The recent product restrictions would expire 23rd of March 2021
ASIC declared a consultation paper that seeks to extend the forced restraints on the distribution and sale of retail CFDs till April 1st of 2031.
The Australian financial market regulator has imposed ongoing constraints on retail contracts for differences (CFDs) on March 31, 2021. But, the order of product intervention will expire 23rd of March 2022, except it has been extended.
The latest proposal of the regulation states that “We propose to extend the CFD Order so that it will remain in force until it is revoked or sunsets on 1 April 2031,”
The regulations of ASIC consist of standardizing margin close-out arrangements, the modification of leverage for CFDs to a peak of 30:1 for those retail traders, forbidding from giving incentives to inexperienced traders, and mandatory negative balance protection.
An advantage for All Traders from ASIC
This proposal for the extension of the order came based on much-improved trading conditions that are observed for a quarter.
The Australian financial market regulator stated that when we compare the average quarterly loss of AUD 372 million in the last year, retail CFDs traders’ losses were reduced to AUD 22 million. That is a 94% decrease. In addition to that improvement, losing accounts decreased by 45% and the losses of retail traders also decreased, which are quite important advancements.
Moreover, the regulator announced that the split among the loss-making and profit-making traders improved by 50%. Also, margin close-outs were reduced by 85%, while negative balance instances were reduced tenfold for retail clients.
Industry consultation on the proposed extension period will be accepted by the regulator until the 29th of November. The regulator added that “ASIC will continue to monitor and assess the performance of the CFD product intervention order during the consultation period,”