Under new rules introduced by the government on January 31, Forex brokers in Australia will now be required to hold net tangible assets greater than A $500,000, or 5% of average revenue with this amount set to double to $1 million, or 10% of average revenue by January 31, 2014. These stricter regulations have forced online foreign exchange broker FxPro to move its Australian operations out of the country and to merge it with those in Cyprus and the UK. This transfer comes just over a year after choosing Sydney as the base for its expansion into Asia.
Although no clear reason was given for the decision, clients interested in setting up a new online account via the FxPro site this week were informed of the merger. FxPro Australia Pty Ltd, set up its operations in November 2011 and during the last year, 49% of its trading volumes were transacted in the region. At that time of initiation, the brokerage was authorized and regulated by the Australian Securities and Investment Commission (Asic), to deal and give advice in relation to foreign exchange contracts and derivatives.
The new margin requirements have placed all foreign exchange brokers in Australia under increasing regulatory pressure. The Australian government is also requiring Forex brokers to prepare quarterly cash flow projections over at least one year. These reports will be based on reasonable estimates of revenues and expenses over that time and will require the issuer's directors to certify these projections as reasonable. Viewing the Australian dollar as being stronger than currencies in Europe and North America may have been one reason why FxPro opted to Australia as its key location with Sydney serving as the base for its expansion.