According to an announcement made by the Australian Securities and Investments Commission (ASIC) after an investigation into the matter, the regulator has suspended the Australian financial services (AFS) licence of the provider of margin FX products, AGM Markets Pty Ltd (AGM).
The regulator explains in its announcement that the action is part of its efforts to crack down on the margin FX industry. After issuing an announcement warning retail investors about the challenges associated with trading foreign currencies, ASIC is taking actions to prevent consumers from making uninformed investment decisions.
the action is part of its efforts to crack down on the margin FX industry
Back in October 2013, ASIC Commissioner Greg Tanzer said that forex trading was complex and risky. Explaining that even the most skilled and experienced forex traders have difficulty predicting movements in currencies, he said that trading in international currencies required a huge amount of knowledge, research and monitoring.
“Like any investment, it is vitally important investors fully understand what they are getting into, and FX trading is no different. Unless you fully understand what investment you are making and the risks involved with that investment, don’t do it,” Mr. Tanzer said at the time.
AGM ceased offering financial services in May 2014. ASIC received an indication that the company was planing to re-start its services at the end of April 2015 after a number of changes to the broker’s name and corporate structure, including members.
The FBS CopyTrade Team Presents a New 'FBS CopyStar' ContestGo to article >>
participants in the margin FX industry can be exposed to turmoil in currency markets
AGM has been previously known as Fixi Australia Pty Ltd, Forbes Wealth Services Pty Ltd and Easy Fortune & Ever Wealth Pty Ltd. According to ASIC, the granting of an AFS licence is not an ongoing right when a company no longer operates within the financial services market.
Mr. Tanzer said in the announcement, “Participants in the margin FX industry can be exposed to turmoil in currency markets and ASIC wants to ensure licensees wanting to be part of this sector are in a position to meet their AFS licence obligations. If businesses can’t demonstrate this, ASIC can cancel licences.”
AGM’s licence has been suspended for six months starting from March 26, 2015.
In the meantime the Cyprus Securities and Exchange Commission (CySEC) regulated entity of AGM Markets continues its business as usual.
The merits of maintaining an ASIC regulated subsidiary have been called into question by some retail brokers as ASIC became more voiceful in campaigning and informing the broker’s customers that the regulator only responsible for protecting residents of Australia.