The Australian Securities and Investments Commission (ASIC) revealed on Wednesday it has extended its product intervention order for retail issuance and distribution of CFDs for a further five years to 23 May 2027.
ASIC’s CFD trading restrictions first came into effect on 29 March 2021. Initially, the order was said to last for 18 months after which time it could be extended or made permanent.
The order imposes restrictions on CFDs issued to retail clients, including leverage ratio limits ranging from 30:1 to 2:1, standardisation of margin-close out rules, and negative balance protection.
Retail customer protection
The Aussie regulator highlighted that following the product intervention order, it observed a 91% reduction in net losses by retail client accounts. There were 51% fewer loss-making retail client accounts per quarter on average.
Additionally, ASIC noted there was an 87% decrease in margin close-outs and an 88% reduction in negative balance occurrences for retail clients.