ASIC has indicated that it will continue to take on misconduct in the retail OTC sector in its annual report, with more regulation potentially on the way.
The report chronicles ASIC’s close scrutiny of the market, which has seen the watchdog conduct extensive fact-finding of licensed entities active in retail OTC derivatives and publicly warns Australian issuers that they may be dealing with offshore investors illegally.
“We continue to respond to a high incidence of misconduct in the retail OTC derivatives sector, involving large client losses,” reads the report.
The watchdog provided several examples of their “high deterrence value” cases, including that of Stavro D’Amore, ex-director of OTC retail provider Berndale Capital Securities.
Mr Amore had his assets frozen and was banned from providing financial services for six years after ASIC found “systemic failures” in complying with reporting requirements.
“We also addressed harms to retail consumers in the retail OTC derivatives market through a range of licensing action, referrals to our enforcement teams, and disrupting unlicensed conduct,” the report reads.
ASIC Commissioner Sean Hughes also suggested that the watchdog might consider an intervention in retail binary OTC options during the Governance Risk Compliance Conference in Melbourne on Thursday.
The report also touched on ASIC’s general enforcement efforts across the finance sector.
ASIC enforcement investigations have increased by 20 per cent over the last year.
There has been a 51 per cent increase in the number of enforcement investigations involving Australia’s largest financial institutions and a 216 per cent increase in the number of wealth management investigations.
Between 2018-19, ASIC conducted over 300 surveillances in the deposit-taking and credit, financial advice, investment management and superannuation sectors, and over 900 surveillances in the corporations, market infrastructure and market intermediaries sectors.
They charged 26 people with wrongdoing.
“We are focused on efficient and effective enforcement action, particularly cases that have a high deterrence value and those responding to egregious misconduct (e.g. misconduct impacting vulnerable consumers),” wrote chairman James Shipton.
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