Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services (AFS) licence of retail over the counter (OTC) derivative issuer Forex Capital Trading Pty Ltd (Forex CT).
Forex CT offered clients opportunities to trade in contracts-for-difference (CFDs) and margin foreign exchange contracts (FX Contracts).
ASIC cancelled Forex CT’s AFS licence after its investigation found Forex CT’s financial services business model disregarded key obligations of an AFS licensee and resulted in unconscionable conduct, misleading and deceptive conduct and a failure to manage conflicts of interest.
ASIC’s investigation also found that Forex CT lacked sound ethical values and judgement in dealing with clients, failed to ensure its representatives were adequately trained and complied with financial services laws and failed to ensure that financial services covered by its licence were provided efficiently, honestly and fairly.
CFDs and FX Contracts are OTC derivatives that allow clients to speculate on the change in the value of an underlying asset. ASIC’s investigation identified a number of clients incurring large losses in the hundreds of thousands of dollars, including from their superannuation accounts, from investing in these products.
‘ASIC continues to focus on conduct by AFS licensees who operate business models that harm consumers,’ ASIC Commissioner Cathie Armour said.
Forex CT’s AFS licence will continue until 31 July 2020, for the purpose of having a dispute resolution scheme in place to resolve any disputes with the Australian Financial Complaints Authority. Forex CT’s license will also continue until 31 July 2020 to facilitate the orderly closure of existing client positions. Forex CT is not permitted to open new client positions. Forex clients can contact Forex CT in relation to the closure of current open positions.
Forex CT has the right to appeal to the Administrative Appeals Tribunal for a review of Australian Securities and Investments Commission’s decision.