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Australia : ASIC crackdown on unlicensed retail OTC derivative providers.

ASIC has warned of a dramatic increase in the extent of unlicensed conduct by retail OTC derivative providers seeking to expand their market with new customers for their complex and risky products such as binary options.

The recent Report 482 Compliance review of the retail OTC derivatives sector (REP 482) highlighted an increase in activity among licensed and other participants, especially binary option providers, operating through online platforms or websites that are offering financial services to retail investors in Australia without an appropriate licence or authorisation.

ASIC has raised its concerns with more than 40 unlicensed providers. The majority are binary option issuers but also contacted were some binary option review websites, binary option trading signal providers, binary option broker affiliate websites, margin FX providers and managed FX service providers.

Of those providers contacted, 21 have agreed to co-operate with ASIC and take remedial steps to ensure they are no longer providing financial services in Australia until they are appropriately licensed or authorised. Remedial actions that have been implemented include:

removing references to Australia on their website; ceasing marketing campaigns directed at Australian investors; adding appropriate disclaimers to websites and mobile apps; blocking sign-up access to Australian investors; educating introducing brokers and affiliates to cease targeting Australian investors; closing down existing Australian accounts; and informing Australian investors that the entity is not appropriately licensed in Australia.

Some of these entities have indicated an interest in obtaining the appropriate licence to operate in Australia and have been provided with information to assist them with that process.

A further nine entities have not directly responded to ASIC regarding our concerns but appear to have made some changes to their websites, including removing references to Australia.

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Publication:Mena Report
Geographic Code:8AUST
Date:Jul 9, 2016
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