City Index Australia required to have independent expert ‘babysit’ and report to ASIC

Follows ASIC review of City Index Australia involving weaknesses in handling client money.

Australia’s financial regulator ASIC has announced that it is requiring City Index Australia to appoint an independent expert to review its business and develop a plan to rectify certain deficiencies. The independent expert will report regularly directly to ASIC for the next 18 months on City Index Australia’s implementation of the plan.

ASIC’s action against City Index Australia (or “CIA”), a subsidiary of UK-based online trading firm City Index, follows a $13,200 fine assessed by ASIC against CIA late last year, and a subsequent review of certain business practices at CIA, focusing on weaknesses in its client money handling arrangements.

We have seen a rise in fines and actions this year as various financial regulators around the world have stepped up diligence focusing on the safety and handling of client funds. Just last week we reported that the CFTC assessed a $225,000 fine against Interactive Brokers (Nasdaq:IBKR), a leading U.S.-based online brokerage company, for what they termed segregated client fund failures.

For the entire ASIC press release click here.

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