Following the regulatory investigation, the Hong Kong SFC Fines FXCM Asia HK$2 million for regulatory violations and internal control failings that are related to under-segregation of client money. What did the broker say in regards to the news?
14 December, AtoZForex – The key regulator of Hong Kong financial services market, the Securities and Futures Commission (SFC) has reproved and fined FXCM Asia Limited (HK FXCM). Now, the entity is widely known as Rakuten Securities Hong Kong Limited.
Hong Kong SFC Fines FXCM Asia HK$2 million
The SFC has fined the company HK$2 million for the certain regulatory violations and internal control failings that are related to under-segregation of client money.
In addition, the regulatory investigation has revealed that in the period from January 2013 to January 2015, HK FXCM under-segregated client funds. The watchdog stated that HK FXCM has under-segregated client monies, which resulted from:
- meeting clients’ withdrawals of monies that are in excess of the amounts HK FXCM segregated for them with the monies that are held for other clients and
- understating the number of monies that should have been segregated due to the erroneous calculation.
The SFC further states that these actions were not in line with the Client Money Rules and the Code of Conduct.
What exactly did HK FXCM fail to do?
In fact, the Hong Kong regulator also notes that the amount of under-segregated client funds emerged in the range HK$2.9 million to HK$11.6 million at the end of each month between January 2013 and December 2014. The SFC has stated that this amount has reached HK$72 million in January 2015.
Following the investigation, the SFC believes that FXCM Asia has failed to properly carry out the adequate internal controls to prevent under-segregation of client funds. Moreover, the supervisory body notes that the entity has failed to ensure that clients’ monies were properly accounted for and safeguarded.
While deciding on the disciplinary sanctions, the Hong Kong regulator has taken into consideration that HK FXCM:
- co-operated with the SFC in resolving the SFC’s concerns;
- has taken actions to remediate its internal control deficiencies, and
- is now under new ownership and management and the failures relating to its client money handling procedures were attributable to the former management of HK FXCM.
Rakuten Securities HK Follows the SFC regulations
As Hong Kong SFC Fines FXCM Asia, we have reached out to the representatives of HK FXCM for further insights. Mr. Kazunori Iida, President of Rakuten Securities Hong Kong Limited has stated the following:
“This was a historical issue that happened and rectified before Rakuten Securities, Inc. acquired FXCM Asia in Sept 2015. I’m proud to say that, Rakuten Securities HK, strictly followed and is now continuously following the SFC regulations and the code of business conduct to assure the best interest of our clients.”
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