Australia has become the latest location for a class action lawsuit against a group of banks with a law firm filing a cartel class action in the Australian Federal Court claiming the banks “systematically manipulated foreign exchange rates to boost profits at the expense of Australian businesses and investors”. In what has become a familiar […]
The latest round of FX committee semi-annual turnover surveys indicate that activity globally dipped slightly in October 2017 from the previous April, but was up year-on-year.
The US was the bright point amongst the surveys, showing a 6.2% rise from April 2017’s level and 7.2% higher than the previous October, while the UK, still easily the world’s largest FX market, saw activity decline by 4.3% from April, however it was up 5.4% year-on-year. Elsewhere, all centres saw slightly higher activity from the April 2017 survey, however Singapore and Canada were up on a year-on-year basis while Japan and Australia declined slightly.
Regular readers know that the increasingly blurred lines between retail and institutional FX markets have bothered me for years. Too many customers are unsuccessful in the retail sector and the reputational risk for the entire industry is off the scale. We need to be asking many more intrusive and difficult questions of these firms – for if we do, I think the answers – assuming they are given honestly – will highlight the scale of the problem and help deliver a solution.
The Australian government has announced it is proceeding with reforms regarding the use of client funds by OTC derivatives brokers. The move will bring the country into line with other jurisdictions such as the US and Canada and mean client funds held by retail brokers will have to be held in trust.
Australian-domiciled retail brokers can currently use money held on behalf of their clients for a wide range of purposes, including for working capital. Use of client money for these purposes is either not permitted, or is more heavily regulated, in a number of other G20 economies. This means Australian retail clients are at a greater risk of loss in the event of a broker’s insolvency.