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#1 08-04-2019 17:30:23

johnedward
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From: Paris - France
Registered: 21-12-2009
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The Australian parliament passes a financial product bill

The Australian parliament passes a bill allowing for intervention in financial products


http://www.forex-central.net/forum/userimages/ASIC.JPG


After several quarters of discussion in Australia's Parliament, a new law that will majorly affect laws overseeing brokers is awaiting final approval. The amendment, also referred to as the "Design and Distribution Obligations and Product Intervention Powers Bill", will enable ASIC to completely modify the forex and CFD investment market.

This bill will concern the financial products marketed to traders, will likely be implemented in 2 years. The ASIC is now free to debate on the type of limits it will bring into the market.

As Australia is commited to the G-20's financial regulatory streamlining plan after the 2009 financial crisis, the changes will likely mirror those already in effect in the EU, Japan and the USA. Given the influx of forex dealers throughout the world, the likelihood of regulatory standardisation is high.

Intervention abilities on financial products

The amendment is nevertheless still pending another related procedure. The law will be sent to the residence of the Governor, who will likely sign it and send it through to both the Senate and the House of Representatives speakers.

The purpose of the law is to enable the Australia's regulatory agency to intervene in the event that the distribution of certain products is deemed harmful to consumers. According to the document, financial products there are supposed to be sold to "enlightened consumers".

The commitment to this bill stems from a financial investigation that ended over 4 years ago. The ASIC's powers of intervention will go into effect the day after Royal Assent, a mere formality.

In addition to forex brokerages, the Australian Financial Regulatory Agency could also examine current credit practices. By law, the ASIC decides whether the use of its new product intervention powers will take into account any potential harm that consumers may be exposed to via the use of certain products.

Harmonisation with other regulations is likely, but there is no formal ASIC decision yet on how it will use its newfound authority. As everyone knows, Europe's ESMA has taken the lead, banning certain products and limiting the leverage that brokers can offer.

Duration of implementation

According to those who have seen the legislation, companies might have 24 months to implement the new rules. A spokesman for London's industry think tank 'CFD Trading & Compliance Forum" says that: "The new intervention powers are a key answer from authorities, as they will change the landscape of Australia's growing financial services sector."

The reason for these updates is once again a long list of traders who complained to the local regulatory agency: "Too many complex and risky products have been abusively marketed to traders when there is a discrepancy and imbalance in their risk profile and requirements."

According to the UK's CFD Trading & Compliance Forum spokesperson, new laws that back an improved framework of convenience and relevance will strengthen the trading environment and reduce the potential catastrophies that vulnerable traders could face.

"This new bill means that Australia will no longer be viewed as being an easy target for forex brokers that want to get around leverage restrictions in other nations," the spokesperson mentioned.


"Anything worth having is worth going for - all the way." - J.R. Ewing

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