The FinancialFXOpen AU Pty Ltd, the Australian division of FXOpen’s CFD brokerage, plans to appeal the Australian Securities and Investments Commission (ASIC)’s decision to revoke its Australian Financial Services (AFS) licence.
The cancellation follows an ASIC investigation that raised concerns about FXOpen AU’s ability to meet key regulatory requirements.
ASIC Cites Compliance Failures
ASIC’s investigation identified several compliance issues with FXOpen AU, including alleged deficiencies in maintaining adequate human resources for delivering financial services and supervising operations. The regulator highlighted that FXOpen AU failed to:
– Maintain the necessary competence to provide licensed financial services
– Comply with the ‘key person’ condition of its licence
– Adhere to financial services laws
The AFS licence 412871, granted in December 2011, permitted FXOpen AU to issue contracts for difference (CFDs), which are leveraged derivative products for speculating on price movements of assets like foreign exchange, stocks, commodities, and cryptocurrencies.
ASIC justified the licence cancellation by citing the risk posed to both existing and future clients due to FXOpen AU’s non-compliance. This action aligns with ASIC’s broader regulatory goals to enhance fairness, professionalism, and investor confidence in the financial sector.
Broader Regulatory Context
ASIC’s action against FXOpen AU is part of a wider crackdown on retail over-the-counter (OTC) derivatives issuers. The regulator has taken enforcement actions against several firms for similar compliance issues and has extended its CFD product intervention order until May 2027 to mitigate risks associated with high-leverage products for retail clients.
ASIC has also imposed significant penalties on non-compliant firms and overseen compensation payouts for retail investors affected by misconduct in the OTC derivatives market.
FXOpen AU’s Response
Jafar Calley, CEO of FXOpen AU, expressed disappointment at the timing of the licence cancellation. He noted that the company had been actively working with ASIC to address the identified issues.
“FXOpen AU has been addressing ASIC’s concerns for several months. Unfortunately, the licence was cancelled before we had the chance to fully resolve all issues. We intend to appeal ASIC’s decision and will continue our efforts to address these concerns in hopes of reinstating our licence,” said Calley.
The appeal will be closely watched, as its outcome may impact the broader CFD and forex trading industry in Australia. FXOpen AU’s ability to resolve the issues highlighted by ASIC will be crucial for regaining its AFS licence.