ASIC Lifts Temporary DDO Ban on CFDs Broker Mitrade

On July 26th, the Australian Securities and Investments Commission (ASIC) lifted its temporary stop order on contract for differences (CFDs) broker Mitrade Global Pty Ltd. The regulatory authority initially issued a temporary ban against the broker on June 22nd due to its breach of design and distribution obligations (DDO).

“Following the interim stop order made on 22 June 2023, Mitrade addressed ASIC’s concerns regarding its failure to take reasonable steps likely to result in distribution conduct being consistent with its TMD (target market determination). ASIC revoked the stop order on 26 July 2023,” an update from ASIC noted.

Mitrade holds an Australia Financial Services (AFS) license and provides CFDs of forex, indices, commodities, and stocks to retail investors and traders in Australia. In addition to the AFS License, Mitrade is also authorized by regulatory authorities in the Cayman Islands and Mauritius to provide its services. The broker added approximately 900,000 new users last year, bringing its total number of customers to 2.4 million.

According to the initial order of ASIC, Mitrade had negligence in its target market determination (TMD), with deficiencies in the “retail investor questionnaire.”

“Mitrade questionnaires gave prompts to a prospective retail investor to review any ‘unacceptable answer’ that would indicate that the investor was not likely to be in the target market for the products,” ASIC stated in its initial temporary ban in June, adding that retail investors were even allowed to pass the survey questionnaire without limitations on attempts.

Under the interim order, ASIC prohibited the broker from opening trading accounts to retail investors and providing CFDs and margin forex dealings for them, it is only allowed to “varying or closing their CFD positions.”

(Source: Finance Magnates)