Top Tips for UK Traders Moving to Australia

Top Tips for UK Traders Moving to Australia

According to a recent survey, there are over one million British expats living in Australia – which not only makes Australia one of the largest expat communities in the world but also the most popular destination for British expats. There are many benefits that you can enjoy after moving here, but, despite all of them, living in another country can still be a challenge, especially if you’re a trader or investor. After all, Australia and the UK have different financial systems and, if you’re not careful, you can expose yourself to many risks. For example, you might want to place your investments in Australian Dollars (AUD) to mitigate currency risks and transfer your UK pension to Australia and transform it into a superannuation fund so that you pay less in taxes. 

Broadly speaking, your tax status will be determined based on whether you are deemed an Australian resident or temporary resident. If in the case of a temporary residency, you have a temporary resident visa that says you’re only allowed to live and work in Australia for a fixed period of time, Australian residency means that you’ll be living and working here for an indeterminate period of time, that you’ve made living arrangements here, and that you have personal or business ties. 

One of the most common concerns of British expats in Australia is whether or not to sell their UK property to avoid the inheritance tax but, as important as this decision might be, it’s just one of the many things to keep in mind when planning your finances – especially if you’re a trader. 

By the most recent count, there are around 300,000 Forex traders in the UK, so chances are you might have a Forex trading account when you move to Australia. In general, Australia is a good country to be a Forex trader, and you won’t have to discontinue your investments. However, the regulations are slightly different so, if you want to have unpleasant surprises, you should do some research in advance. 

Here are the most important things you should know about Forex trading in Australia: 

Is Forex trading legal in Australia?

Yes, it is. 

Forex trading is not only legal here but also popular. Some of the world’s most important brokers are based here, and there is a robust trading regulatory environment that protects your best interests. So, if you’re an avid Forex trader, you can continue to invest this way even after moving to Australia. 

Look for a new Forex broker. 

Although the legal status of Forex trading in Australia means that you can continue to exchange currencies, the broker you used in the UK might not be regulated here, in which case you should consider changing it. 

As you probably know, your choice of Forex broker can greatly influence the profitability of your trades, so this isn’t something to take lightly. Ideally, we recommend comparing brokers a few weeks before moving to Australia, just so you have time to weigh the pros and cons of each one and make a wise decision based on your personal preferences and trading strategy. 

In Australia, Forex brokers are regulated by the Australian Securities and Investments Commission (ASIC). Founded in 1998, ASIC is an independent commission that’s also in charge of regulating companies and enforcing laws that protect Australian consumers and investors. In 2021, the legislation was changed, and Forex regulations have been tightened so that today Australian Forex brokers have to meet criteria similar to Europe’s ESMA rules. 

Thus, according to the legislation, all Australian Forex brokers must have an AFSL number and have offices in Australia, even if they were originally founded abroad. Regulated Forex brokers must not only provide seamless trading experiences but also facilitate trader education by offering resources on risk management. 

While these strict regulations might seem unwelcoming, Australia has rapidly become one of the best countries in the world for Forex trading. In just three years, the total client went from 450,000 traders to over 1 million, which goes to show that traders appreciate regulations that follow their best interests. Other important things you should know about Australia’s Forex trading market is that retail participation of ASIC Forex brokers increased to 99% and that the gross annual trading turnover reached $22 trillion in 2019, more than double than in 2017. 

What to expect from ASIC-regulated Forex brokers? 

When looking for the best ASIC Forex brokers, you should know that new restrictions came into place in March 2021 to tackle the uncertainty caused by the pandemic. As a result, you’ll notice that ASIC-regulated brokers have changed their terms: 

  • The maximum leverage went from 1:50 to 1:30. Moreover, if you trade volatile assets such as crypto and gold, know that those will be subject to even stricter leverage limits. For example, the maximum leverage structure for crypto is now 2:1, and the maximum leverage for all currency pairs (including gold and exotic currencies) is 20:1. If you don’t like this leverage, your broker may be able to redirect your account if they have an offshore location. Be careful when doing this, however, because you might not get ASIC protection anymore. 
  • Binary options are now banned – if you used to trade binary options before, you won’t find any regulated brokers in Australia. 
  • ASIC-regulated brokers have to provide their users with negative balance protection. 
  • ASIC-regulated brokers are no longer allowed to offer bonuses and promotions to attract traders. 
  • Some ASIC-regulated brokers now also offer ECN trading conditions, including the option of trading with a Forex API. This means that you’re trading directly with liquidity providers, at higher speeds. 

In general, when awarding licenses to Forex brokers, ASIC focuses not just on the features of their platforms but also on their risk management mechanisms and commitment to trader education. 

To conclude, expat UK Forex traders can continue to trade their favourite assets after moving to Australia. However, the regulatory environment is somewhat different, and you’ll need to keep this in mind when choosing a new Forex broker.