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Screenshot of a breaking news alert e-mail from Q2 2017
The Australian Securities & Investments Commission (ASIC) today announced that FXAsia Pty Ltd (FXAsia) has taken steps to update disclosure on its website (https://www.fxasia.com/) after the regulator voiced its concerns regarding the scope of the company’s authorization and the claims on its website.
The updates will inform visitors of the corporate website that FXAsia cannot currently issue OTC derivatives to retail investors. Despite holding retail license authorisations, FXAsia is not in a position to issue these products as it does not currently comply with some financial resource requirements.
FXAsia has also removed a Product Disclosure Statement and Financial Services Guide from their website. Its disclosure now clearly states that its services are for wholesale investors only.
In order to issue OTC retail derivatives, a licensee must comply with ASIC Class Order 12/752 Financial requirements for retail OTC derivative issuers, which requires a licensee to hold a minimum of $1 million Net Tangible Assets (NTA) or 10% of the average revenue of the licensee, whichever is greater. The ASIC Class Order requiring this NTA applies to licensees that have an actual or contingent liability to retail investors. At the time of ASIC’s discussions with FXAsia, the company had decided to focus the services on wholesale investors only and was not in a position to meet the minimum NTA requirement.
The disclosure on FXAsia’s website currently includes the following statement:
“While FXAsia has a retail license authorisation, it cannot offer OTC retail derivatives to retail investors as it does not currently comply with the net tangible asset requirements outlined in Class Order 12/752 (including a minimum of $1 Million NTA).”
This outcome underlines ASIC’s focus on financial services compliance in the retail OTC derivative sector, including margin FX, CFDs and binary options. A recent example dates back to December last year, when the regulator published a warning regarding false claims on www.usgforex.com.
For the full announcement regarding FXAsia, click here.