IG Group to close accounts of Chinese residents in Australia by end-July
Chinese resident clients contracted to IG’s Australian entity generated revenue of £2.7 million in FY19.
Online trading major IG Group Holdings plc (LON:IGG) has earlier today posted its preliminary results for the year to May 31, 2019, with the report including an update on regulatory developments.
These developments concern, inter alia, IG’s Australian operations.
The Group explains that, in April 2019 following a request from the Chinese State Administration of Foreign Exchange, the Australian Securities & Investments Commission (ASIC) asked all its licensed providers of CFDs to prevent Chinese nationals from trading through their platforms. IG ceased accepting new trades from Chinese resident clients in June 2019 and all accounts of Chinese resident clients in Australia will be closed by the end of July 2019.
Chinese resident clients contracted to IG’s Australian entity generated revenue of £2.7 million in FY19.
The Australian regulator is also expected to open a consultation process regarding potential measures they may seek to apply to the CFD industry. The Group expects that any measures ASIC chooses to implement, which are expected to include leverage restrictions, will apply to Retail clients only and will exclude clients who elect to be categorised as a Wholesale client.
Let’s note that IG is not the single brokerage whose work with Chinese clients has changed over the past couple of months. Hong Kong-focused retail Forex broker KVB Kunlun Financial Group Ltd (HKG:6877), said in May that it had received a letter from ASIC dated April 18, 2019 addressed to its licensees. The Letter 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.
Given ASIC’s 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 from the legal advisers on the PRC laws, a detailed survey of the Group’s Existing Ethnic Chinese Clients will be conducted. This survey aims to identify anyone who is, or who may possible 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.
