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The Australian Securities and Investments Commission (ASIC) said on Thursday forex and contracts for difference (CFDs) broker FXAsia has updated its website, as asked by its regulator ASIC, to state more clearly that it only works with wholesale clients. The broker is not allowed to issue over-the-counter (OTC) derivatives to retail investors.
The broker has decided to work with wholesale customers only, since it is unable to meet certain regulatory requirements in order to be able to provide services to retail investors.
The limited service suspension was imposed since FXAsia, www.fxasia.com, does not meet all financial resource requirements of the ASIC. The broker has removed from its website a Product Disclosure Statement and Financial Services Guide in order to avoid misleading retail investors.
FXAsia holds an Australian Financial Services (AFS) license by the Australian regulator, which allows it to offer retail services. However, under the Australian regulator’s requirements, in order to service retail clients OTC derivative issuer licensees need to have net tangible assets (NTA) of at least $1.0 million or 10% of their average revenue, whichever is higher. Apparently, FXAsia was unable to keep its NTA above this amount.
“Licensees need to ensure compliance with all their obligations including those licence authorisations which carry with them additional protections for retail investors. If a licensee is not in a position to provide those protections, they should not offer those financial services and make that clear to investors,” ASIC commissioner Cathie Armour said.
No information was available as to when the ASIC addressed the NTA issues to FXAsia.
FXAsia offers trading in forex, CFDs, binary options, commodities, and indices.
On its website, the broker states has a warning notice regarding not serving retail clients:
“While FXAsia has a retail license authorisation, it cannot offer OTC retail derivatives to retail investors as it does not currently comply with the net tangible asset requirements outlined in Class Order 12/752 (including a minimum of $1 Million NTA).”