The Australian Securities and Investments Commission (ASIC) announced this Friday that it has cancelled the Australian financial services (AFS) licence of Forex Capital Trading Pty Ltd, a retail over the counter (OTC) derivative issuer.
Before having its licence cancelled, Forex Capital Trading, also referred to as Forex CT, offered trading in contracts for difference (CFDs) and margin foreign exchange (forex) contracts. Following its investigation, ASIC found that the company’s business model disregarded key obligations of an AFS licensee, resulting in unconscionable conduct, misleading and deceptive conduct and a failure to manage conflicts of interest.
“ASIC’s investigation also found that Forex CT lacked sound ethical values and judgement in dealing with clients, failed to ensure its representatives were adequately trained and complied with financial services laws and failed to ensure that financial services covered by its licence were provided efficiently, honestly and fairly,” ASIC said in its statement today.
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ASIC: some Forex CT clients experienced large losses
During its investigation, ASIC found that a number of clients, who were trading CFD and FX contracts, had experienced large losses in the hundreds of thousands of dollars, including from their superannuation accounts.
As Finance Magnates reported, the regulator appeared before Federal Court in Melbourne last year to extend measures prohibiting the company from removing its assets from Australia as well as disposing of its property and freezing monies in its bank account.
Commenting on the cancellation, ASIC Commissioner Cathie Armour said in the statement: “ASIC continues to focus on conduct by AFS licensees who operate business models that harm consumers.”
Following the cancellation, Forex CT’s AFS licence will continue until the 31st of July 2020, so that there will be a dispute resolution scheme in place. This time period will also allow the company to close any existing client positions. During this time, the company can’t open any new client positions.