WIKIFX REPORT: TRADE360 SURRENDERS ASIC LICENSE FOLLOWING PRESSURE SELLING TACTICS

The firms former executives, Jonathan Schneider and Oskar Pecyna, were handed eight-year bans, restricting them from controlling an entity that carries on a financial services business or performing any executive or management role in relation to a financial services business.

Sirius Financial Markets operated with the brand ‘Trade360’ and was found to have engaged an off-shore call center, Toyga Media Ltd (Toyga), to source clients to trade in high-risk contracts-for-difference (CFDs) and margin foreign exchange contracts products issued by Sirius Financial.

According to ASICs investigation, Toyga persuaded clients to trade using pressure selling tactics and provided clients with personal advice when Sirius Financial was not licensed to do so.

ASIC Commissioner Danielle Press said: ‘ASIC’s investigation uncovered concerning consumer losses from trading in CFDs, including a Sirius Financial investor, who had limited knowledge of the market, losing over $400,000 after being told CFDs were a safe investment.

In addition to that, ASIC found that Sirius Financial failed to:

• do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly

• take reasonable steps to ensure that its representatives comply with the financial services laws

• have in place adequate arrangements for the management of conflicts of interest

The banned executives were found to have been involved in the breaches while also not being adequately trained or competent to be involved in the control of a financial services business.

Sirius Financial has decided to surrender its license and wind down retail and wholesale operations. The firm will cease providing financial services on 29 July 2022.

Previous enforcement actions by ASIC against OTC derivates providers have resulted in a $75 million penalty against AGM Markets and a $20 million fine against Forex CT.

It was last year that ASICs restrictions on CFD products came into effect. In April 2022, ASIC extended its product intervention order for a further five years to 23 May 2027 after a successful year for retail traders.

Reduced CFD leverage available to retail clients and restrictions on certain product features and sales practices since March 2021 have improved the trading environment for retail users, as shown by a recent ASIC report.

The order imposes restrictions on CFDs issued to retail clients, including: leverage ratio limits ranging from 30:1 to 2:1; standardisation of margin-close out rules; negative balance protection; and prohibitions on offering or giving of certain inducements.