ASIC Suspends Retail OTC Derivative Licenses of Several Companies With Change of ShareholdingBy Lex Yaranu | Friday, August 28th, 2015
The Australian Securities and Investment Commission (ASIC) has once more exerted its regulatory control of the binary options market by suspending the licenses of several companies that have changed their shareholding structure outside of the guidelines governing the possession of the Australian Financial Services license.
One of the affected companies is a provider of retail Over the Counter (OTC) derivative trading, Australian Capital Markets Advisory Services Pty Ltd (ACMAS). ACMAS changed all directors and shareholders details after the company became a wholly owned subsidiary of another company, Formax International Market Limited. The new company could not demonstrate full compliance with many of ASIC’s licensing requirements and had its OTC operations shut down by the regulator.
Presently only a suspension of its current license is in place. ACMAS has been given until 30 October 2015 to prove its readiness to recommence its financial services business with demonstration of all required obligations necessary to obtaining an Australian Financial Services license, or face the possibility of having the license suspension converted to a complete revocation.
Speaking on the matter, ASIC Commissioner Cathie Armour commented on the noted increase in retail OTC derivative providers that purchase moribund companies with existing ASIC licenses. She noted that the new management brought in to reflect the ownership change are often not in a position to recommence providing services in a manner that is compliant with required ASIC regulations.
Speaking further, Armour said that ASIC has reviewed the situation and views it purely as a means that these new companies are using to inappropriately bypass ASIC’s stringent AFS Licence application processes. She reiterated that ASIC expects all new companies to comply with the regulatory obligations on AFS licenses as these also apply to previously licensed companies with new ownership, warning that failure to comply with Australian licensing obligations will attract suspension of such previously issued licenses or total cancellation.
ASIC is empowered by law to immediately suspend or cancel an AFS license where a financial services company previously issued such a license stops operations. ASIC can also grant hearings to affected companies and if there is reason to believe that the licensee has not complied with ASIC obligations, such a license will remain suspended or canceled.
Where there has been a change of ownership, companies with AFS licenses (including binary options companies) are obligated to inform ASIC in writing of full particulars of any change in management or shareholding within 10 business days following the change.
Binary options traders will therefore need to be very vigilant to any change of ownership of companies that they trade with. Change of ownership is very common with binary options brokerages in Cyprus.Published in News & Analysis