‘Margin discounts' for CFDs under ASIC scrutiny

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ASIC warned providers in their most recent Market Integrity Update issued in July 2024.

Australia Finance and Banking

CFD issuers that offer 'margin discounts' must cease doing so immediately.

ASIC warned providers in their most recent Market Integrity Update issued in July 2024. They expressed concern that some CFD issuers are offering 'margin discounts' to retail clients with opposing long and short contracts in contravention of ASIC Corporations (Product Intervention Order – Contract for Difference) Instrument2020/986 ("CFD PIO").

Sophie Grace encourage all CFD issuers in Australia, in relation to their offering of CFDs to retail clients, to:

Check disclosure documents (i.e. PDS, T&Cs / Client Agreement / FSG) and ensure 'margin discounts' are not provided for under these disclosure documents;
Check if 'margin discounts' are being provided to retail clients on opposing CFD positions in practice;
If yes, carefully consider whether a breach has arisen and whether a reportable situation is required to be notified to ASIC and take appropriate steps to do so;
Consider your obligations to remediate affected retail clients for any losses (and any other related fees and costs).

Check out the full article published on Finance Magnates for details of why this practice is considered by ASIC to be in contravention of the PIO.

Read here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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