Hong Kong’s Securities and Futures Commission (SFC) has issued its latest warning and fine against FXCM Asia Limited, now known as Rakuten Securities Hong Kong Limited. The edict follows after multiple regulatory breaches and internal court failings by the group, prompting the HK$2 million ($256,180) penalty, per the latest SFC filing.
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The regulatory action reflects the SFC’s ongoing agenda to police Hong Kong, which has by and large succeeded in curbing a wide range of illicit activity and abuse this year. Its most recent action against FXCM Asia Limited deals with the under-segregation of Client Money over a two-year period.
Two-year period in focus
More specifically, the SFC found that between January 2013 to January 2015, FXCM Asia Limited, had breached multiple regulatory actions. This included withdrawing client monies in excess of the amounts segregated for them by using money held for other clients, as well as understating the amount of money that should have been segregated due to incorrect calculation.
These actions run contrary to client money rules and the code of conduct as stipulated by the SFC. The under-segregated amounts ranged from HK$2.9 million ($371,461) to HK$11.6 million ($1,485,844) at the end of each month between January 2013 and December 2014.
However in specific instances, this amount surged to as high as HK$72 million ($9,222,480) in January 2015. The repeated lapses and failures to oversee proper internal controls drew the fine.
The warning and subsequent fine were lobbied to help ensure that FXCM Asia Limited’s client assets were properly accounted for. For its part, the group cooperated with the SFC, which was taken into account when dictating the fine. Since the infraction, the group has also taken multiple internal actions to rectify its shortcomings.
This includes attempts to correct internal control deficiencies, namely in terms of its accounting and calculations. There was also the impact of the new ownership and management of the group. Ultimately the failures outlined above related to the client money handling procedures of the former management, which was considered by the regulator.
FXCM Asia Limited was sold off to Rakuten Securities back in May 2015 for a sum of $36.0 million. The most recent fine follows a previous infraction back in October 2016, which saw FXCM Asia draw another $500,000 fine from the SFC. Over the past year, the group has roughly seen a collective $756,180 in fines for holding clients’ trading profits and other lapses.
