On 2 January 2020, ASIC suspended the Australian financial services (AFS) licence of over-the-counter derivatives issuer AxiCorp Financial Services Pty Ltd (AFS licence 318 232) (AxiCorp) for four months. On the same day, AxiCorp applied to the Administrative Appeals Tribunal (the Tribunal) for review of ASIC’s suspension decision, as well as for a stay of the suspension decision and for confidentiality orders.
The Tribunal has granted a stay of the suspension pending final review, meaning that AxiCorp can continue to provide financial services until a final decision by the Tribunal is made. The Tribunal refused AxiCorp’s request for confidentiality orders.
AxiCorp trades under the business names AxiForex, AxiPrime and AxiTrader and operates a business offering margin foreign exchange (FX) and contracts for difference (CFDs) to retail and wholesale clients.
AxiCorp’s licence was suspended after ASIC found that AxiCorp failed to comply with financial services laws, namely the requirements to:
- pay client money into an account with an Australian authorised deposit-taking institution
- lodge product disclosure statement (PDS) in-use notices with ASIC
- comply with the ASIC derivative transaction rules
- comply with client money reporting rules; and
- lodge financial statements with ASIC by the due date.
AxiCorp was also found by ASIC to have breached Condition 3 of its licence which requires AxiCorp to establish and maintain compliance measures that ensure, as far as is reasonably practicable, that the licensee complies with the provisions of the financial services laws.
ASIC also found that AxiCorp is likely to contravene its obligations under s912A of the Corporations Act as a result of deficiencies and systemic failures in AxiCorp’s compliance regime.
ASIC’s action to suspend AxiCorp’s AFS licence is part of ASIC’s ongoing focus on improving standards in the retail OTC derivatives sector.
Background
On 28 June 2018, ASIC released REP 579 Improving practices in the retail OTC derivatives sector which found that the practices of licensees in the retail OTC sector (margin FX, CFDs and binary options) fell short of ASIC’s expectations. ASIC will continue to take action to improve issuers’ compliance.