CFD leverage reduced
The corporate regulator’s order to reduce contracts for difference (CFDs) leverage available to retail clients took effect from Monday.
The Australian Securities and Investments Commission (ASIC) said its CFD product intervention order strengthened protections for retail clients trading CFDs after it found CFDs were likely to result in significant detriment to retail clients.
The intervention order also targeted CFD product features and sales practices that amplified retail clients’ CFD losses, such as providing inducements to become a client or to trade.
The maximum CFD leverage available to retail clients would range from 30:1 to a 2:1 depending on the underlying asset class. Previously, CFD exposure could be 500 times the original outlay.
ASIC said contravention of the order was five years imprisonment for individuals and penalties of up to $555 million for corporations. The order would remain for 18 months, and could be extended or made permanent after that.
ASIC commissioner, Cathie Armour, said: “We will closely monitor compliance with the product intervention order and won’t hesitate to take appropriate action to enforce the order.
“We are also paying careful attention to changes in CFD providers’ reported holdings of retail client money and any mis-classification of retail clients as wholesale clients, which would risk denying them important rights and protections. Protecting retail investors from harm, particularly at a time of heightened vulnerability, is a priority for ASIC.”
Recommended for you
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
