ASIC has imposed additional licensing conditions on the Australian financial services licence (AFSL) of Saxo Bank (Saxo)..
Saxo provided the trading platform for collapsed broker Sonray Capital Markets Pty Ltd.
The additional conditions agreed with Saxo centre around the risk management systems used by Saxo Capital Markets (Australia) Pty Ltd (SCMA).
The corporate regulator’s extra conditions require Saxo to engage an expert to review and report on the adequacy of its risk management systems to address credit risk, client risk and compliance risk.
SCMA must also implement the expert’s recommendations over a six-month period, engage the expert for further reviews and reporting for 18 months after the initial report, and provide ASIC with independent verification twice a year of client monies held by SCMA.
Asked whether SCMA was confident of meeting the conditions, chief executive Anthony Griffin said, “Absolutely.”
ASIC chairman Greg Medcraft said in a statement the additional licence conditions on Saxo Bank’s AFSL reflected ASIC’s priority to improve industry standards among financial services licensees.
He added that the new licence conditions were key to restoring investor confidence in the broader broking area and providing reassurance that compliance procedures are in place to ensure risk-management practices are of the standard required by law.
“Since September 2004, Saxo Bank has held an AFSL authorising it to provide financial services on a wholesale basis,” ASIC said.
“Under that wholesale licence, Saxo Bank contracted with a number of retail licensees in Australia, including Sonray, to facilitate the trading of various financial products on a trading platform, Saxo Trader.”
Saxo Bank closed its retail operations in 2004 but is reopening a retail division through SCMA.
Sonray, one of Saxo Bank’s white-label clients, collapsed in June 2010.
Sonray, which had 3500 clients, was placed in liquidation just over a year ago. Liquidators at Ferrier Hodgson found, among other things, a $46.7 million shortfall.
Former chief executive Scott Murray is serving a five-year prison sentence for 10 charges involving illegally obtaining more than $60 million.
Sonray’s sole director Russell Johnson has been charged with 24 offences, including two charges of conspiracy to commit theft to the value of $5.78 million.
