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Screenshot of a breaking news alert e-mail from Q2 2017
The Securities and Futures Commission (SFC) informed that it has reprimanded and fined FXCM Asia Limited (HK FXCM) (now known as Rakuten Securities Hong Kong Limited) HK$2 million for regulatory breaches and internal control failings relating to under-segregation of client money.
The SFC’s investigation found that from January 2013 to January 2015, HK FXCM under-segregated client monies as a result of:
- meeting clients’ withdrawals of monies that are in excess of the amounts HK FXCM segregated for them with the monies that are held for other clients; and
- understating the amount of monies that should have been segregated due to erroneous calculation.
These actions of HK FXCM were contrary to the Client Money Rules and the Code of Conduct.
The amount of client monies that were under-segregated ranged from HK$2.9 million to HK$11.6 million at the end of each month between January 2013 and December 2014 and was as high as HK$72 million in January 2015.
The SFC considers that HK FXCM failed to have adequate internal controls in place to prevent under-segregation of client monies, and to ensure that client assets were properly accounted for and adequately safeguarded.
In deciding the disciplinary sanctions, the SFC took into account that HK FXCM:
- co-operated with the SFC in resolving the SFC’s concerns;
- has taken actions to remediate its internal control deficiencies; and
- is now under new ownership and management and the failures relating to its client money handling procedures were attributable to the former management of HK FXCM.