ASIC revokes FXOpen AU's financial services license
ASIC revokes FXOpen AU's financial services license
The Australian Securities and Investments Commission (ASIC) has revoked the Australian financial services (AFS) license of FXOpen AU Pty Ltd (FXOpen AU), a provider of contracts for difference (CFDs) and foreign exchange contracts.
The cancellation follows an investigation that uncovered serious concerns about the company's inability to maintain adequate human resources and its failure to meet essential supervisory requirements for delivering financial services.
ASIC's investigation into FXOpen AU revealed several critical breaches of its obligations as an AFS licensee, according to the regulator's website. Specifically, the company was found to have failed in the following areas:
- Maintaining the necessary competence to provide financial services as stipulated in its license.
- Adhering to the 'key person' condition attached to its AFS license.
- Complying with broader financial services laws and regulatory requirements.
FXOpen AU has held AFS license 412871 since December 12, 2011, which allowed it to issue CFDs. These financial instruments enable traders to speculate on the price movements of various underlying assets, including foreign exchange rates, stock indices, commodities, and crypto-assets.
ASIC concluded that FXOpen AU's failure to meet its core obligations posed a risk to both existing and potential clients. The decision to revoke the license was made to prevent future violations and protect investors. The cancellation also serves as a deterrent to other AFS license holders, reinforcing the regulator's commitment to promoting fairness, honesty, and professionalism in the financial services sector.
FXOpen AU is not the only entity facing enforcement actions from ASIC. The regulator has increased scrutiny of retail issuers of over-the-counter (OTC) derivatives, a sector known for high-risk products like CFDs. Recent actions include:
- ASIC secured a $75 million penalty against AGM Markets and its authorized representatives, OT Markets and Ozifin, along with compensation for approximately 10,000 affected clients.
- ASIC launched proceedings against eToro, marking its first action focused on design and distribution aimed at protecting consumers from risky CFD products.
- The regulator suspended the AFS license of Prospero Markets and liquidated the company on just and equitable grounds.
- XTrade.AU faced license revocation for non-compliance, and its former directors and responsible managers were banned from the industry.
ASIC is actively working to protect consumers from high-risk OTC derivatives. The regulator introduced a product intervention order (PIO) for CFDs, which has been extended until May 2027. The PIO has played a crucial role in mitigating the risks posed by CFDs to retail clients, which are known to carry significant potential for harm.
Additionally, ASIC oversaw the payment of $17.4 million in compensation to over 2,000 retail investors affected by breaches of financial services laws. The regulator continues to monitor the sector closely, ensuring that issuers of retail OTC derivatives meet their obligations to protect consumers.
By revoking FXOpen AU's license, ASIC has underscored the importance of compliance and consumer protection in the financial services industry. This decision is expected to strengthen industry standards and reassure investors of the integrity of the financial system.
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