The KVB Kunlun Financial Group, a brokerage focused on the Hong Kong region, recently stated that the identification and disengagement process of clients in the People’s Republic of China is already underway. It has been designed, mainly, as a mean of compliance with the country’s laws. The information was published in the company’s report for the first half of the year.
The process may be related to a letter that KVB Kunlun and other entities that hold an Australian Financial Services License received from the Securities and Investments Commission (ASIC) in April 2019, which said that licensees were under obligation to show compliance with foreign jurisdictions’ legal instruments that applied.
Showing Compliance With Foreign Regulations
The letter also stated that the licensees were recommended to look for legal advice to make sure that any goods, products, and services offered to customers show compliance with the aforementioned foreign regulations.
The KVB Kunlun Financial Group has specific subsidiaries that hold financial services licenses in Australia and New Zealand, and these subsidiaries’ forex trading ecosystems are targeted to attend the Chinese market. As a result, and according to the letter’s view, KVB Kunlun’s board sought legal advice to comply with Chinese laws.
Following the tip from its lawyer, KVB’s Existing Ethnic Chinese Clients is conducting a detailed survey to determine and spot any person who is or may qualify as a People’s Republic of China customer.
People that the group finds as an existing or potential PRC domestic client will subsequently be disengaged immediately. And, according to the company, the process of identification and disengaging of PRC’s domestic clients is still happening as of the moment of writing this piece.
An Unsuccessful Semester
When it comes to results, it wasn’t the best semester for the KVB Kunlun Financial Group, as it reported a significant net loss according to the presented document. It matches with a profit warning posted not so long ago.
To be specific, KVB Kunlun’s reported loss ascended to HK $77.1 million in the period that ranged from January 1 to June 30, 2019. It pales in comparison with the performance of 2018’s first semester when the forex margin trading platform reported a net profit of HK $10.4 million.
The Group identified the decrease in leveraged foreign exchange as one of the primary reasons behind the low profitability, as well as a sharp decline in trading volume of KVB Kunlun’s clients. Issues with regulations in places such as Hong Kong and Australia are also to blame.