ASIC Cancels AFS Licence of Forex CT
The Australian Securities and Investments Commission has canceled the Australian financial services (AFS) license of Forex Capital Trading Pty Ltd. The retail over the counter (OTC) derivative issuer had another handle, Forex CT.
Before having its license canceled, it offered clients opportunities to trade in contracts for difference (CFDs) for margin forex contracts. Following its investigation, ASIC found that the company’s business model disregarded key obligations of an AFS licensee.
This has resulted in unconscionable conduct, misleading and deceptive conduct, and a failure to manage conflicts of interest.
ASIC said, its investigation also found that Forex CT lacked sound ethical values and judgment in dealing with clients. It failed to ensure its representatives were adequately trained and complied with financial services laws. It also failed to ensure that financial services covered by its license were provided efficiently, honestly, and fairly.
Some Forex CT Clients Suffered Large Losses
During its investigation, ASIC found that a number of clients, who traded CFD and FX contracts, had suffered large losses. This was in the hundreds of thousands of dollars, including from their superannuation accounts because of investment in these products.
ASIC appeared before Federal Court in Melbourne last year to extend measures prohibiting the company from removing assets from Australia. Also, from disposing of its property and freezing monies in its bank account.
ASIC Commissioner Cathie Armour said ASIC focuses on conduct by AFS licensees who operate business models that harm consumers.
Following the cancellation, OTC derivatives issuer Forex CT’s AFS license will continue until the 31st of July 2020. This is so that there will be a dispute resolution scheme in place.
This grace period will also allow the company to close any existing client positions. Current clients could contact Forex CT in relation to closures. During this time, Forex Capital Trading Pty Ltd. can’t open any new client positions.
