Australian Regulator Halts FXCM's Offering of CFDs to Retail Investors

On December 5, the Australian Securities and Investments Commission (ASIC) announced an interim stop order prohibiting Stratos Trading Pty Limited, trading as FXCM, from providing CFDs to retail investors due to the deficiencies in the company's target market determination (TMD).

ASIC concerned that the broker's target market determination improperly included medium risk appetite investors in the target market for FXCM's CFDs.

The regulator considered that regardless of other investment criteria mentioned in the TMD, the leverage, volatility, liquidity, and pricing risk associated with trading its CFD products made them unlikely to be unsuitable for investors with medium risk appetite.

FXCM's CFD offerings to retail clients may not be consistent with the financial objectives, situation, and needs of target market consumers.

The regulator has issued an interim stop order preventing FXCM from offering CFDs to retail clients or opening new accounts for new clients to trade such CFDs. Unless revoked earlier, the order is valid for 21 days.

The order covers the following asset classes offered by FXCM:

currency pairs and forex baskets

treasuries and commodities

stock indices

stocks and stock baskets, and

cryptocurrencies.

Additionally, this order does not prevent existing FXCM clients from varying or closing their CFD positions.

BrokersView reminds you

The Australian Securities and Investments Commission (ASIC) is the national regulatory body overseeing local companies, markets, and financial services. Brokers operating in the country or providing financial services must hold an Australian Financial Services (AFS) license issued by ASIC.