ASIC targets brokerage City Index

The corporate regulator, the Australian Securities and Investments Commission (ASIC), identified several compliance flaws at City Index, including weaknesses in how client money was handled. Because of those concerns, ASIC required City Index to take remedial steps, prompting the appointment of an independent expert.

City Index is described as one of the nation's biggest contract-for-difference (CFD) brokers. It offers derivative trading products, including trading on equities and currencies.

The phrase means ASIC found problems in the processes City Index used to manage and safeguard client funds. While the article doesn't list specific details, such weaknesses typically relate to how client money is recorded, protected, or segregated from the broker’s own funds.

An independent expert is a third-party reviewer brought in to assess and report on a firm's compliance and remediation. ASIC required City Index to appoint an independent expert to help address the regulator’s concerns and verify that the broker’s remedial actions meet legal and industry standards.

An enforceable undertaking is a formal agreement between a firm and a regulator to take specific steps to fix problems, often instead of pursuing court action. City Index said the steps in its enforceable undertaking were necessary to address ASIC’s concerns and ensure compliance with the Corporations Act.

The article notes ASIC identified compliance issues and City Index has agreed to remedial steps overseen by an independent expert. While that indicates problems were taken seriously, investors should monitor updates, review their broker’s client money protections, and consider their own risk tolerance when using CFD providers.

Everyday investors can look for public regulator notices (like ASIC announcements), review a broker’s statements about client money handling, and confirm whether the broker is taking remedial actions such as independent reviews or enforceable undertakings. The article highlights these measures in City Index’s case as signs the issues are being addressed.

The situation underscores that regulators like ASIC actively monitor CFD brokers for compliance, especially around client money handling. For investors, it signals that regulatory oversight can lead to enforceable undertakings and independent reviews when flaws are found, reinforcing the importance of choosing regulated brokers and staying informed.