Sophie Grace can assist you with all stages of obtaining an AFSL to establish a margin foreign exchange, CFD or Binary Options brokerage in Australia. We will create an AFSL package to best suit your needs.
1. Determine which authorisations you need – The standard authorisations required for establishing a margin FX, CFD or binary options brokerage (or a combination of these) are advice, dealing (including by issuing) and making a market in foreign exchange (FX) and derivatives.
If you want to offer managed accounts (including MAMMs and PAMMs) or copy trading services you will also need to apply for authorisations which allow you to issue and operate Managed Discretionary Accounts (MDAs). Please see our separate article relating to additional requirements which will apply.
You will need to determine if you want to provide your services to retail or wholesale clients. If you want to provide your services to retail clients, the requirements are more onerous.
Sophie Grace will work with you to ensure you seek and obtain the appropriate authorisations needed to operate your business. Financial product/service delineations and boundaries are complex and it is easy to overlook or inaccurately define an aspect of your activities. There are serious penalties and repercussions for operating without an AFSL or without the correct authorisations.
2. Choose your Responsible Managers – You must ensure that the Responsible Managers nominated have appropriate skill and experience to provide the authorisations that your business is seeking. Broadly, this means they will:
- need to have worked in Australia for an AFSL for at least 3 in the past 5 years, or 5 in the past 8 years;
- have a university degree in a relevant field (e.g. commerce, science, economics);
- have held RG146 in foreign exchange and derivatives (for retail AFSL applications);
- be able to provide at least two referees;
- not be associated with more than one other AFSL (as RM, shareholder or director);
- have clear criminal and bankruptcy checks.
3. Draft your Documents for ASIC – The documents submitted to ASIC for your AFSL application are known as ‘Proof Documents’. There are two types of proof documents, ‘Core Proofs’ and ‘Additional Proofs’. Sophie Grace will work closely with you to prepare the following proof documentation to meet the requirements of your ASIC AFSL application:
- Business Description
- People proofs for each nominated Responsible Manager
- Organisational Expertise Table
- Financial Resources Statements
Recently ASIC has stated that they require additional information relating to this type of AFSL application, including:
- details of the counterparty or liquidity providers (e.g. AFSL details, agreements negotiated to date)
- any guarantees on stop losses you will provide to clients;
- whether a Straight Through Processing (STP) operating model will be in place for the products.
4. Additional Proof Documentation – Depending on the authorisations for which your business is seeking to be Licenced, ASIC will require the submission of additional proof documentation. Sophie Grace will prepare these documents for you and liaise with ASIC on your behalf. Some of the documents which may be required include:
- Development Program for Responsible Managers
- Compliance Arrangements
- Outsourcing Statement
- Conflicts of Interest Arrangements
- Program for monitoring, supervision and training of Representatives
- Human Resources Capacity Statement
- Information Technology Capacity Statement
- Dispute Resolution System Statement
- Risk Management System Statement
- Compensation Capacity Statement
- Derivatives Statement
- Foreign Exchange Operating Statement
- Product/Service distribution Statement
- Market Maker Statement
- Derivatives Statement
5. Ongoing AFSL Procedural Documentation – The ongoing compliance obligations of your new or varied AFSL will require procedure documents to maintain the good standing of your AFSL. Refer to our section on AFSL Procedural Documentation for more information.