Licence glitch shuts down online US broker's loans dealing The corporate regulator has stopped a US-based brokerage from providing margin loans in Australia after it discovered the firm did not have a licence to do so. The online brokerage, Interactive Brokers, has been operating in Australia for more than 13 years. Its financial services licence allows it to deal in securities, derivatives and foreign exchange contracts. But the Australian Securities and Investments Commission has stopped the firm issuing new margin loans to Australian clients after it discovered the firm was dealing without a licence. "[The firm] has advised its clients of this decision and made them aware of their potential rights," ASIC said. Individual clients may wish to seek legal advice on their personal circumstances. David Friedland, Asia Pacific managing director, Interactive Brokers, said the problem stemmed from a rule change in 2010 regarding margin trading in Australia. His firm was co-operating fully with ASIC and had applied for a variation to its licence. "We were advised [in 2010] by senior compliance [that] because IB is a US firm and [given] the design of our margin trading platform ... [that] we were not required to obtain an additional licence by ASIC in order to give margin accounts," Mr Friedland said. But ASIC has now advised us that we should obtain this variation to our licence in order to continue to offer margin lending, so we've filed an application ... and until this is granted we've agreed to voluntary limit any margin lending to people in Australia. ASIC approached IB a few weeks ago but no decision had been made until last weekend, he said. IB has sent a note to clients to explain ASIC's announcement, but it has not issued a press release. ASIC said its inquiries into IB were continuing and it had "no further comment" at this stage. When the rule regarding margin loans was changed in 2010, issuers and advisers of margin lending facilities were asked to apply for an Australian Financial Services licence, or a variation to an existing licence. They had from February 1, 2010, until June 30, 2010, to do so. Industry participants who failed to do so would have to stop providing such services.