AFS licensees could be breaking overseas laws

12 April 2019

Australian Financial Services (AFS) licensees that offer over-the-counter (OTC) derivatives to retail investors located in some overseas jurisdictions may be providing unlicensed or unauthorised services in those jurisdictions.

Many jurisdictions (such as Europe, Japan, North America and China) had restricted or prohibited the provision to retail investors of certain OTC derivatives.

These included binary options, margin foreign exchange and other contracts for difference (CFDs) to mitigate harm to retail investors.

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AFS licensees are on notice that in addition to overseas consequences of potential breaches of overseas law, the Australian Securities and Investments Commission (ASIC) would consider whether breaching overseas law was consistent with obligations under Australian law to provide services ‘efficiently, honestly and fairly’.

ASIC would also consider whether AFS licensees are making misleading or deceptive statements about the scope, application or effect of an AFS licence.

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