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IG Supports ASIC Review of Client Money Controls

MELBOURNE, Australia, December 4, 2012 /PRNewswire/ --

  • ASIC reports on CFD providers' controls of client money
  • IG operates above and beyond industry regulations

ASIC recently conducted a thematic review of the Australian OTC derivatives market, with a focus on CFD providers' client money controls. In its report, ASIC highlighted areas of non-compliance within the industry.

IG welcomes the particular focus on client money controls, and has always been an advocate for full segregation of client funds; IG has never and will never use client money for its own hedging purposes. IG maintains that having effective controls and oversight around the handling of client money, on top of client money protection, is extremely important and should be an industry standard.

Along with the use of client money, the biggest regulatory issue facing the Australian CFD industry is how client money is handled.  Unfortunately, some CFD providers have minimal financial liquidity and compliance infrastructure, and are at risk of breaching ASIC client money handling regulations.

IG was assessed by ASIC in this review and is proud to announce it was given a clean bill of health; incorporating well developed and robust client money policies that represent good industry practice.

IG, Australia's largest CFD provider*, has a track record of applying higher standards than required by regulation in the protection of client money, including being the first major CFD provider in Australia to offer full protection.  In keeping with this leadership position, the group has recently had an independent assurance assessment of its client money processes and controls completed to the ISAE 3000 standard, and is the first and only firm in its industry to do so.

Head of IG, Asia Pacific, Tamas Szabo commented on the significance of the company's independent review, "We are proud to be the first and only provider to successfully complete this independent assurance assessment, and we believe this is an important step forward for the industry."

"As part of a listed group, we give clients wider access to our financial details, and greater confidence that we employ a higher level of corporate governance than smaller providers may be able to."

While ASIC requires CFD providers to segregate client money from company funds, this does not include money that the CFD provider might use for hedging. Consequently, the provider could withdraw client money from this account for hedging purposes.

IG has always stood firmly against hedging with client money; it holds client money, their net running and unrealised profits in separate, regulated trust accounts at approved banks. This means that client money is not pooled with IG's money, which is in excess of both regulatory and contractual obligations.

Mr Szabo, said, "We are proud to be at the forefront of the industry when it comes to controls around client money, as it is a core principal of how we run our business."

"At IG we have a comprehensive and detailed client money controls policy, with a client money committee who monitor the effectiveness of our global processes and controls for segregating client money."

IG's client money control policy sets out key controls such as corporate governance and risk management frameworks, management oversight, detailed processes, reporting and compliance monitoring. Mr Szabo commented "And we hold all important control and oversight functions such as compliance and finance locally."

IG also ensures its clients are aware of the differences between how CFD providers can operate: http://www.igmarkets.com.au/cfd/strength-security.html. This guide covers the company's policies on hedging client positions and holding client money, and compares these policies to the industry standard.

IG Markets is regulated by ASIC in Australia, and IG Group companies are regulated by the local regulators in each country of operation.

About IG

IG Markets specialises in financial derivatives, principally CFD trading on over 7,000 global share CFDs, indices, forex, commodities, options, binaries and more. IG Markets is a part of IG Group, a FTSE 250 company established in 1974 which now employs over 1000 staff in 15 countries.

A CFD (or Contract for Difference) is an agreement to exchange the difference in value of a particular asset between the time at which a contract is opened and the time at which it is closed.

IG Markets advises that trading CFDs may not be suitable for everyone, since CFDs are a geared product and can result in losses that exceed an initial deposit, and that product disclosure statements are available from http://www.igmarkets.com.au

*By primary relationships, Investment Trends May 2012 CFD Report

For further information please contact Chris Weston, Institutional Dealer
Australia Freecall: 1800-601-734
International: +61-(3)9860-1734

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