Trademax Australia Limited, operating under the TMGM brand, faces interim stop orders from the Australian regulator under Design and Distribution Obligations (DDO). The broker must halt new trading accounts and dealings in CFDs and margin FX for 21 days unless the orders get revoked earlier.
ASIC Cracks Down on TMGM
On Thursday, the ASIC issued two interim stop orders. These orders claimed the broker needed an adequate retail investor questionnaire and more controls in its onboarding process. ASIC made the interim orders to protect retail investors from buying unsuitable CFDs or margin FX products. The regulator highlighted that existing clients could still exit their positions.
The TMGM brand operates globally and holds licenses in Australia, New Zealand, Vanuatu, and Mauritius. It’s important to note that ASIC’s action impacts only the Australian-regulated entity. The regulator pointed out that the broker failed to adequately assess clients’ financial situations, risk tolerance, and investment goals. Additionally, TMGM’s questionnaires had a significant design flaw, allowing clients to retake the test twice every 24 hours indefinitely.
A TMGM said, “TMGM acted immediately on the stop order.” The representative added, “We temporarily halted onboarding Australian clients and hired an external compliance lawyer to address ASIC’s concerns.” The representative also said, “We aim to resolve the stop order and meet all regulatory standards. This order affects Australian clients only; other operations remain unaffected.”
The Strict DDO Regulations
ASIC introduced the DDO rules in October 2021 to ensure financial products meet consumer needs and are distributed correctly. Providers must monitor outcomes and reassess governance over time. To date, ASIC has issued 86 interim stop orders for DDO breaches. These include actions against retail OTC derivative product issuers like Saxo Capital Markets and Mitrade. ASIC’s first lawsuit for DDO lapses involved eToro and its CFDs offerings.
The Australian regulator aims to tighten DDO rules for CFDs and crypto derivatives due to “significant room for improvement.” Earlier this year, ASIC obtained a court order to shut down Prospero Markets, an FX and CFDs broker that breached licensing conditions. A court-appointed liquidator is managing the return of client funds.
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