Brokers Blame Australian Regulator for Unfairly Slamming Down Their Business
Australia’s main financial watchdog, the Australian Securities and Investments Commission, issued a notification warning investors of the nature of foreign

The world of retail foreign exchange trading faced another battle after Australia’s financial regulator issued a harsh warning against the asset class. The Australian Securities and Investments Commission (ASIC), the country’s main organization that supervises firms operating in the financial services, banking and insurance sector, issued a grave warning to investors on its website.
The warning comes in light of a spree of illicit activity that has affected Sydney’s claim as a reputable, reliable and credible jurisdiction for business.
Join the iFX EXPO Asia and discover your gateway to the Asian Markets
The regulator’s notification stated that investors (customers) should, “Ensure they understand the risks of foreign exchange trading before putting their money on the line.” The notification continues with an explanation of how traders use FX as an investment/trading tool.
ASIC Commissioner, Greg Tanzer, commented in the official notification, saying: “Forex trading is complex and risky. Even the most skilled and experienced Forex traders have difficulty predicting movements in currencies. Trading in international currencies requires a huge amount of knowledge, research and monitoring.”
Margin FX is a derivatives product offered to traders on leverage and brokers can dictate the leverage offered to clients. A similar concept in other derivative contracts, including futures and CFDs. ASIC was the world’s first regulator to offer listed CFDs.
A Sydney-based trading professional responded to today’s warning: “ASIC’s statement is unclear, unfair and misleading. FX trading is as good as any other derivatives instrument, where are the warnings against ‘other risky’ investments?”
The regulator states that it has issued the warning on the back of a major black hole that hit the Australian FX industry. Sydney-based, GTL TradeUp (GTL) went into liquidation at the end of September, thus affecting investments of several Australian investors using GTL’s trading solution.
“The warning about this complex investment comes after liquidators were appointed to GTL TradeUp Pty Ltd (GTL), a Sydney-based company involved in foreign exchange (FX or Forex) trading. ASIC is investigating GTL and the circumstances around its collapse,” the notice stated.

ASIC’s notification is somewhat out of perspective; the regulator has inappropriately blamed FX as a tradable asset class for the failures of a regulated brokerage. The regulator is responsible to monitor and supervise firms and this ‘uncalled for’ warning to investors about Forex trading will only dampen the industry at large.In the latest Investment Trends Australia report, the firm found that “41,000 Australians traded CFDs at least once in the 12 months to June 2013.”
Suggested articles
Understanding the Gaps in Forex TradingGo to article >>
ASIC’s team of expert traders were fortunate enough to provide ‘its clients’ with useful hints and tips:
Consumer tips
To successfully trade in FX, you will need to have good knowledge of foreign exchange, leverage, volatility, the conditions of each country whose currency you are trading, and counterparty risk – knowing where your funds will be kept and the risk that an issuer will default on its obligations to clients, including failing to return client money.
It is very risky because:
• There are significant investment risks as currency fluctuations may move against you, causing you to lose money. Exchange rates are very volatile – they tend to move around a lot even within very short periods of time.
• Markets are open 24 hours a day, 6 days a week (due to time zones), so you need to devote a lot of time to tracking your investment.
• Currency markets are extremely difficult to predict because so many factors affect exchange rates.
• Even small market movements can have a big impact, because most forex trading products are highly leveraged.
• Risk management systems, such as stop loss–orders, will only give you limited protection by capping your losses. You may have to pay a premium price to guarantee your stop loss order.
Regulators should assess the way firms are adhering to principles and rules regarding products that the watchdog governs, as opposed to finding a scapegoat in products.
Leave a Reply
ASIC has a job to protect investors. The facts on the website are indisputable.
ASIC has a job to protect investors. The facts on the website are indisputable.
Great article
Great article
Melanie, If ASIC done their job to protect investors then why the hell did they let GTL Tradeup have a licence in the first place? A simple Google search would have brought up all that was needed to know in that case with that company and the owner. Also why did ASIC let GTL Tradeup to continue in business after breaching laws on three separate occasions, and why was not only Riaz but also his wife allowed to transfer funds? And finally….. Why did ASIC let Riaz go and not ask him to surrender his passport like the other director?… Read more »
Melanie, If ASIC done their job to protect investors then why the hell did they let GTL Tradeup have a licence in the first place? A simple Google search would have brought up all that was needed to know in that case with that company and the owner. Also why did ASIC let GTL Tradeup to continue in business after breaching laws on three separate occasions, and why was not only Riaz but also his wife allowed to transfer funds? And finally….. Why did ASIC let Riaz go and not ask him to surrender his passport like the other director?… Read more »
@Melanie, the ASIC cannot issue trading advice. Some of what they state is misleading. What specific knowledge is required to be successful? Oh wait, much easier to just issue a generic risk disclaimer. There is not anything new that the ASIC has done here that it wasn’t already doing as far as ‘warning’ the public about the riskiness of FX trading. What is needed as the article above concludes is to assess the brokerage firms ability to comply with the rules. Although I do admire ASIC for issuing their own version of a risk disclosure. Brokers like GlobalPrime Au actually… Read more »
@Melanie, the ASIC cannot issue trading advice. Some of what they state is misleading. What specific knowledge is required to be successful? Oh wait, much easier to just issue a generic risk disclaimer. There is not anything new that the ASIC has done here that it wasn’t already doing as far as ‘warning’ the public about the riskiness of FX trading. What is needed as the article above concludes is to assess the brokerage firms ability to comply with the rules. Although I do admire ASIC for issuing their own version of a risk disclosure. Brokers like GlobalPrime Au actually… Read more »
Hi Andrew,
Thanks for the clarification, I suppose its a very fine line between criminal and civil in these cases.
Riaz has his own (Fall Guy) to take the hit for him I suppose in the shape of the other director.
Still, this does not let off ASIC from the whole affair sorry affair.
With inadequate due diligence and then a subsequent three breaches made with no comeback I would go as far as saying ASIC themselves are complicit.
that’s what the exchanges lobby at CFTC is pushing for
that’s what the exchanges lobby at CFTC is pushing for
Hi Andrew,
Thanks for the clarification, I suppose its a very fine line between criminal and civil in these cases.
Riaz has his own (Fall Guy) to take the hit for him I suppose in the shape of the other director.
Still, this does not let off ASIC from the whole affair sorry affair.
With inadequate due diligence and then a subsequent three breaches made with no comeback I would go as far as saying ASIC themselves are complicit.
@Michael
I disagree somewhat with that statement. I think some of the provisions that are now in place make it more difficult to scam customers funds blatantly. Things like read-only access to client segregated funds acct and using trade monitoring tools like Fortress.
But fraud is still possible.
@Michael
I disagree somewhat with that statement. I think some of the provisions that are now in place make it more difficult to scam customers funds blatantly. Things like read-only access to client segregated funds acct and using trade monitoring tools like Fortress.
But fraud is still possible.
it’s a client that barely traded and then found a loophole and traded 25k ! trades in 24 hours, seems logical to you?
it’s a client that barely traded and then found a loophole and traded 25k ! trades in 24 hours, seems logical to you?
Thing is Michael.
This scam was not smart nor clever it was as dumb as a box of frogs and ASIC still failed, even after GTL conducted multiple breaches on ASIC’s rulebook.
And this particular scam is not a new one for this pond life the litany of disaster with previous GTL incarnations internationally is well known.
They just followed the same MO with the Australian set up.
Stevie Wonder could have spotted that this was a wrong’un from day one.
Thing is Michael.
This scam was not smart nor clever it was as dumb as a box of frogs and ASIC still failed, even after GTL conducted multiple breaches on ASIC’s rulebook.
And this particular scam is not a new one for this pond life the litany of disaster with previous GTL incarnations internationally is well known.
They just followed the same MO with the Australian set up.
Stevie Wonder could have spotted that this was a wrong’un from day one.
Regulators around the world are notoriously bad at preventing such things, asic is probably no better or worse than the next one. They should at least aim to put sufficient hurt on the culprits after the fact, if only to discourage any new prospects.
Regulators around the world are notoriously bad at preventing such things, asic is probably no better or worse than the next one. They should at least aim to put sufficient hurt on the culprits after the fact, if only to discourage any new prospects.
in the list of creditors the largest disclosed is ADS with 175k owed
totes amazeballs given they’re in MENA n their DD failed to pop up the mug-shot of the raz
in the list of creditors the largest disclosed is ADS with 175k owed
totes amazeballs given they’re in MENA n their DD failed to pop up the mug-shot of the raz