Saxo Capital Markets (Australia) Limited has become the latest target of the Australian Securities & Investments Commission (ASIC) for deficiencies in the broker’s target market determinations (TMDs) of some contracts for differences (CFDs) offerings.
Saxo Responded Quickly
Initially, the Aussie regulator issued eight interim stop orders on Tuesday against Saxo’s CFDs offering to retail investors. Saxo quickly amended the TMDs to address ASIC’s concerns, and the orders were revoked.
The regulatory order affected eight types of derivatives offered by Saxo to retail clients: single stock CFDs, FX CFDs, exchange-traded funds (ETFs) CFDs, index CFDs, commodity futures CFDs, bond CFDs, index options CFDs, and cryptocurrency derivatives.
ASIC Tightens Obligations for Financial Product Issuers
ASIC introduced design and distribution obligations (DDO) in October 2021, mandating product issuers and distributors to place consumers at the center of product and distribution. It requires the design and distribution of financial products with “clear and contemporary consideration of the objectives, financial situation and needs of the consumers and retail investors being targeted.”
According to ASIC, the TMDs for Saxo’s derivative products were inappropriate. The deficiencies were in the target market of retail clients using CFDs as a ‘standalone or core component’ of their investment portfolio, clients with investment timeframe of up to one year or up to three years, and in specific instruments with which retail clients seek growth and income.
CFDs are leveraged derivatives contracts that allow traders to speculate the price of underlying assets. These instruments are considered risky, and ASIC has created many restrictions around these products over the years.
“ASIC made the interim orders to protect retail clients from acquiring CFDs from Saxo, where they may not be suitable for their financial objectives, situation, or needs. The orders did not prevent Saxo’s existing clients from varying or closing their CFD positions,” the regulatory announcement came.
Earlier this month, ASIC notified investment product issuers and asked them to ‘lift their game’ around DDO to date. The regulator has issued 36 interim stop orders under DDO, including those to Saxo. Furthermore, it pointed out that 31 of those orders were lifted following actions taken by the entities.
Saxo Capital Markets (Australia) Limited has become the latest target of the Australian Securities & Investments Commission (ASIC) for deficiencies in the broker’s target market determinations (TMDs) of some contracts for differences (CFDs) offerings.
Saxo Responded Quickly
Initially, the Aussie regulator issued eight interim stop orders on Tuesday against Saxo’s CFDs offering to retail investors. Saxo quickly amended the TMDs to address ASIC’s concerns, and the orders were revoked.
The regulatory order affected eight types of derivatives offered by Saxo to retail clients: single stock CFDs, FX CFDs, exchange-traded funds (ETFs) CFDs, index CFDs, commodity futures CFDs, bond CFDs, index options CFDs, and cryptocurrency derivatives.
ASIC Tightens Obligations for Financial Product Issuers
ASIC introduced design and distribution obligations (DDO) in October 2021, mandating product issuers and distributors to place consumers at the center of product and distribution. It requires the design and distribution of financial products with “clear and contemporary consideration of the objectives, financial situation and needs of the consumers and retail investors being targeted.”
According to ASIC, the TMDs for Saxo’s derivative products were inappropriate. The deficiencies were in the target market of retail clients using CFDs as a ‘standalone or core component’ of their investment portfolio, clients with investment timeframe of up to one year or up to three years, and in specific instruments with which retail clients seek growth and income.
CFDs are leveraged derivatives contracts that allow traders to speculate the price of underlying assets. These instruments are considered risky, and ASIC has created many restrictions around these products over the years.
“ASIC made the interim orders to protect retail clients from acquiring CFDs from Saxo, where they may not be suitable for their financial objectives, situation, or needs. The orders did not prevent Saxo’s existing clients from varying or closing their CFD positions,” the regulatory announcement came.
Earlier this month, ASIC notified investment product issuers and asked them to ‘lift their game’ around DDO to date. The regulator has issued 36 interim stop orders under DDO, including those to Saxo. Furthermore, it pointed out that 31 of those orders were lifted following actions taken by the entities.
