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15-120MR ASIC requires FX Primus to cease targeting Australian investors
Following concerns raised by ASIC, FX Primus, which provides margin foreign exchange (margin FX) and contracts for difference (CFDs) trading, has agreed to make changes to its websites and to notify its Australian clients that it is not licensed to provide them with financial services.
Over the past few weeks, ASIC has raised a number of issues, including the provision of unlicensed financial services to Australian investors, with various entities within the FX Primus group of companies, including FXPrimus Australia Pty Ltd (ACN 169 107 199), FX Primus Group Limited (ACN 603 898 157) and FX Primus Europe (CY) Ltd (collectively, FX Primus). As part of those discussions, FX Primus Europe (CY) Ltd has stated it had hundreds of Australian investors.
Individuals or businesses who want to offer financial services to Australian investors on their own behalf must hold an Australian financial services (AFS) licence. None of the entities in the FX Primus group of companies hold an AFS licence.
FX Primus operates through several websites, including:
The website www.fxprimus.com made representations which suggested that FX Primus was authorised to deal in financial products in Australia and was compliant with ASIC regulation. This included statements such as, "[FX Primus is] operating under the jurisdiction of the Australian Securities & Investment Commission (ASIC)" and "[FX Primus is] operating under ASIC regulations".
The website also contained various statements and material that, in ASIC's view, specifically targeted Australian investors. This included the marketing of a sponsorship arrangement with Australian-based football club, Melbourne City FC, including statements such as:
- "Melbourne City FC's Official Online Forex Trading Partner"; and
- "Keep a lookout in the coming months as we'll have many promotions and giveaways in store for you as part of this partnership."
and offered special trading bonuses to promote this arrangement.
ASIC Commissioner Cathie Armour said, ‘Financial service providers must ensure that they are properly licensed or authorised in Australia before they promote financial services to Australian investors. ASIC will not hesitate to take action where we have concerns Australian investors are being targeted by unlicensed or unauthorised operators.’
Consumers can check if a company or individual is licensed by searching ASIC’s professional registers on ASIC’s website.
Australian clients who receive financial services from an entity that is not appropriately licensed may have the right to rescind their agreement with the entity and may be entitled to recover brokerage, commissions and other fees paid to that entity.
ASIC has also been in discussions with FX Primus Group Limited in relation to its initial public offering and the related prospectus lodged on 16 April 2015. ASIC had a number of concerns with the prospectus disclosure and an interim stop order was placed on the prospectus by ASIC in order to provide time to adequately address these concerns.
FX Primus Group Limited has since consented to a final stop order being made by ASIC and, as a result, no offers, issues, sales or transfers of shares in FX Primus Group Limited can be made under the prospectus dated 16 April 2015.
FXPrimus Australia Pty Ltd was previously a corporate authorised representative of HLK Group Pty Ltd (ACN 161 284 500). Under that authorisation, FXPrimus Australia Pty Ltd was authorised to provide general advice on behalf of HLK Group Pty Ltd. The authorisation did not allow FX Primus to deal, issue or make a market in derivatives in Australia. FXPrimus Australia Pty Ltd has confirmed with ASIC that it is no longer a corporate authorised representative of HLK Group Pty Ltd.
ASIC has recently taken the following action in the margin FX and CFD space:
- Cancelling the AFS licence of FX provider Rainbow Legend Group Pty Ltd for failing to comply with its obligations and making false and misleading statements. (refer: 15-108MR)
- Cancelling the AFS licence of four licensees for failing to lodge annual statements (refer: 15-100MR)
- Clarifying the scope of Advanced Markets Ltd's AFS licence (refer: 15-085MR)
- Suspending the AFS licence of FX provider AGM Markets Pty Ltd (refer: 15-075MR).
- Warning Australian investors not to deal with unlicensed forex broker, Grandegoldens (refer: 15-066MR).
- Cancelling the licence of Efininium Pty Ltd for failing to have adequate risk management systems (refer: 15-026MR).
- Shutting down Vault Market Pty Ltd and removing its sole director, Mr MD Anamul Amin, from the financial services industry (refer: 14-309MR).
- Pepperstone has agreed to cease providing financial services in Japan following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency (refer: 14-267MR).
- Commencing proceedings in the Federal Court of Australia to restrain Monarch FX, and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-342MR).
- Cancelling the AFS licence of online FX broker Global Derivative Services Pty Ltd, after an investigation found it failed to comply with a number of its AFS licence obligations (refer: 14-226MR).
- Following a surveillance, Calibre Investment changed the way it offers FX services to retail clients (refer: 14-327).
- Restraining Monarch FX and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-342MR).
- Warning investors not to deal with YoutradeFX (refer: 14-306MR). It is not licensed to trade in margin FX in Australia.
- Accepting an enforceable undertaking from online FX broker Forex Financial Services prohibiting it from operating managed discretionary accounts (refer: 14-036MR).