ASIC Forces Broker to Enhance Supervision in “Forex Crackdown”

The Australian Securities and Investments Commission (ASIC) has announced today that, following an ASIC surveillance, Calibre Investments Pty Ltd. will have to implement changes to the way it offers FX services to retail clients.

ASIC is Australia’s corporate, markets and financial services regulator. It says this move is part of its “crackdown on the FX industry” which has resulted in a number of outcomes recently.

Calibre Investments is an Australian financial services house serving private investors, corporate clients and institutional investors. It also runs an internally managed fund which aims to provide smoothed returns for investors as well as a wealth management business.

Calibre Investments is a holder of an Australian Financial Services (AFS) licence based on which it provides, what are referred to in Australia as, Managed Discretionary Account (MDA) services. An MDA service allows a broker to enter and exit trades on behalf of a client without seeking the client’s approval.

ASIC’s surveillance of Calibre raised concerns over the business’ compliance and risk frameworks, their advice to clients and their supervision of representatives. In response, Calibre has appointed an independent consultant to review its MDA policies and procedures. The independent consultant will report back to ASIC.

The group will also provide new statements of advice to all MDA clients and enhance its compliance department, and ASIC acknowledges Calibre’s cooperation in this matter.

ASIC Commissioner Cathie Armour said, “FX trading is complex and risky, requiring a significant amount of knowledge, research and monitoring. ASIC expects business in this space to have policies, systems and processes in place that protect the interests of their clients.”

Crackdown on the FX Industry

To make the case that it is targeting margin forex trading for increased scrutiny, ASIC has listed all of its recently taken actions in relation to retail margin FX licensees:

  •  and removing its sole director, MD Anamul Amin, from the financial services industry
  • following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency
  • Commencing proceedings in the Federal Court of Australia to, and its former director and general manager, Quinten Hunter, from carrying on a financial services business
  • Cancelling the Australian Financial Services (AFS) licence of  after an investigation found it failed to comply with a number of its AFS licence obligations
  • Accepting an enforceable undertaking from online FX broker  prohibiting it from operating managed discretionary accounts

ASIC also says it has also issued an alert cautioning Australian investors against dealing with for trading in margin FX and issued a more general warning to retail investors about the dangers of FX trading.

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