ASIC is still focusing its attention on the operations of CFDs and retail forex brokers. The Australian Securities and Investments Commission continue to mention the overseas dealings of the brokers in the country. The commission reveals that many of the licensees who offer over the counter derivatives are not complying with the laws in the EU and China.
Few days after ASIC got the “product intervention powers” it reached out to the Australian Financial Service providers. The body demanded a huge cache of data from the service. Presently, they are still going on with their plans of reshaping the retail brokerage industry . However, ASIC is warning the operators in the industry.
The commission has now notified the Licensees that they will review any illegal oversee dealings which they carry out. ASIC plans to focus on determining if the brokers’ obligation under Australian Law is different from what is attainable overseas. They will consider if rendering services in an honest, efficient and fair manner mean breaking of overseas law.
ASIC comments about the AFS Licensees
Another area where the commission is reviewing presently is the AFS Licensees. They aim to find out whether the licensees are deceiving the retail brokers on the extent of the license. If they are not plain about the scope, effect and areas of application of the license, ASIC will know.
Speaking about the Licensees, Commissioner Cathie Armour advises AFS licensees to be careful of their operations. She warns them to seek advice before issuing the AFS license to retail clients from overseas. At least, they should understand the legal implications of issuing such licenses to foreign clients. Cathie went further to advise that they should stop issuing the license if they notice any non-compliance. Also, informing the ASIC or the regulatory authorities overseas will be the right move.
China Inform ASIC About Illegal Dealings
The regulator is presently acting based on the Intel from the Chinese authorities about forex margin trading. In China, this form of trading is a violation of their laws especially if authorities didn’t approve. Also, any client who permits such unauthorized institution to trade on margin has broken the laws of the country.
The authorities in China informed ASIC that they never approved any institution to engage in Forex margin trading. Therefore, Australian brokers who have clients in China are operating illegally by giving out “margin foreign exchange products.”
Product Intervention by EU
It is not only the Chinese authorities Intel that is fuelling the ASIC steps and warnings. The EU regulations are also encouraging the watchdog to take actions against foreign lawbreakers. The EU has discovered that their product intervention measures are not effective. Many brokers are now ignoring the ESMA which limits the sale of CFDs and Forex in EU .
According to what ASIC says, EU has anti-avoidance provisions. Companies who market clients or promote their products outside the guidelines are violating the provisions.
Still, on the issue Commissioner Armour warns operators who break oversee laws as destroying the reputation of the licensing regime.
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