsAs a highly-developed capitalist country, New Zealand has been listed as a state with the highest Ease of Doing Business rankings by the World Bank. As a major economy in the southern hemisphere, New Zealand has witnessed fast retail FX development but still maintained at an initial stage.Due to relatively flawless financial regulating system and infrastructures, FX industry in New Zealand has attracted attention of Chinese investors. Many retail FX brokers under the country’s regulation are now operating business in China. It should be noted that the Financial Markets Authority (FMA) is the organ that regulates New Zealand’s FX brokers, while the Financial Services Provider (FSP) doesn’t have the authority. Compared with other countries, FMA system is more complicated when it comes to broker enquiry, because it shares the same set of code with FSP, leading to common occurrence of scams made by unregulated brokers.To protect the interests and rights of China’s investors, fx110.com assisted many investors in submitting complaints about FSP as early as in July 2014. After rounds of investigation, fx110.com unveiled the truth about New Zealand’s regulation and published an essay clarifying that FSP approval was null and void. Continuous complaints finally aroused the attention of the local authority. After realizing the problems brought about by its regulation and effectiveness, New Zealand started to implement a new financial law in 2015. The new law stipulated that since February 28, 2015, all compliant FX brokers regulated by New Zealand should acquire derivative issuer license from FMA. Now there are 26 FMA-regulated FX brokers.Partial list of brokersAxiTraderBL Global MarketsDirectFXCMC MarketsIG MarketsPlus500Rockfort2.8 Hong Kong SAR — Stability mattersAs the third largest financial hub in the world, HK is known for the regulation and rigorousness Securities of the Futures Commission (SFC) after surviving many rounds of financial crisis.SFC’s Q3 report in 2019 showed that it received 2,060 license applications, an increase of 17.3% on a month-on-month basis. And according to its 2019 Q4 report, by the end of 2019, 47,437 companies have been registered with or licensed by SFC, among which 3,084 have acquired SFC license and 42 of them were FX brokers. In June 2019, SFC issued a circular, stating that under Mainland law and regulations, it was not legal for any unapproved institution to conduct FX margin trading on the Mainland or for any client on the Mainland to entrust an unapproved institution to do so. Accounts of mainland China’s investors were shifted to offshore regulation. The new rules brought more risks to investors from mainland China. Thus, fx110.com downgraded SFC’s regulatory mark and ranking.Partial list of brokersAUSFOREXBlackwell GlobalKVBGMOLMAXGain Capital SwissquoteSaxo Capital Markets 2.9 Southeast and South Asia — Market with potential and scamAs the western market becomes saturated, CFD brokers are longing for developing a new one. They favor Southeast Asia for its loose policy, advantageous location, complete trading infrastructures, and a huge population of young investors. Singapore, Malaysia, Vietnam, Thailand, and Indonesia are among the most active forex markets in the region. Statistics show that 34% of brokers have translated their web pages to Thai, and 38% to Vietnamese. However, except for Singapore, the whole FX market in the region is not mature, with too loose regulation or even regulatory void in many countries. Instabilities such as illegal gangs and drug dealers contribute to the region’s low security.2.9.1 IndonesiaThere are two government regulatory bodies in Indonesia. Commodity Futures Trading Regulatory Agency (BAPPEBTI) is in charge of supervising transactions of bulk commodity futures, while Financial Services Authority (OJK) in charge of financial services, both of which take no responsibility for FX trade, leading to the emergence of fraud organizations such as PTFX and OTM.In 2013, the Indonesia administration cracked down on the brokers who scammed money form the country’s residents, causing widespread shutdown of FX brokers. Later, the government resumed the legality of brokers on the premise that they should set an office in Indonesia, but the regulation didn’t play a substantive role. Indonesia’s FX market is also characterized by sharia-compliant transaction accounts provided by brokers since it is the largest Muslim country.2.9.2 SingaporeBIS statistics show that Singapore has become the third largest FX trading hub in the world next to the UK and the US, accounting for 7.6% of the market share.With perfect regulatory conditions and strict laws, Singapore has 44 MAS-licensed leverage FX brokers.Since October 8, 2019, Singapore has reduced the amount of leverage from 50:1 to 20:1.Notably, many unregulated brokers hide behind the disguise of MAS license. For instance, Longasia, boasting it was under the regulation of MAS to attract many Chinese investors, was reported to be caught in a scandal of deliberately denying money withdrawal in August, 2019. In fact, the broker’s license has expired for a long time. Partial list of brokersCMC MarketsGain CapitalOandaSaxo 2.9.3 ThailandThe Securities and Exchange Commission (SEC) was in charge of Thailand’s security market and FX and CFD transactions. Nevertheless, no list of licensed brokers can be found on SEC’s official website. It is certain that FX transactions are not illegal in Thailand, because the country allows investors to select all international brokers that supports SEC. Some of the brokers have set offices in Thailand.2.9.4 MalaysiaBank Negara Malaysia (BNM) instead of Securities Commission (SC) takes charge of Malaysia’s FX transactions. Malaysia is the largest Islamic bond market in the world.Compared with brokers, Malaysia’s forex scams are better known by Chinese investors. The MBI financial pyramid scheme scammed over 140 million yuan out of tens of thousands of investors across China.Moreover, the Chinese character “pian”– which can be translated as lying, cheating or to deceive someone – was voted as the Word of The Year for Malaysia in 2019, which is an embodiment of the rampant fraud in Malaysia.2.9.5 India — Spot FX illegalIndia’s FX market is subject to the Foreign Exchange Management Act (FEMA) passed in 2000, which outlawed spot FX transactions.Officially-approved FX transactions are only limited to FX futures of a certain kind of currencies, including USDINR, YENINR, GBPINR, EURINR, EURUSD, GBPUSD, and USDJPY. FEMA also prescribes that FX transactions can only be conducted through authorized exchanges such as National Stock Exchange (NSE), Metropolitan Stock Exchange (MSE), and Bombay Stock Exchange (BSE).But many traders and investors in India have found out ways to bypass FEMA restrictions. Although India’s commercial banks have deactivated credit cards or debit cards to prevent online FX trade, investors can still invest or withdraw money through digital wallet.
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