FXOpen has become the latest target of the Australian Securities and Investments Commission (ASIC), as the regulator canceled the license of the forex and contracts for differences (CFDs) broker. The Australian Financial Services (AFS) license was held by the local entity FXOpen AU Pty Ltd.

Failure to Follow License Obligations

Announced today (Wednesday), the regulator detailed that the action against the retail broker came after an investigation identified serious concerns about the “inadequacy of its human resources to provide financial services and to carry out supervisory arrangements.”

ASIC elaborated that the broker failed to meet three key AFS licensing requirements, which include maintaining competence to provide financial services, complying with the “key person” condition on its license, and adhering to financial services laws.

According to the regulator, canceling the broker’s license would protect its existing and future clients from potential breaches of its core obligations.

“By canceling the license, ASIC also aims to deter other AFS licensees from failing to comply with their obligations, promote the objectives of fairness, honesty, and professionalism by those who provide financial services, and support confident and informed participation of investors and consumers in the financial system,” the regulator noted.

“FXOpen AU has been working with ASIC over the past few months to address their concerns related to the license,” Jafar Calley, CEO of FXOpen AU said.

“Unfortunately, the license was cancelled before the company had the opportunity to fully resolve all the issues identified,” he continued. He reassured that FXOpen AU intends to continue its efforts to address these concerns and will be appealing ASIC's decision, with the aim of having the license reinstated.

ASIC’s Crackdown on CFDs Brokers

FXOpen is a well-known name in the FX and CFDs brokerage industry, founded in 2005. Besides Australia, the brokerage operates under licenses from regulators in the United Kingdom and Cyprus. It also has an offshore entity registered in the Caribbean island of Nevis, which is part of Saint Kitts and Nevis.

Earlier this year, Finance Magnates reported that the revenue of the UK-based entity of FXOpen increased by 5.5 percent to £645,643 in 2022. The company also narrowed its losses to £338,651 from the previous year’s £420,035.

Meanwhile, ASIC has taken action against multiple FX and CFD brokers over the years for various lapses. Earlier this year, it canceled XTrade's license and ordered the liquidation of Prospero Markets, both of which offered CFDs.

Many of these regulatory actions have centered around breaches of the mandatory Design and Distribution Obligations (DDO). This includes an interim order against the local operator of the TMGM brand. The Australian regulator also took eToro to court over DDO lapses, the outcome of which is still pending. Other brokers facing minor actions for DDO breaches include Saxo Bank and Mitrade.