ASIC has extended its Product Intervention Order, which imposes conditions on the issuance and distribution of contracts for difference (CFDs), for a further five years to 23 May 2027.
Since March 29, 2021, the Product Intervention Order has strengthened protection by reducing the CFD leverage available to retail clients and by cracking down on product features and sales practices that increase retail client CFD losses. ASIC’s extension of the Product Intervention Order ensures that CFD protection in Australia is in line with existing protections in other similar markets.
ASIC also issued Report 724 today in response to the filing of an extension of the CP 348 CFD Product Intervention Order. Using data from more than 60 CFD issuers, the report summarizes ASIC’s analysis of the impact on order books. The report highlights key issues raised in the submission of consultation paper 348 CFD Product Intervention Order Extension (CP 348) and details ASIC’s response to these issues.
ASIC found that product intervention orders effectively reduced the risk of CFDs causing significant harm to retail customers. For example, ASIC observed in the first six months of the order run:
● 91% reduction in total net losses on retail client accounts (from $372 million to $33 million per quarter on average)
● Reduced loss-making retail client accounts by an average of 51% per quarter
● 87% reduction in margin closeouts affecting retail client accounts on an average quarterly basis
● The average quarterly incidence of negative balances for retail customers decreased by 88%.
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