The Australian Securities and Investments Commission (ASIC) today suspended the license of embattled brokerage Longhou Capital Markets, which fell into voluntary administration on February 28.
The ASIC’s order against Longhou is restraining them from dealing with monies received from investors, or carrying on a financial services business. The interim orders are in place until June 12, 2020, when voluntary administrator Christopher Darin, of Worrells Solvency & Forensic Accountants, reports on its findings.
The suspension of Gold Coast firm’s license means that the company’s authorized representatives providing financial services on its behalf must immediately cease providing financial services, the ASIC said.
According to its website, Longhou is described as an Australian boutique investment advisory and online trading firm with offices in Sydney, NSW, and Varsity Lakes, Queensland. The company offers online trading products on CFDs, equities, options, futures, and forex, as well as financial advisory and funds management services directly and through relationships with other brokers.
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Further explaining its background, the ASIC said Longhou is the holder of AFS license no. 292464, which it has held since November 2005. Prior to April 2016, Longhou was formerly known as Avestra Capital Pty Ltd from October 2008 and as AG Capital Markets Pty Ltd from March 2015.
ASIC preparing to flex its new regulatory muscles
The Australian financial watchdog has kicked off its largest swipe against the sale of risky investments to retail investors, but industry players are claiming that they already operate in compliance with most of these restrictions.
The corporate regulator has been preparing to flex its new regulatory muscles after a recent review found in 2018 alone 80 percent of binary traders and 72 percent of clients who traded CFDs, lost money. Retail traders lost nearly $490 million and $1.5 billion a year in trading binary options and CFDs, respectively, according to ASIC data.
Still, the regulatory updates, which will include leverage limits, margin closeout rules, and negative balance protection, are anticipated to affect fortunes of local brokers from their Australian customers.