ASIC tightens CFD rules

23 October 2020
| By Mike |
image
image
expand image

The Australian Securities and Investments Commission (ASIC) has used its product intervention power to tighten the rules around retail contracts for difference (CFDs). 

The regulator said its product intervention order strengthened consumer protections by reducing CFD leverage available to retail clients and by targeting CFD product features and sales practices that amplify retail clients’ CFD losses. 

ASIC said the move also served to bring Australian practice into line with protections in force in comparable markets elsewhere. 

From 29 March 2021, ASIC’s product intervention order would:  

  • Restrict CFD leverage offered to retail clients to a maximum ratio of: 
  • 30:1 for CFDs referencing an exchange rate for a major currency pair 
  • 20:1 for CFDs referencing an exchange rate for a minor currency pair, gold or a major stock market index 
  • 10:1 for CFDs referencing a commodity (other than gold) or a minor stock market index 
  • 2:1 for CFDs referencing crypto-assets 
  • 5:1 for CFDs referencing shares or other assets; 

Standardise CFD issuers’ margin close-out arrangements that act as a circuit breaker to close-out one or more a retail client’s CFD positions before all or most of the client’s investment is lost; 

Protect against negative account balances by limiting a retail client’s CFD losses to the funds in their CFD trading account; and 

Prohibit giving or offering certain inducements to retail clients (for example, offering trading credits and rebates or ‘free’ gifts like iPads). 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 5 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

18 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 3 days ago