CryptoSlate
ASIC wants to extend Australia's retail leverage restrictions to qualifying crypto-settled derivatives after finding that 68% of retail CFD clients lost money in 2023–24. Their combined losses exceeded A$458 million, including A$73 million in fees, although the figures cover CFD trading across asset classes rather than cryptocurrency derivatives alone.
The Australian Securities and Investments Commission's proposal would close a gap between economically similar products by applying existing CFD rules based on a contract's structure and underlying exposure, not solely on whether settlement occurs through digital assets. Affected firms could face leverage limits, standardized margin close-out rules, negative-balance protection and tighter restrictions on promotional incentives.
Why it matters
Crypto-referenced CFDs currently carry a maximum retail leverage of 2:1, while other products face limits ranging from 5:1 for shares to 30:1 for major currency pairs. The proposed framework would not impose the crypto cap on every digitally settled product, and some fixed-expiry crypto futures and options would remain outside its scope.
ASIC is also seeking to extend the existing investor protections until 2037, subject to government approval. The regulator said the rules reduced aggregate quarterly retail losses by 91% in the first six months after taking effect in March 2021, though most retail CFD investors continued to lose money.
Market impact
The proposal would require brokers to calculate initial margin separately for each CFD, preventing one position from reducing the collateral required for another. ASIC said its intervention over margin-netting practices led 28 issuers to refund more than A$36 million to retail customers.
Options-linked CFDs face additional scrutiny after 85% of retail clients trading them lost money in 2023–24. ASIC is seeking evidence on products that could expose investors to losses beyond the options premium, including contracts with potentially unlimited downside. Consultation closes on Nov. 9, and the final scope could change before the current order expires on May 23, 2027.
Frequently asked questions
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What is ASIC proposing for crypto-settled derivatives?
ASIC wants qualifying digitally settled derivatives to follow existing CFD protections, including leverage limits, margin close-out rules and negative-balance protection.
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How much did Australian retail CFD clients lose in 2023–24?
ASIC found that 68% of retail CFD clients lost money, with combined losses exceeding A$458 million, including A$73 million in fees. The figures cover CFDs across asset classes.
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Would every crypto-settled product face 2:1 leverage?
No. The proposed rules would depend on the derivative's underlying exposure and contractual structure. Some fixed-expiry crypto futures and options would remain outside the framework.
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What did ASIC find about margin-netting practices?
ASIC wants brokers to calculate initial margin separately for each CFD. It said intervention over margin-netting practices led 28 issuers to refund more than A$36 million to retail customers.
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Why are options-linked CFDs facing additional scrutiny?
ASIC found that 85% of retail clients trading CFDs over options lost money in 2023–24. It is examining products that could create losses beyond the options premium, including potentially unlimited downside.
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