The Australian Securities and Investment Commission (ASIC) is the main regulator for Australia’s financial services and markets including registered companies and providers of credit services. They ensure fairness, integrity, and transparency, this promotes the secure participation of investors and other financial consumers.
ASIC in a nutshell
- ASIC Authority: Australia’s primary regulator for financial services and markets.
- Regulatory Functions: Enforces laws, oversees financial system, and regulates businesses.
- Roles and Responsibilities: Facilitates financial system performance, ensures transparency, and educates investors.
- Scope of Regulation: Covers Australian and foreign-owned businesses in financial markets.
- Binary Options Regulation: Bans the issue and sale of binary options to private investors until October 2031.
ASIC was established by the ASIC Act, the Australian Securities and Investments Commission Act of 2001 as an independent commonwealth governing body. The ASIC body has a wide range of responsibilities and operating power, ranging from company registration to data security management.
It goes without saying that businesses play a primary role in a nation’s financial market and services, this is why it was established that all businesses operating within the Australian market must be in full compliance with the Australian Securities and investment regulation. Going against the ASIC requirements and regulations will result in severe penalties and in certain cases, criminal prosecution.
Businesses regulated by the Australian Securities and investments commission (ASIC) include Australian businesses or companies as well as foreign-owned businesses. The ASIC is made of a chairperson as well as members of the body who have delegated the responsibility of overseeing the performance of the financial system, regulating Australian companies, markets organizations, and professionals who operate in financial services. In addition, the ASIC enforces laws, keeps a structured record of financial information, and makes it accessible to the general public. They also issue financial licenses to businesses operating within the Australian market.
What is the role of ASIC?
The Australian Securities and Investment Commission (ASIC) plays an important role in the financial system. The ASIC has authority in a number of areas, including regulation, enforcement, and facilitation.
Some key roles of the ASIC under the ASIC act include:
- Improving, facilitating, and maintaining the overall performance of the financial systems
- Promoting and supporting secure and informed participation of investors and other financial consumers.
- Maintaining trust and confidence within the financial system by educating investors and the general public on the responsibilities of an investor.
- Effectively processing and keeping accurate records of financial information of companies and making sure this information is accessible to the general public.
- Efficiently enforcing laws and ensuring the procedural requirements and minimal.
- Aiding in the facilitation of civil and criminal penalties as well as commencing prosecution.
- Ensuring transparency in the financial system by engaging instrumentally in market supervision and corporate governance.
- Investigating suspected breaches and issuing infringement notices.
- Ban individual activities in the financial market.
- Mediate in the process of granting defective products.
Beyond being just a regulatory body, it is also backed up by the law with new amendments in 2019 which authorizes civil and criminal penalties for companies or investors who do not comply with the ASIC regulations and guidelines.
Although the Australian Securities and Investment Commission (ASIC) is primarily committed to handling financial services. The body also has influence and impact in every aspect of Australian business, as well as any other foreign-owned business operating within the Australian financial market. From basic activities such as taking credit card payments from an Australian to registering a company in Australia, the Australian Securities and Investment Commission (ASIC) is responsible for setting the minimum standard for security and fairness in the financial system.
Who does ASIC regulate?
The Australian Securities and Investment Commission (ASIC) licenses and regulates all financial service businesses in the Australian financial market, including Australian companies, foreign-owned businesses, financial service organizations, and financial professionals. They also play the role of consumer credit regulator, licensing, and regulating organizations including financial firms, banks, mortgage brokers, and credit unions in accordance with the National Consumer Credit protection act of 2009.
The ASIC is there to ensure these financial service businesses are transparent and uphold integrity in their business transactions. They are also responsible for regulating the creation of new markets that are in the Australian financial system, in addition, they play a role in the authorization process of these new markets.
When it comes to establishing new laws as it relates to the Australian financial market, the government also consults with the Australian Securities and Investment Commission (ASIC)
As much as the focus of the ASIC is mainly on financial services businesses, their authority spreads to every other industry. As long as the business has a presence in the Australian market, it will be regulated by the Australian Securities and Investment Commission (ASIC) at one point or another.
How does ASIC affect you?
The Australian Securities and Investment Commission is in charge of laws in areas that affect the lives of each and every citizen of Australia. Their places of authority range from finance, investments, insurance, and banking.
Some of their responsibilities also involve appointing auditors to banks and other financial institutions to set a reasonable standard and ensure creditors transact fairly with borrowers. About two million companies and businesses operating in the country, as well as entities of top banks, are mandated to comply with ASIC rules. The Australian Securities and Investment Commission has also increased its focus on data protection within the country. The goal is to ensure foreign businesses are committed to protecting the personal and financial data of Australian citizens. Failing to do this will result in stiff penalties and possibly criminal prosecution.
Regardless of the size of the business, they are expected to get familiar with the laws, rules, and regulations of ASIC before delving into the Australian market. Basically, all of these are put in place to ensure consumers and everyone in the financial system are rightfully protected.
Does the ASIC regulate the Binary Options market?
ASIC is regulating the binary options market by extending its product intervention order and prohibiting the issue and sale of binary options to private investors until 1st of October 2031.
The intervention order came into force on 3rd of May 2021 after ASIC found in 2017 and 2019 that around 80% of private investors lost money when trading binary options in Australia. For example:
- 74-77% of active private investors lost money when trading binary options
- Private investor accounts made net losses of 14 million dollars in total
- Private investor loss-making accounts made net losses of $15.7 million in total, while profitable private investor accounts made net gains of only $1.7 million
What is the goal of the ASIC regulation?
In general, the Australian Securities and Investment Commission (ASIC) with aim of protecting consumers and investors in the financial system, while also educating them regarding their options.
They provide resources for financial education, which includes information about borrowing safely. Financial professionals can also access tips for applying for auditor registration and ways of obtaining an AFS license, which is a requirement for operating a financial service business.
In addition, consumers can find out the steps to take in finding lost money from forgotten bank accounts, shares, insurance policies, and the rest. They can also be informed on what to do when a company they invested in becomes insolvent.
Especially worth mentioning is that the ASIC includes binary options trading in its regulation. Given the risks associated with binary options trading, ASIC has introduced a Product Intervention Order which will apply from 3 May 2021 to 1 October 2031. This order prohibits the issue and sale of binary options to private investors.
