ASIC tightens high-risk and OTC derivatives product distribution
<img width="250" height="187" src="https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-250×187.jpg" class="webfeedsFeaturedVisual wp-post-image" alt="" decoding="async" style="float: left; margin-right: 5px;" link_thumbnail="" srcset="https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-250×187.jpg 250w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-700×525.jpg 700w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-768×576.jpg 768w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-120×90.jpg 120w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-245×184.jpg 245w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806-500×375.jpg 500w, https://www.leaprate.com/wp-content/uploads/2023/09/FIN-LP-ASIC-tightens-high-risk-and-OTC-derivatives-product-distribution-5112965372iStock-1436915806.jpg 1183w" sizes="(max-width: 250px) 100vw, 250px" /><p><span data-contrast="auto">A recent targeted review, which examined the DDO practices of sample financial issuers, found most retail clients lost money when trading CFDs. The ASIC deputy chair, Karen Chester, said:</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<blockquote><p><span data-contrast="auto">ASIC is disappointed that some high-risk retail product issuers have changed little in response to their design and distribution obligations (DDO).</span><span data-ccp-props="{"201341983":0,"335559685":720,"335559739":160,"335559740":259}"> </span></p></blockquote>
<p><span data-contrast="auto">DDO requires companies to design financial products that meet the needs of consumers and to distribute these in a targeted manner. The regulations got the stamp of approval from the Australian Parliament in 2019 and compliance came into effect on 5 October 2021.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<p><span data-contrast="auto">After almost two years since DDO approval, the regulator found little evidence that financial products, especially high-risk ones, incorporate the guidelines of transparent objectives and targeted customer needs. In Australia, there are more than 60 licensed financial service providers that offer high-risk OTC derivatives to retail clients.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
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<p><span data-contrast="auto">After recent findings, ASIC called on issuers of financial products to address over-reliance on customer questionnaires, review the mass marketing drives of OTC derivatives, and optimise available data when designing products and targeting a market.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<p><span data-contrast="auto">Since March 2023, ASIC has taken action against five issuers of retail OTC derivative products. These steps led to 10 interim stop orders and further DDO-related investigations. Chester indicated:</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"> </span></p>
<blockquote><p><span data-contrast="auto">We will not hesitate to take further action, from stop orders through to court proceedings, especially where we see egregious failures.</span><span data-ccp-props="{"201341983":0,"335559685":720,"335559739":160,"335559740":259}"> </span></p></blockquote>
<p>The post <a rel="nofollow" href="https://www.leaprate.com/news/asic-tightens-high-risk-and-otc-derivatives-product-distribution/">ASIC tightens high-risk and OTC derivatives product distribution</a> appeared first on <a rel="nofollow" href="https://www.leaprate.com">LeapRate</a>.</p>
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