{"id":5750,"date":"2021-03-30T20:16:19","date_gmt":"2021-03-30T20:16:19","guid":{"rendered":"https:\/\/www.futuresandoptions.gr\/en\/?p=5750"},"modified":"2021-03-30T20:16:20","modified_gmt":"2021-03-30T20:16:20","slug":"asics-cfd-product-intervention-order-takes-effect","status":"publish","type":"post","link":"https:\/\/www.futuresandoptions.gr\/en\/asics-cfd-product-intervention-order-takes-effect\/","title":{"rendered":"ASIC\u2019s CFD product intervention order takes effect"},"content":{"rendered":"\n

ASIC\u2019s product intervention order imposing conditions on the issue and distribution of contracts for difference (CFDs) to retail clients takes effect from today.<\/p>\n\n\n\n

The order strengthens protections for retail clients trading CFDs after ASIC\u00a0found\u00a0that CFDs have resulted in, and are likely to result in, significant detriment to retail clients.<\/p>\n\n\n\n

ASIC\u2019s order reduces CFD leverage available to retail clients and targets CFD product features and sales practices that amplify retail clients\u2019 CFD losses, such as providing inducements to become a client or to trade. It also brings Australian practice into line with protections in force in comparable markets elsewhere.<\/p>\n\n\n\n

The maximum CFD leverage available to retail clients will range from 30:1 to a 2:1, depending on the underlying asset class. Before now, a retail investor\u2019s CFD exposure could be as much as 500 times their original outlay.<\/p>\n\n\n\n

ASIC Commissioner Cathie Armour said \u2018We will closely monitor compliance with the product intervention order and won\u2019t hestitate to take appropriate action to enforce the order.\u2019<\/p>\n\n\n\n

\u2018We are also paying careful attention to changes in CFD providers\u2019 reported holdings of retail client money and any mis-classification of retail clients as wholesale clients, which would risk denying them important rights and protections. Protecting retail investors from harm, particularly at a time of heightened vulnerability, is a priority for ASIC,\u2019 Commissioner Armour said.<\/p>\n\n\n\n

The maximum penalty for a contravention of a product intervention order is five years\u2019 imprisonment for individuals and substantial pecuniary penalties of up to $555 million for corporations.<\/p>\n\n\n\n

If a court finds that a person has contravened a product intervention order, a retail client may recover the amount of loss or damage suffered because of the contravention.<\/p>\n\n\n\n

The product intervention order will remain in force for 18 months, after which it may be extended or made permanent.<\/p>\n\n\n\n

Background<\/h2>\n\n\n\n

A CFD is a leveraged derivative contract that allows a client to speculate in the change in value of an underlying asset, such as foreign exchange rates, stock market indices, single equities, commodities or cryptoassets.<\/p>\n\n\n\n

Regulatory Guide 272<\/a> Product intervention power<\/em> provides an overview of ASIC\u2019s product intervention power, when and how ASIC may exercise the power, and how a product intervention order is made.<\/p>\n\n\n\n

On 22 August 2019, ASIC released Consultation Paper 322<\/a> Product intervention: OTC binary options and CFDs <\/em>(CP 322<\/a>) seeking feedback on proposals to use its product intervention power to address significant detriment to retail clients resulting from over-the-counter (OTC) binary options and CFDs (refer 19-220MR<\/a>). CP 322 attracted over 400 responses from consumers, consumer groups, product issuers, industry bodies and other stakeholders.<\/p>\n\n\n\n

On 23 October 2020, ASIC made a product intervention order imposing conditions on the issue and distribution of contracts for difference (CFDs) to retail clients (refer 20-254MR<\/a>).<\/p>\n\n\n\n

In addition to the product intervention order, ASIC\u2019s actions to address concerns about CFDs include:<\/p>\n\n\n\n