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15-217MR ASIC suspends retail OTC derivative licence after change of control
ASIC has suspended the Australian financial services (AFS) Licence of retail OTC derivative provider Australian Capital Markets Advisory Services Pty Ltd (ACMAS).
ACMAS ceased providing financial services after a change of all directors and shareholdings in the company in June 2015 when the entity became a wholly owned subsidiary of Formax International Market Limited.
The new management of the company was unable to demonstrate it was fully compliant with many of the AFS licensing requirements.
ACMAS has stated it intends to set up and recommence its business in a few months. On this basis, ASIC has suspended its licence until 30 October 2015. If ACMAS is unable to demonstrate prior to that date that it is in a position to recommence its financial services business, including demonstrating its ability to meet the obligations that would apply to it as the holder of an AFS licence, consideration will be given to cancelling the licence entirely.
ASIC Commissioner Cathie Armour said, ‘We have seen an increase in retail OTC derivative providers purchasing companies that already hold a licence but that have ceased providing financial services. The new management are often not in a position to recommence providing services that are compliant with Australian obligations for an extended period of time.
‘More generally we would have concerns if new entrants to this market were trying to inappropriately bypass ASIC’s stringent AFS Licence application processes. Regulatory obligations on AFS licensees continue to apply after the change of control. Any entity that is unable to comply with Australian licensing obligations risks having its licence suspended or cancelled.’
ASIC has the power to immediately suspend or cancel an AFS licence where a financial services business has ceased to operate.
ASIC also has the power to suspend or cancel an AFS Licence after offering a hearing where it has reason to believe the licensee has not complied with its obligations or is likely to contravene its obligations under the AFS Licence.
AFS licensees have an obligation to notify ASIC of the particulars of any change in control no later than 10 business days after the change occurs.
This work continues ASIC’s focus on the retail OTC derivative sector, including margin FX and binary options.
Recent outcomes include:
- following an investigation, ASIC cancelled the AFS licence of FX provider Rainbow Legend Group Pty Ltd (Rainbow Legend) for failing to comply with its obligations, including making false and misleading statements (refer: 15-108MR)
- following an investigation, Advanced Markets agreeing to change potential misleading statements on its website (refer: 15-085MR)
- following an investigation, suspending the AFS licence of FX provider AGM Markets Pty Ltd (AGM) (refer: 15-075MR)
- warning investors not to deal with Grandegoldens (refer: 15-066MR). It is not licensed to trade in margin FX in Australia.
- cancelling Enfinium’s AFS licence because, among other things, concerns around inadequate risk management systems (refer: 15-026MR)
- following a surveillance, Calibre Investment changed the way it offers FX services to retail clients (refer: 14-327MR)
- restraining Monarch FX and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-342MR)
- shutting down Vault Market and removing its sole director, Mr MD Anamul Amin, from the financial services industry (refer: 14-309MR)
- warning investors not to deal with YoutradeFX (refer: 14-306MR). It is not licensed to trade in margin FX in Australia
- Pepperstone agreeing to stop providing financial services in Japan following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency (refer: 14-267MR)
- cancelling the AFS licence of online FX broker Global Derivative Services after an investigation found it failed to comply with a number of its licence obligations (refer: 14-226MR)
- accepting an enforceable undertaking from online FX broker Forex Financial Services prohibiting it from operating managed discretionary accounts (refer: 14-036MR)