ASIC tightens CFD rules

ASIC CFDs

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

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

2 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 7 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 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....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 5 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 8 hours ago