ASIC revokes XTrade license for compliance failures, impacting financial services market integrity and international operations.
ASIC revokes XTrade license for compliance failures, impacting financial services market integrity and international operations.
ASIC revokes XTrade License, citing serious regulatory breaches from June 2018 to September 2022. The decision comes after ASIC found XTrade failed to adhere to its obligations under the Australian Financial Services (AFS) license, including significant non-compliance and allegations of unconscionable conduct.
XTrade attempted to challenge ASIC’s decision at the Administrative Appeals Tribunal (AAT) in April 2024 but was unsuccessful. The AAT declined to grant a stay order, thus upholding ASIC’s cancellation pending further legal proceedings.
Specializing in leveraged trading of retail forex and contracts for differences (CFDs), XTrade offered customers opportunities to speculate on asset price movements. Despite losing its AFS license, XTrade intends to continue operating internationally under licenses obtained from Belize and South Africa.
ASIC’s investigation into XTrade uncovered a range of operational deficiencies. These included inadequate management of conflicts of interest, failure to ensure compliance with financial laws by its representatives, and inconsistencies in the distribution of retail products aligned with their intended market. The regulator also highlighted instances where XTrade allegedly prioritized its own interests over those of its clients, involving misconduct and insufficient training of its personnel.
The cancellation of XTrade’s license highlights ASIC’s dedication to upholding stringent regulatory norms in the financial services industry. Given the substantial risks to retail investors, ASIC has actively ensured adherence to rules, especially among CFD providers.
Recent actions by ASIC, such as issuing temporary stop orders against other prominent CFD brands for violations related to design and distribution obligations (DDOs), reflect ongoing scrutiny aimed at ensuring fair market practices and protecting consumer interests.
XTrade’s license cancellation serves as a stark reminder to financial service providers of the consequences of failing to meet regulatory requirements. ASIC continues to emphasize the importance of adherence to legal obligations to uphold market integrity and safeguard investor confidence in Australia’s financial markets.
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