ASICAustralian Securities and Investments Commission

What ASIC is

ASIC is Australia's integrated corporate, markets, financial services and consumer credit regulator. Unlike many jurisdictions where responsibilities are split between several bodies, ASIC holds a single mandate across those functions. That integration matters because it means a CFD broker has one supervisor whose rules cover everything from how the firm holds client money to how it advertises to retail clients.

Who and what it regulates

ASIC supervises AFSL (Australian Financial Services Licence) holders offering financial services to Australian clients, including retail OTC derivatives. The licence covers the firm, its representatives, its compliance arrangements, and its dispute resolution pathways. Marketing to retail clients is treated as conduct that falls within ASIC's scope, which is why the high-pressure bonus and promotional environment seen in some offshore markets does not survive ASIC supervision.

Client money and segregation

AFSL holders must hold client money on trust in segregated accounts with an Australian prudentially regulated bank, separated from the firm's own cash. Daily reconciliation is required and client money cannot be used for the firm's operating expenses or to meet its own obligations. This is the basic client-money regime you should expect from any tier-1 regulator.

Capital requirements

Minimum capital for an AFSL holder depends on the activities authorised and the scale of the business, with higher requirements for dealing in derivatives and for holding client money. The base level for a derivatives issuer sits at a meaningful floor and is monitored through periodic reporting. ASIC can and does increase requirements on individual firms if their risk profile warrants it.

Compensation scheme

Australia does not have a statutory investor compensation scheme equivalent to the UK's FSCS. The closest mechanism is the Australian Financial Complaints Authority (AFCA), which can hear disputes and direct remedies up to monetary limits. AFCA is not insurance — it cannot magic funds out of a failed firm — but it is a real and reasonably efficient dispute path.

Leverage and product rules

In 2021 ASIC issued a product intervention order capping retail CFD leverage, broadly aligned with ESMA's framework: 30:1 on major FX pairs, lower on more volatile assets, and very low on crypto. Negative balance protection applies to retail clients. Marketing restrictions and a standardised client suitability assessment are also in force.

Higher leverage is still available through the same offshore entities most ASIC-authorised brokers operate, which is why the same brokers will often onboard Australian clients to a Vanuatu or similar entity under a separate agreement. Read which entity you are actually with.

How to verify a licence

Search ASIC's professional registers for the firm name and the AFSL number. Confirm "Current" status and that the licence covers the service you intend to use. Cross-check the AFSL number back to the broker. As with any regulator, the verification step takes minutes and prevents the bulk of cloned-firm scams.

The honest caveat

ASIC is a credible and active supervisor, and an AFSL is a strong signal that a broker operates to a real standard. It does not compensate for trading losses and it does not validate the strategy you are running. Use ASIC as a baseline filter for any broker offering to Australian clients, then apply the same verification discipline to your own setup that you would anywhere else.