CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.


ASIC initiates consultation on CFD leverage restrictions

September 03, 2019 17:11

Dear Traders,

We would like to share the important news related to regulatory changes in the global trading industry.

As you know, the licensed investment companies operating within Admiral Markets Group under the Admiral Markets trademark ("Admiral Markets") are physically represented in 16 countries with a client portfolio covering over 110 countries offering services in various jurisdictions by utilising several companies authorised and regulated in Estonia, Cyprus, UK and Australia. One world - One Brand/Broker.

A high percentage of clients are, in fact, experienced traders, considering their education, trading background, work experience and risk appetite.

The Australian regulator, ASIC, initiated a consultation on the proposed administration of its new product intervention power in relation to binary options and CFDs.

The aim of planned restrictions on leverage for the retail client is protecting retail clients. The proposed restrictions are more strict than the ones proposed by European regulator (ESMA). The Authority adopted the position that retail clients do not sufficiently understand the risks related to the products. Such regulatory changes do not impact wholesale clients.

ASIC's proposed changes include, among others:

  • Full ban for binary options and certain restrictions for CFD offerings to retail clients, including imposing leverage limits;
  • Implementing a standardised approach to automatic close-outs of clients' CFD positions in margin call; protecting retail clients against the risk of negative CFD trading account balances;
  • Prohibiting certain trading inducements, and enhancing the transparency of CFD pricing, execution, costs and risks.

An important message for all existing clients under the ASIC regulation:

Nothing will change for you today or tomorrow. If the regulatory proposal comes into force, you will be informed separately. It is expected that such a regulation could become effective in late Q4-2019 or early Q1-2020.

Admiral Markets welcomes the intent of the regulators to force unified regulation for all market participants all around the globe, and is already operating in compliance with most of these new regulatory updates, including by providing:

  • Negative Balance Protection Policy in all countries where Admiral Markets operates;
  • The possibility for any of our clients to choose a personally adjusted level of leverage;
  • Forex trading with leverage of up to 1:30;
  • Prominent and proper risk warnings and disclosures, linked to information detailing how clients can effectively manage risk and how to improve their personal risk management;
  • Admiral Markets never offered binary options.

We would like to remind you that:

  • Within Admiral Markets you can always choose the offer that suits you the best, in line with Admiral Markets' policies and geographical restrictions;
  • Eligible clients who request to be categorized as professional clients have lower protections and are able to take more risk.
  • Criteria differ by jurisdiction but, in general, include a sufficient amount of trading, experience in the financial sector and/or value of the investment portfolio.
  • Last but not least: It is only with derivative products like Forex & CFDs that you are able to trade long and short, which gives you the potential to profit in both rising and falling markets.

To conclude - Admiral Markets supports all changes intended to protect retail investors. Trading involves risk and a sufficient amount of knowledge and understanding of the risks involved is key to success. Measures imposed previously by European regulators have shown that carefully selected leverage, better education, and use of analytics reduced significantly the number of losses and encouraged traders to treat their trading more professionally.


We care! Please contact your local client support and our professional service team will be happy to assist you with any questions you might have.