FxPro exits Australia as retail rules come into force

Online foreign exchange broker FxPro is merging its Australian operations with those in Cyprus and the UK, just over a year after launching, igniting speculation of a trend to exit the increasingly strict retail market.

The merger was announced in a notice to clients looking to set up a new account via its Australian site this week. While it is unclear what led to the decision, it comes a month after new capital requirements for retail forex brokers were affected in the country.

FxPro Australia Pty Ltd, set up in November 2011, was set to be the base for the expansion of the broker's Asia operations. At that time, the region accounted for 49% of its trading volumes. It was authorised and regulated by the Australian Securities and Investment Commission (Asic), to deal and give advice in relation to foreign exchange contracts and derivatives.

At the time of launching, Denis Sukhotin, founder of FxPro, said: "Australia is a key market for FxPro, and we are committed to developing the strength of our operations in the region. The Australian dollar is one of the most popularly traded currencies on our platform, at a time when both investors and traders are troubled by developments in both Europe and North America. Our Sydney office will also serve as the base for the expansion of our operations in Asia."

If its Australian licence was retained, under new rules that came into effect on January 31, the broker would have to hold net tangible assets greater than A$500,000, or 5% of average revenue. That amount is set to double to A$1 million, or 10% of average revenue by January 31, 2014.

Other requirements include preparation of quarterly projections of cashflows over a minimum 12-month period, based on reasonable estimates of revenues and expenses over that term. The issuer's directors must certify these projections as being reasonable.

A spokesperson for FxPro in London did not respond to enquiries.