In addition to the many protections afforded by a trusted regulatory jurisdiction such as efficient compliance and enforcement of regulations, forex traders in Australia may also benefit from the required Professional Indemnity (PI) insurance policy that ASIC-regulated brokers are required to hold. A forex broker that holds an Australian Financial Services (AFS) license with ASIC must hold adequate insurance. Adequacy levels are contingent on the size of the broker (i.e. larger brokers must have larger policies, whereas smaller firms will hold coverage sufficient for their client base size). Important note: Indemnity insurance isn’t designed to protect you directly – it protects your broker in the extraordinary case of an insolvency event. It does not guarantee that you will be paid should your broker become insolvent. Nonetheless, this insurance policy is a requirement under s912B of the Corporations Act of 2001, which mandates that AFS holders have arrangements in place to compensate clients in the event of Chapter 7 of the corporations act (and under Chapter 6 applicable to AFS holders as per the Treasury Department). This can help reduce the damage caused in cases where a broker goes out of business. In the event of the insolvency of a forex broker: ASIC will step in to ensure that external administrators comply with the law, supervise any registered liquidators that may be assigned from secured creditors, and implement insolvency reforms and publish updates about the case on its website. Because forex traders must rely on the broker's creditworthiness to reduce counterparty risk, it is essential to only deal with highly-trusted forex brokers.