The Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) has hit Mitrade Global Pty Ltd with an interim stop order, preventing the broker from opening trading accounts and dealings in contracts for differences (CFDs) and margin forex to retail investors. However, existing clients will be allowed ‘from varying or closing their CFD positions’.

Regulatory Lapses at Mitrade Global

Announced on Friday, the decision came as the Aussie regulator found lapses in the brokerage’s target market determination (TMD). The regulator highlighted that the broker ‘relied on a retain investor questionnaire with significant flaws’ for compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term with its obligations.

According to ASIC: “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.”

Furthermore, the broker allowed retail investors unlimited attempts to pass the questionnaires.

Other concerns of the Aussie regulator include failure on the part of the broker “to reduce the likelihood of distribution conduct being inconsistent with the TMD included inadequate assessment of whether retail investors were likely to be in the target market for the CFDs.”

Additionally, the regulator pointed out that the questionnaires of Mitrade did not correctly seek the ‘objectives and needs’ of retail investors to trade complex instruments like leveraged CFDs and margin forex. Additionally, the broker did not properly assess whether retail investors would likely be consistent with its target market conditions on knowledge and experience.

ASIC’s Priority on DDO

The order came under ASIC’s design and distribution obligations (DDO) that took effect in October 2021. The regulator has issued 41 interim stop orders under the DDO rules.

Recently, ASIC found deficiencies in Saxo Capital Markets (Australia) Limited’s target market determinations (TMDs) of some CFDs offerings. However, the broker quickly addressed the concerns, and the order was revoked.

The latest action against Mitrade was the “first use of its stop order powers in response to a contravention of the reasonable steps obligations regarding a financial product” since DDO was introduced.

“ASIC made the interim order to protect retail investors from acquiring CFDs or margin FX from Mitrade, where those products may not be suitable for their financial objectives, situation or needs,” the Aussie regulator added. “The order does not prevent Mitrade’s existing clients from varying or closing their CFD positions.”