ASIC Bans Two Directors of FX and CFDs Broker XTrade

Yesterday (Thursday), the Australian Securities and Investment Commission (ASIC) banned two former directors of XTrade, a forex and CFDs broker, for failing to manage conflicts of interest and ensure compliance. XTrade previously lost its operating licenses in the country.

Major Failure to Follow Rules

One director, Shay Zakhaim, cannot work in financial services as a director or manager for three years. The other director, Anthony Anderson, cannot do the same for five years.

Regulatory Concerns

The regulator pointed out that the two directors did not have proper measures to manage conflicts of interest or stop aggressive sales tactics by company representatives toward Australian clients. In February 2022, they took steps to ensure the brokerage representatives followed local financial services laws.

“ASIC believes that Mr. Zakhaim and Mr. Anderson are not fit, properly trained, or competent to provide financial services, act as officers, or control a financial services business,” the regulator said in its announcement.

XTrade’s Operations and Licence Issues

XTrade was a company offering high-risk CFDs and FX contracts to its customers. These contracts allowed traders to speculate on the value changes of underlying assets with leveraged trading opportunities.

The Australian regulator banned two XTrade directors three months after canceling the Australian Financial Services (AFS) license of XTrade.AU Pty Ltd, which operated the XTrade brand in the country. The regulator said XTrade did not meet the obligations of an AFS license holder from June 2018 to September 2022 and accused the broker of “unconscionable conduct.”

The regulator pointed out that XTrade did not ensure its representatives followed financial services laws, lacked proper conflict of interest management, and failed to align its retail product distribution with its target market determination. Additionally, XTrade did not offer its services efficiently, honestly, and fairly.

Conflict of Interest and Client Impact

The regulatory investigation found that the broker prioritized its own interests over its clients’ and failed to act honestly. The brokerage representatives engaged in misconduct for years, and the broker did not provide them with proper training.

Current Status

Even though XTrade doesn’t have the AFS licence anymore, it still provides services in other countries using its licences from Belize and South Africa.

Related Reads:

• Alpari International Ceases Operations Amid Market Shifts
• Archegos Founder Bill Hwang Convicted for $36 Billion Fund Collapse