GTL Tradeup, an Australian FX Broker Goes Belly Up Down Under

GTL Tradeup (GTL), a regulated financial services' firm in Australia has decided to call it a day. The move comes on the back of a notice issued by the firm to the Australian financial watchdog about its intention to place the brokerage into liquidation.

The news comes as no surprise to both clients of GTL and industry professionals who are familiar with the firm's past performance. The the owner of GTL, Mr Mian Mehmood, repeated an episode of history, where the firm packed up and left (from its Pakistan office in the early 2000's) as soon as it collected enough Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arrangement is made. Who Owns Client’s Money?When clients transfer complete ownership of money to a firm with the intention of covering present or future, contingent or actual or prospective obligations, that money is no longer seen as client money once it is transferred out of the account to the firm. When a firm acquires full ownership of money through a collateral agreement, the firm has also taken an obligation to repay the client although distributed funds upon agreement completion are not considered to be client money. This transfer of full ownership of money is an example of a title transfer financial collateral arrangement under the Financial Collateral Directive, were once transferred that client’s money is no longer considered client money.Should a firm enter an arrangement with a client where a commission is rebated, those rebates are not considered client money until they become due with the terms of the agreements set forth between both parties. Firms are required to operate with the client’s best interest rule, which means that they are required to act professionally, honestly, and fairly. Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arrangement is made. Who Owns Client’s Money?When clients transfer complete ownership of money to a firm with the intention of covering present or future, contingent or actual or prospective obligations, that money is no longer seen as client money once it is transferred out of the account to the firm. When a firm acquires full ownership of money through a collateral agreement, the firm has also taken an obligation to repay the client although distributed funds upon agreement completion are not considered to be client money. This transfer of full ownership of money is an example of a title transfer financial collateral arrangement under the Financial Collateral Directive, were once transferred that client’s money is no longer considered client money.Should a firm enter an arrangement with a client where a commission is rebated, those rebates are not considered client money until they become due with the terms of the agreements set forth between both parties. Firms are required to operate with the client’s best interest rule, which means that they are required to act professionally, honestly, and fairly. Read this Term. In this case, past performance should have been an indication of future performance - a leopard never changes its spots.

Contrary to the famous saying by George Santayana, "Those who cannot remember the past are condemned to repeat it," it's believed that the GTL owner 'bagged' a big one with the aid of the ASIC Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (FCA), the US’ Securities and Exchange Commission (SEC), Australian Security and Investment Commission (ASIC), and the Cyprus Securities and Exchange Commission (CySEC) are the most widely dealt with authorities in the FX industry.In its most basic sense, regulators help ensure the filing of reports and transmission of data to help police and monitor activity by brokers. Regulators also serve as a countermeasure against market abuse and malpractice by brokers. Brokers adhering to a list of mandated rules are authorized to provide investment activities in a given jurisdiction. By extension, many unauthorized or unregulated entities will also seek to market their services illegally or function as a clone of a regulated operation.Regulators are essential in snuffing out these scam operations as they prevent significant risks for investors.In terms of reporting, brokers are also required to regularly file reports about their clients’ positions to the relevant regulatory authorities. The most-recent regulatory push in the aftermath of the Great Financial Crisis of 2008 has delivered a material shift in the regulatory reporting landscape.Brokers typically outsource the reporting to other companies which are connecting the trade repositories used by regulators to the broker’s systems and are handling this crucial element of compliance.Beyond FX, regulators help reconcile all matters of oversight and are watchdogs for each industry. With ever-changing information and protocols, regulators are always working to promote fairer and more transparent business practices from brokers or exchanges. Read this Term, used as a front in his latest financial incident.

The Sydney based firm, who also holds regulatory status in Dubai and Karachi sent an email notification to its clients, informing them of the firms brave move to go into liquidation. Unlike its previous case, the firm had the courtesy to let people know that they have been duped.

GTL Trade has not responded to email or calls.

The email, which was sent by the firm's customer services department, requested clients to close out all their positions by 7 a.m. Australian time, on the 26th of September. Failure to do so will result in the positions being automatically terminated by the firm.

The notification states, "We request you close off, and all pending orders not cancelled by the Market on Close (MOC) United States session of today (day email was sent), September 25, 2013, being 7 a.m. Australian Eastern Standard Time September 26, 2013, then all open positions will be automatically closed at market price, and all pending orders will be cancelled. Trading will be disabled from 7 a.m. Australian Eastern Standard Time September 26, 2013. The GTL Tradeup website will be shut down within 48 hours."

The latest broker related concern doesn't help the FX industry's perception. GTL Tradeup follows a similar stance to UK spread betting firm WorldSpreads. A listed broker who was shut down by the regulatory after discrepancies in client money.

GTL Tradeup will provide its clients with details of the firm which is dealing with the liquidation.

On the firm's Facebook page, a message from GTL Tradeup uploaded on the 25th of September, states, "Been told GTL Australia is insolvent and we are all out of a job. My heart goes out to our clients who will have to try to get their funds back from DMCC Dubai."