Sirius Financial Markets, an ASIC-licensed over-the-counter (OTC) derivatives provider trading as ‘Trade360’, has relinquished its license following an investigation by the financial watchdog .

Could ASIC ban CFD trading in Australia?

The company’s former executives, Jonathan Schneider and Oskar Pecyna, were sentenced to eight-year bans, preventing them from controlling an entity that conducts financial services business or from exercising any leadership or management role in relation with a financial services company.

Sirius Financial Markets operated under the ‘Trade360’ brand and was found to have engaged an offshore call centre, Toyga Media Ltd (Toyga), to source clients to trade high-risk contracts for difference (CFDs) and foreign margins. foreign exchange contract products issued by Sirius Financial.

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

ASIC Commissioner Danielle Press said: “ASIC’s investigation revealed consumer losses related to CFD trading, including an investor from Sirius Financial, who had limited knowledge of the market, losing over $400,000 after learning that CFDs were a safe investment.”

In addition to this, ASIC discovered that Sirius Financial failed to:

  • do all that is necessary to ensure that the financial services covered by the license are provided in an efficient, honest and fair manner
  • take reasonable steps to ensure that its representatives comply with financial services laws
  • have put in place adequate systems for managing conflicts of interest

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

Sirius Financial has decided to relinquish its license and end its retail and wholesale operations. The company will stop providing financial services on July 29, 2022.

ASIC’s previous enforcement actions against OTC derivatives providers resulted in a $75 million fine against AGM Markets and a $20 million fine against Forex CT.

It was last year that the ASIC restrictions on CFD products came into effect. In April 2022, ASIC extended its commodity action order for another five years until May 23, 2027 after a successful year for retail traders.

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

The order imposes restrictions on CFDs issued to retail clients, including: leverage ratio limits ranging from 30:1 to 2:1; standardization of margin closing rules; negative balance protection; and a prohibition on offering or giving certain inducements.