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Screenshot of a breaking news alert e-mail from Q2 2017
The Australian government has published its response to the Financial System Inquiry, outlining steps to bolster protection for client funds held at brokers.
The report says that:
- The Government will develop legislative amendments to improve protections for client monies held in relation to derivatives.
- These improvements are needed to ensure that investors’ monies are adequately protected when held by intermediaries.
The corresponding legislation is set to be developed by end-2015.
The Australian CFD & FX Forum, an organization whose members include CMC Markets, GAIN Capital, IG Markets and OANDA, said it welcomed the government’s plans.
Forum Co-Founder Tamas Szabo of IG Markets said,
“This is good news for both investors and Australia’s international standing as a well-regulated financial centre. The CFD & FX Forum has consistently called for reform and better investor protection and we are pleased Government is finally addressing this.”
“The issue has been extensively examined by ASIC and Treasury in recent years. Legislative reform to benefit and better protect investors is straightforward and should be introduced as soon as possible.”
The CFD & FX Forum admitted in its comments that it has been clear for many years that the Corporations Act 2001 (Section 981D) is deficient in permitting derivatives providers, including CFD and FX brokers, to co-mingle client segregated monies with their own and use it for other purposes.
The effect of this, the CFD & FX Forum says, has been to unnecessarily put investor funds at risk as providers can use them for other purposes like collateral or hedging.
To view the full “Government response to the Financial System Enquiry”, click here.