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Screenshot of a breaking news alert e-mail from Q2 2017
Australia financial regulator ASIC has announced that as a result of its intervention, licensed Retail Retail Forex and CFDs broker XTrade.au Pty Ltd will implement changes to the way it handles client money.
The Australian arm XTrade.au is part of the global XTrade brand which also has licensed operations in Cyprus and Belize, and which recently integrated former sister brand XForex. XTrade recently made a major investment becoming a sponsor of Real Madrid and Portugal footballer Cristiano Ronaldo (see below).
ASIC’s surveillance raised concerns that XTrade’s payment processes may not comply with requirements to pay client money into client trust accounts on the day it is received or on the next business day. Client money accounts were only reconciled on a periodic basis at XTrade.
ASIC was also concerned that XTrade’s parent company was depositing a ‘buffer’ into the client trust account to cover any potential shortfall.
Australian rules do not permit a licensee to deposit funds belonging to the licensee into client money accounts, by way of a ‘buffer’ or otherwise. ASIC expects a licensee to maintain appropriate and prudent reconciliation practices in respect of its client money accounts.
ASIC Commissioner Cathie Armour said,
The protection of client money is an important safeguard of investors’ interests. Using a general buffer or delays in paying client money into the correct client money trust account can breach these legislative protections.
ASIC client money provisions protect the interests of clients of licensees. The provisions require licensees to separate client money from money belonging to the licensee, hold the money on trust and sets limits on how the money is used, withdrawn or otherwise dealt with.
More on ASIC’s intervention at XTrade can be seen here.