ASIC: forex trading in Autralia is on the rise

Interest in forex trading continues to grow among Australia's retail traders. This was reported in a speech made last week by Cathy Armor, who works for the ASIC (Australian Securities and Investments Commission).

Armor noted that the number of retail clients trading OTC derivatives has almost doubled in the last 3 years.

According to the ASIC, there are now over 50 issuers of CFDs and binary options allowed in Australia. Annual derivatives turnover reached over $20 trillion. Over  900,000 traders participate in this market, 99% of which are individuals.

Last year, 600+ million transactions were carried out on OTC derivatives. Of this total, over 60% were currency pairs, which has risen sharply since the last ASIC review which reported 160 million transactions.

Cathie Armor notes that there has been a sharp rise in interest in currency pairs and that this growth has been much faster than the growth in the number of CFD or binary options trades over the same period.

Nevertheless, forex trading is still lagging behind CFDs, with the foreign exchange margin accounting for around 31% of net volume, while CFDs contribute nearly 40%.

The ASIC Commissioner also complains that 75% of individual traders reside abroad and that many forex brokers offer leverage of 300:1 and more, which represents $2 million of exposure on a $5,000 investment.

Armor also says that ASIC has recently terminated its consultation period for the product intervention measures it proposes. The regulator plans to implement these temporary measures once it has reviewed the comments it has received.

The Australian agency aims to filter the products it deems dangerous for traders. As in Europe, the ASIC reviews some of the most popular products for retail investors, especially binary options and CFDs.