Australia’s financial regulator has restrained foreign exchange firm Monarch FX Group and former director and general manager, Quinten Hunter from carrying on a financial services business for four years, after being convicted of operating without a licence.

Australia’s financial regulator has restrained foreign exchange firm Monarch FX Group and former director and general manager, Quinten Hunter from carrying on a financial services business for four years, after being convicted of operating without a licence.

The Australian Securities & Investments Commission took the action against the firm after the Federal Court in Victoria found that the business operated without an Australian Financial Services Licence.

Monarch FX provided FX trading signals to consumers who purchased memberships with the company. The signals were automatically executed on members' trading accounts.

Neither Monarch FX or Hunter held a licence, ASIC said in a statement.

“FX trading can be extremely risky with the potential for large losses to be incurred. The margin contracts that are needed to be entered into to generate a small profit require significant leverage. For example, one contract, after leverage, of $5 million may only generate a profit or loss of A$525,” Greg Tanzer, ASIC Commissioner said.

“We are concerned about the number of companies operating similar business models to Monarch FX which use trading software to automatically execute trades in foreign exchange contracts on clients' accounts without instructions for each transaction. In many instances, we believe the companies do not hold the appropriate licences or authorisations,” he continued.

“Given the complexity of foreign exchange trading, consumers should understand the risks before investing, and particularly, before establishing a self-managed superannuation fund in order to trade in foreign exchange,” Tanzer added.