The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services (AFS) licence of Direct FX Trading Pty Ltd after finding the retail OTC derivative issuer failed to be compliant.
ASIC found that Direct FX, which had its AFS licence suspended in April this year:
- Failed to comply with client money reporting rules;
- Continued to carry on a financial services business while suspended by continuing to allow clients to enter into trades; and
- Failed to comply with its net tangible asset requirements, including not having sufficient cash and cash equivalents to meet its obligations.
ASIC also found Direct FX did not maintain the competence required to provide the financial services covered by its AFS licence or understand its obligations as an AFS licensee.
ASIC commissioner, Cathie Armour, said the company was in breach of multiple conditions of its AFS licence, which were aimed at protecting investors from the higher operational and credit risks posed by the retail OTC derivative sector.
“Direct FX ignored key conditions of the notice of suspension by continuing to open new trading positions and failed to comply with its client money reporting obligations whilst suspended,” she said. “The ongoing and demonstrated disregard for meeting their obligations has resulted in ASIC acting to remove the company from the industry.”
The company would be required to maintain its membership of an external dispute resolution scheme and adequate professional indemnity insurance until April next year.