If you’re looking to escape the clutches of ESMA’s leverage cap by going with an ASIC regulated broker and taking your trading offshore here are a few things you need to know.
Firstly – who are the decent ASIC regulated brokers?
- Pepperstone is the largest Aussie broker by far.
- City Index, is a well established UK broker also regulated by ASIC
- Forex.com is one of the largest global forex brokers
- IG, regulated by ASIC and New Zealand
- Plus 500, pretty much regulated everywhere…
- TradeDirect365 is a smaller ASIC only regulated broker (read our CEO interview here)
However, if a broker is also regulated by the FCA, then they may not let you have an account with their APAC subsidiary…
Secondly – what are the disadvantages about moving to an ASIC regulated broker?
- Protection – You’ll lose FSCS protection from the FCA. This is a big deal if your broker goes bust.
- Customer Service – Whilst all brokers are global brands the separately regulated subsidiaries are different. Meaning that the UK office may not be able to deal with any account issues. The big time difference will mean there could be problems dealing with errors quickly.
- Asset Class Limitation – ASIC may not enable you to trade as many products as you can in the UK.
Thirdly – what are the advantages of trading with an ASIC regulated broker?
- Leverage – ASIC has yet to put restrictions on margin meaning you can still get high leverage rates
- Language – Aussies still English so there should be minimal language barriers
- Safety – compared to other offshore regions like Cyprus, Australia and ASIC provide a relatively safe environment for traders and investors.
Always do your own research before sending any money offshore and be aware that the FCA offers some of the best protection for UK investors and traders.
So it’s worth considering if you should upgrade your CFD or FOREX account to professional status and keep trading with a UK regulated broker.
This of course all depends on your experience and risk appetite, and you should always seek independent financial advice from a local expert.
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously acting as multi asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2000.