Multiple Licences for Brokers Becomes a Necessity at Low Leverage Age

On October 23rd, the Australian Securities and Investments Commission (ASIC) has officially confirmed its product intervention measures on the issue and distribution of contracts for difference (CFDs) to retail clients and the new leverage ratios will be 1:30 for CFDs products . ESMA, CySEC, ASIC and other mainstream jurisdictions have implemented low leverage measures.

Survey into Licensing of ASIC-Regulated Brokers

The new rules will come into effect as of the end of March 2021.

As soon as the ASIC leverage measures are introduced, several ASIC-licensed brokers say they would apply for or recommend other regulator licences to cope with the leverage restriction.

Talking about ASIC’S restriction on overseas market, IFS speaks bluntly: “Most of the Australian brokers have entered a difficult period of business decline and shrink since the announcement of ASIC in April last year. So they decide to apply for more licenses issued by financial regulators of other countries."

Spokesman of the MEX and the MBG say that most of their customers are from Asia with mainland China taking the largest proportion, so they will recommend other regulators to their clients to minimize customer churn.

That’s what most brokers do. IC Markets issued a notice at the end of August to transfer its client's Australian account to IC Markets Seychelles account. Brokers start move their clients to non-ASIC licence (offshore licence included).

The following is a form of the other licences held by 20 ASIC-licensed brokers:

Multiple Licences Required under Low-Leverage

Most large brokers now hold multiple licences and offer brokerage services under different sub-brands. In general, the brokers will also hold main regulator licences such as the Financial Conduct Authority (FCA) and Australian Securities and Investments Commission (ASIC), supplemented by the offshore licences like Vanuatu Financial Services Commission (VFSC) and the Seychelles Financial Services Authority (FSA).

With multiple licences, brokers can build a good brand image and guarantee both credibility and security. Brokers can provide regulation based on client needs, offering different subsidiary or sub-brand services, and this can also be seen as a risk control tool for brokers.

​Holding more than one licence becomes an inevitable choice for brokers in response to the trend towards low leverage. If you are considering applying for other licences or finding licences solutions, please visit Fazzaco’s Forex Licensing/Legal Companies Directory​.