Interview with ACY Securities’s Ashley Jessen: How Australia Brokers Respond to the New ASIC Regulation？

Ashley Jessen is the Chief Operating Officer of Australia-based forex broker ACY Securities and involved in the financial services space since the year 2000. His career in ACY Securities began as the Head Of Marketing in 2019, working on the digital marketing strategy and building  marketing campaigns etc.

Today, he sat down with Fazzaco to talk about the ASIC Product Intervention rules​ which will be effective from March 29th. He explains how the new regulation will effect  Australia-based forex brokers and how to deal with new rules.

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Fazzaco: Hello, Ashley. Firstly please explain what your current role at ACY Securities?

Ashley: Thanks for the opportunity of speaking to you about one of the most critical aspects of our business in 2021, which is the ASIC Product Intervention rules introduced in October last year.

I'm the current Chief Operating Officer at ACY Securities. I'll be working closely with our founder and CEO, Jimmy Ye, on expanding our global reach and putting the processes in place to execute our overall strategy.

My role will cover the operational activities across our institutional and retail business, global marketing efforts, and compliance operations.

Fazzaco: Before we drill down on today's topic, let's talk about COVID-19. What have been some developments and challenges for your company in this context?

Ashley: We are incredibly fortunate in Australia to have an extremely low number of cases, one of the best climates in the world, and a medical system to be proud of.

For us, it has been business as usual, apart from a 2-month work from home stint in 2020 when uncertainty was running high.

Fazzaco: Another challenge——ASIC's Product intervention is approaching. How do you think it will affect the FX industry?

Ashley: ASIC's Product Intervention has been more of an expectation rather than a challenge.

I was part of the CFD Forum, which was established back in 2012, when the then Chairman, Greg Medcraft, provided the opportunity for the industry to self-regulate the CFD and FX space.

Many of the issues ASIC has implemented have stemmed from the dozens of meetings the industry had nearly ten years ago, not to mention Japan's regulatory changes along with ESMA. ASIC is proactive in bringing one of the strictest and well-respected regulatory oversight in line with global regulations.

Regarding impact to the FX industry, we had seen drops in revenue of European CFD brokers around the 20% mark when ESMA changes were implemented.

Our Australian arm of our business will likely follow suit and see an initial drop in revenue numbers, but that could be balanced out by the increased volatility that has been attracting the largest number of retails clients we've ever seen.

And in terms of the retail client, we see it as a positive to use lower levels of leverage in their trading.

Many new traders may have previously had a friend who told them about their trading results because of using ultra-aggressive levels of leverage. As a result, it has positioned the CFD product as a trading tool that can win big or lose big.

With lower levels of leverage, it will hopefully take that attitude of 'CFDs are a tool for aggressive position sizing' to one of a financial tool fit for purpose.

Having said that, there are no leverage changes to professional or sophisticated traders based in Australia.

Fazzaco: How has ACY Securities planned for the new regulation, and how will it affect your clients?

Ashley: Communication is paramount with our clients, and we have been strong in terms of updating our clients.

We've emailed our clients multiple times during March and have made phone calls to all Australian-based clients to remind them of the upcoming changes being introduced on the 29th of March.

Feedback has been extremely positive in that clients are aware of our interest in helping them make the transition in the smoothest way possible.

Regarding the impact on clients, we believe they will strengthen their understanding of leverage and welcome the stricter maximum leverage levels.

Fazzaco: Compared with ESMA regulation, ASIC will not require brokers to disclose issuer-specific risk warnings, such as profit & loss ratio. What do you think motivated this decision?

Ashley: That's a great question, and my thinking is that ASIC is well aware of the profit and loss of the industry as a whole and are also aware that the Australian market is more mature in terms of trading the global markets, relative to other countries.

Australia has one of the highest levels of share ownership in the world and owning shares directly or through a super fund is more commonplace.

Trading education here in Australia has been a strong force since 1999 when the tech boom first started.

Since then, hundreds of training companies have educated retail traders on how to trade local shares, Forex, and CFDs across multiple asset classes.

Perhaps this is one of the reasons why they haven't been too concerned about mandating these warnings on banners.

Fazzaco: Statistics show that over 85% of retail traders of Australia-based brokers are from overseas countries. With the ASIC orders to stop providing financial services in overseas jurisdictions where the broker is not licensed, where do ACY Securities and Australian brokers focus your business?

Ashley: Locally, our focus will continue on Australian-based traders, as we've been doing for several years.

Even the likes of Google have implemented restrictions such that marketers of derivative products like CFDs, can only run marketing in countries where they have a license.

Fazzaco: Holding Multiple licenses has become a routine for brokers, how about ACY Securities?

Ashley: At ACY, we hold both an ASIC license and a Vanuatu license and are in the process of securing licenses from other countries.

Fazzaco: What's the usual ratio of retail clients under offshore and mainstream (like FCA, ASIC etc) jurisdictions?

Ashley: The ratio of clients under local or international jurisdictions changes all the time, especially over the last year with volatility at all-time highs.

Specific retail traders have taken advantage of the volatility in cryptocurrencies, while others have enjoyed the run-up in crude oil and global indices.

Fazzaco: How do brokers overcome the FX payment solution challenges in St. Vincent, Marshall Islands and other offshore jurisdictions?

Ashley: Payment solutions in any country are more about using services that the locals are comfortable with. We will always try our best to align with payment solutions that rank efficiency, safety, and security as their top priorities.

Fazzaco: In your opinion, besides the regulatory framework, what upcoming trends do you see emerging in FX industry?

Ashley: 2020 and 2021 having really exposed the entire industry to more clients than ever before, who have been trading the most volatile markets in decades.

Internally, this has seen a focus on improving internal systems, regulatory controls, and client communication.

Also, clients are demanding more than ever and have access to greater insight into what they want as a trader and more reviews to identify the best brokers from those who aren't in the business for the long-term.

At ACY, we've stepped up our Partners business in a huge way to offer our best liquidity options and a newly developed bespoke solution for fund managers and money managers.

With more empowered traders, who have a strong track record of delivering exceptional returns, more are turning to the business of managing other people's money.

Therefore, we've had to focus more time and resources to cater to this growing segment, putting in systems, processes, and people to help expand the business of our trading partners.

In line with this, we've seen a massive increase in the number of people trading algorithmically, creating Expert Advisors, and scaling their trading business faster than we've seen in previous years.

Talented traders are attracting the attention of sidelined capital faster than ever before, providing alternatives that weren't as readily available.

They can showcase their live trading statistics via independent and verified sources and never touch the clients' money directly but can trade on their behalf.

This is the trend we are seeing and are expecting this sector to multiply in the future.