HK brokerage KVB Kunlun says process of disengagement of PRC clients in progress

Maria Nikolova

The brokerage has commenced a process of identification and disengagement of PRC clients in order to comply with the laws of the People’s Republic of China.

Hong Kong-focused retail Forex broker KVB Kunlun Financial Group Ltd (HKG:6877) has just posted its report for the first six months of 2019, with the document stating that a process of identification of the company’s PRC clients is in progress.

Let’s recall that, as a holder of the Australian Financial Services License, the brokerage received a letter from the Australian Securities and Investments Commission (ASIC) in April 2019 which reminded licensees that they were obliged to comply with applicable laws of foreign jurisdictions, and recommended that licensees should seek legal advice to ensure that the products and services they offer to their clients comply with applicable foreign laws.

Certain subsidiaries of the Group hold Australian and New Zealand financial services licenses. The online forex margin trading platform of the Group’s Australian and New Zealand subsidiaries is targeted towards, among others, ethnic Chinese. In view of the Letter, the board of directors of KVB Kunlun has sought legal advice from its lawyer as to the laws of the People’s Republic of China.

In line with the advice, a detailed survey of the Group’s Existing Ethnic Chinese Clients is conducted in order to identify anyone who is, or who may possibly be, classified as a PRC domestic client.

Any person identified as an actual or potential PRC domestic client will then be disengaged as soon as possible. The Identification and Disengagement of PRC Domestic Clients is still in progress, the company said in its announcement today.

In terms of results, the company posted a heavy net loss. This is in line with a recent profit warning.

Today, KVB Kunlun reported a net loss of HK$77.1 million for the six months ended June 30, 2019 compared with a net profit of HK$10.4 million for the first six months in 2018.

The decrease in profitability of the Group was blamed on a reduction in leveraged foreign exchange and other trading income earned from external customers due to reduced volatility which led to decrease in trading volume of the Group’s customers in the reporting period, as well as tightening of regulations in jurisdictions such as Australia and Hong Kong.

The leveraged foreign exchange and other trading income of the Group decreased by 96.6% to HK$8 million for the six months ended June 30, 2019 from HK$233.5 million for the six months ended June 30, 2018. The decrease is due to lower trading volumes.

Read this next

Institutional FX

Sucden Financial launches access to 25 of China’s futures and options contracts

“We are delighted to offer clients access to three key futures markets in China, the world’s largest commodity consumer.”

Industry News

Kraken sponsors Williams Racing to expand institutional reach and fan engagement

“Kraken’s partnership with Williams Racing shows what is possible when you combine a great mission with excellence, innovation and breakthrough performance. These are both iconic brands that have stood the test of time. We’re excited to engage with both Kraken’s and Williams Racing’s global communities, showcasing the power and life-changing impact of crypto and Web3.”

Retail FX

FXChoice taps Acuity’s news, sentiment tools, calendars, trade ideas on MT4/5

“Our tools are designed with the end-user in mind and are engineered to present insightful and actionable market data in an accessible way to help traders manage risk by identifying potential market movements before they occur and ultimately make better decisions on how, when, and where to invest.”

Digital Assets

BlockFi to refund $103K to Californian users

Bankrupt crypto lender BlockFi will refund more than $100,000 to its California-based users who continued to repay loans even after the company halted client withdrawals following a liquidity crisis.

Institutional FX

SimCorp and FlexTrade team up to strengthen Open Platform

Broker-neutral technology firm FlexTrade Systems announced that its solution FlexTRADER EMS has been certified for integration with SimCorp, a provider of integrated, front-to-back, multi-asset investment management solutions.

Digital Assets

MicroStrategy prepays Silvergate loan, trims loss on BTC bet

MicroStrategy, spearheaded by one of bitcoin’s most vocal proponents, has prepaid the $205 million bitcoin-backed loan it took out from insolvent crypto-focused Silvergate Bank in March 2022.

Executive Moves

UK spread better InterTrader hires Joe Rundle as CEO

Multi-regulated online trading provider InterTrader has publicly revealed its newest appointment, having onboarded industry veteran Joe Rundle as its Chief Executive Officer (CEO).

Digital Assets

Federal judge puts brakes on Voyager sale to Binance

A federal judge temporarily halted the proposed deal to sell bankrupt crypto lender Voyager Digital’s assets to Binance US after a request by the United States government for an emergency stay.

Industry News

Equals Group expands payments solutions and BaaS into Europe

“We have made a significant investment in our technology and payment platform over the last few years which will allow us to rapidly deploy new products into the European market and we are confident that we can meet the diverse needs of businesses across the continent.”