Playtech Changes Subsidiary Operating Chinese Markets.com
The ASIC regulated subsidiary of Markets.com STA Global Investments takes over Chinese clients.
Finance Magnates has learned that Playtech has been quietly reshuffling some of its operations. According to information listed on the Chinese website of Markets.com, the TradeFX subsidiary dedicated to financial trading has been actively looking for new ways to expand its business in China. After some considerations, the company switched the regulatory framework of its operation in China under Australian law by using its Sydney based subsidiary, STA Global Investments.
The previous operator of the Chinese subsidiary of Markets.com, Safecap, remains as the operator of the European entity of Markets.com, and the change appears to be regional. Playtech is already using its ASIC regulated subsidiary STA Global Investments to operate its binary options TopOption brand in the region.
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After a number of brokers registered and regulated in Cyprus have been actively targeting the Chinese market and subsequently leaving a footprint of negative experiences, the move by Playtech is one that is aiming to differentiate its subsidiary from the rest of the fish in the pond.
The Aussie safe haven
In September 2014, Chinese traders stormed into the offices of IronFX demanding an explanation about their unfulfilled withdrawal requests, which were all managed by the Cyprus regulated subsidiary of the company, IronFX Global.
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A number of other brokers have been attacked at some forex expos for being dishonest, with a common denominator being a CySEC license. With the trading community heavily criticizing a number of Cyprus based brokers, companies are resorting to ASIC regulation as a safe haven.
While a number of brokerages have been targeting Chinese clients from Australia in recent years, the regulator has not been very welcoming of the practice. A number of brands are getting an ASIC license to provide their services across the Far East, despite the regulatory discouragement.
A list of brokers are actively marketing ASIC regulation as a guarantee for honest business conduct, which for the most part is true. The Australian regulator has repeatedly claimed on its part that it is not responsible for protecting clients outside of the country, however according to legal experts from the land down under, there is no legal basis for the assertions made by the watchdog.
Finance Magnates has approached Playtech for a comment on the matter, however at the time of publication no official statement has been received.
Wait until they find out that they aren’t covered under Australian regulation. The entity doesn’t operate in Australia, therefore no-one outside of Australia is covered under the AFS license. It is outside of ASIC’s jurisdictional reach!
Besides, trading point hedges everything with Safecap anyway so all client money is still unsecured with the overseas Cyprus entity.
These Chinese investors are falling for the IronFX trick again!!!!! How stupid can you be?
Victor, where did get the information that ASIC does not protect non resident clients? ASIC covers all financial related companies – banks, brokers, financial advice. It rules applies to the conduct of the business with its customers. It does not matter where the customers are from. Any complaints must be lodged with the business(broker, bank etc), it it is unsatisfactory, the customer needs to lodge with Financial Ombudsman etc. It doesn’t make sense for a business to break the rule for one class of customers(non resident) but adhere the rules for residents and get away with it. Of course, FOS/ASIC… Read more »
Hi Nick,
in ASIC’s own words:
“The AFS licensing regime only covers financial services carried on in Australia.”
‘ASIC expects that any content or material published by a foreign company mentioning that the company holds an AFS licence to be clear about the reach of the licence. Any limitations of the licence that are not obvious to investors should be clearly disclosed to avoid confusion or misunderstanding,’ ASIC Commissioner Cathie Armour said.
If you are a ASFL license holder and client sign up to this, then you are covered. All ASFL license holder must operate in Australia regardless of ownership. But one loophole is that e.g. pepperstone can setup an office in Japan(without japanese license) to sign customer up. Then that customer is not covered by ASIC since it is done in Japan. But if a Japanese customer sign up on pepperstone usual website, deposit the money with NAB, he is covered since he signed up with pepperstone australia. So if playtech setup an office in China and start operating there ,signing… Read more »
Hey Victor, The clients are covered because the services are from Australia. The office in China is a representative office of the Australian company therefore clients would be covered. The location on the clients doesn’t matter its the location of on entity providing the service.
It isn’t rocket science Nick. If the people providing the financial service aren’t in Australia (as in they are doing the trading etc offshore) and the service they are providing is also not in Australia (they are overseas), then there is no link to Australia, no legal nexus to the Australian laws. It isn’t a financial services business being carried on in Australia, therefore it isn’t a financial service carried on under the Australian licence. The licence (and FOS and ASIC and any Australian legal regime) will ONLY apply to services provided in Australia which, in the case of IronFX… Read more »
I agree with your “legal jurisdiction” 100%. ASIC begins to decline registrations to new applications where the company uses the AFSL license but with no operations in Australia. I believe FXprimus may fall into this category when their license application was declined but I could be wrong. But not sire about those license issued years ago.
But traders from Non English speaking countries prefer to deal with local offices in their own language. Brokers take advantage of these traders by setting up offices there and brandish AFSL, hence the carefully crafted ASIC notice as publish by Victor.
Joseph, you are 100% wrong. It doesn’t matter it is a representative office. All that means is you have just confirmed the financial service is happening IN China to Chinese people. Again, not happening in the Australian jurisdiction, no legal nexus, not under the license.
Could you imagine the outcry if a country said in any area, I know all of this is happening in a completely different country but I want to storm in and regulate it. Can’t happen. Wake up and smell the FX-scam. Stop being such an idiot.
Just checked the ASIC professional register as expected STA Global’s principal office address is an accountant. They are not doing jack in Australia. No financial service is being provided FROM Australia. They only need a license for stuff provided TO Australia (ie to Australians)
Hi guys, it would appear that both of you have valid points. ASIC has repeatedly claimed on its part that it is not responsible for protecting clients outside of the country, however according to legal experts from the land down under, there is no legal basis for the assertions made by the watchdog. It’s understandable for ASIC to be focusing on clients in the country, however the point that if the order matching is not done in Australia could also be a valid one. As is normally the case in such matters the lines are blurry and the issue is… Read more »
I’m sorry Victor I don’t know who your “legal experts from the land down under” are but they aren’t very good at their job, I hope you haven’t paid them. From the statements I have read, ASIC has NEVER said they don’t care about overseas clients or overseas clients aren’t covered, from what i can see in their media releases they have worded things very carefully and only said where a service is not provided in Australia, overseas clients aren’t covered. If you can show me them saying otherwise i’d like to see it. I suggest your legal experts actually… Read more »