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The Australian Securities and Investments Commission (ASIC) has restrictions on the Enforced trading in retail CFDs, which limit the leverage offered by brokers from 500: 1 to a maximum of 30: 1.
In addition, the Australian regulator imposed restrictions to protect traders by imposing negative balance protection and marketing tactics, to offer trade discounts and gifts to new customers.
The rules are largely in line with what its European counterpart implemented in 2018. However, ASIC is still lagging a bit when it comes to flashing the risk warnings.
The leverage limit is expected to drastically impact brokers’ business and revenue on lower trading volumes, a trend we are already at saw the regulated european broker. However, many brokers that Finance Magnates spoke to welcome the restrictions.
Australian brokers have already started upgrading their services before the restrictions are enforced.
ASIC also takes compliance with the restrictions very seriously New broker restrictions as a single infringer could face up to five years’ imprisonment and fines up to A $ 555 million on businesses. In addition, the Product Intervention Regulation applies for 18 months in the event of violations and can also constitute a permanent ban.
Cathie Armor, ASIC Commissioner, commented on the preparations of the ASIC for the introduction of the new rules: « We will comply with the Monitor the Product Intervention Ordinance closely and will not hesitate to take appropriate action to enforce the order. «
» We also pay close attention to changes in retail funds reported by CFD providers and any misclassification of retail customers as wholesale customers who do so could lead to the denial of important rights and protections. Protecting private investors from damage, especially in times of heightened vulnerability, is a priority for ASIC. “
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