ASIC Cancels Direct FX's Financial Licence due to Compliance Failures
- The regulator originally suspended Direct FX’s licence on April 17, 2018, for a period of six months.
The Australian Securities and Investments Commission (ASIC) announced today that it has canceled the Australian financial services (AFS) license of Direct FX Trading Pty Ltd, an Australian-based Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term broker.
ASIC noted in its statement that due to continued compliance failures from Direct FX, the regulator canceled the firm’s license earlier this month on October 8, 2018. Following the cancellation of the license, the Supreme Court of New South Wales, a state in Australia, placed Direct FX into external administration and appointed a liquidator on October 11, 2018.
The securities regulator originally suspended Direct FX’s license on April 17, 2018, for a period of six months, which expired this Wednesday. Initially, the watchdog suspended the license as it found that Direct FX was not meeting its financial and non-financial obligations.
ASIC has listed a number of failures from the firm, including the company not complying with client money reporting rules. These rules require financial institutions to provide ASIC with daily and monthly reconciliations of client money, which Direct FX did not do.
In addition, the firm continued to provide financial services that allowed clients to enter into trades while its license was suspended. It also failed to comply with its Net Tangible Asset (NTA) requirements. This failure included not having enough cash and cash equivalents to comply with its obligations.
In fact, ASIC lists seven separate reasons for the termination of its license, which you can read here. The regulator also notes that Direct FX is required to maintain its membership to an external dispute resolution scheme and have sufficient professional indemnity Insurance until the end of April next year. This is to minimize the impact of the cancellation on both its past and current clients.
Direct FX Ignored Warnings From ASIC
Commenting on the announcement, ASIC Commissioner Cathie Armour said: “Direct FX was in breach of multiple conditions of its AFS license, which are aimed at protecting investors from the higher operational and credit risks posed by the retail OTC derivative sector.
“Direct FX ignored key conditions of the notice of suspension by continuing to open new trading positions and failed to comply with its client money reporting obligations while suspended. The ongoing and demonstrated disregard for meeting their obligations has resulted in ASIC acting to remove the company from the industry.”
ASIC ends the statement by adding that Direct FX has the right to appeal its decision to the Administrative Appeals Tribunal.
The Australian Securities and Investments Commission (ASIC) announced today that it has canceled the Australian financial services (AFS) license of Direct FX Trading Pty Ltd, an Australian-based Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term broker.
ASIC noted in its statement that due to continued compliance failures from Direct FX, the regulator canceled the firm’s license earlier this month on October 8, 2018. Following the cancellation of the license, the Supreme Court of New South Wales, a state in Australia, placed Direct FX into external administration and appointed a liquidator on October 11, 2018.
The securities regulator originally suspended Direct FX’s license on April 17, 2018, for a period of six months, which expired this Wednesday. Initially, the watchdog suspended the license as it found that Direct FX was not meeting its financial and non-financial obligations.
ASIC has listed a number of failures from the firm, including the company not complying with client money reporting rules. These rules require financial institutions to provide ASIC with daily and monthly reconciliations of client money, which Direct FX did not do.
In addition, the firm continued to provide financial services that allowed clients to enter into trades while its license was suspended. It also failed to comply with its Net Tangible Asset (NTA) requirements. This failure included not having enough cash and cash equivalents to comply with its obligations.
In fact, ASIC lists seven separate reasons for the termination of its license, which you can read here. The regulator also notes that Direct FX is required to maintain its membership to an external dispute resolution scheme and have sufficient professional indemnity Insurance until the end of April next year. This is to minimize the impact of the cancellation on both its past and current clients.
Direct FX Ignored Warnings From ASIC
Commenting on the announcement, ASIC Commissioner Cathie Armour said: “Direct FX was in breach of multiple conditions of its AFS license, which are aimed at protecting investors from the higher operational and credit risks posed by the retail OTC derivative sector.
“Direct FX ignored key conditions of the notice of suspension by continuing to open new trading positions and failed to comply with its client money reporting obligations while suspended. The ongoing and demonstrated disregard for meeting their obligations has resulted in ASIC acting to remove the company from the industry.”
ASIC ends the statement by adding that Direct FX has the right to appeal its decision to the Administrative Appeals Tribunal.