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#1 15-09-2020 14:20:44

johnedward
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From: Paris - France
Registered: 21-12-2009
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Australian brokers react to ASIC's measures on CFD products

Australian brokers react to ASIC's intervention measures on CFD products


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Last year, the ASIC (Australian Security and Investment Committee) released its report regarding the new product intervention measures coming down hard on binary options and CFDs. Recently, the regulator published some comments it received from industry participants, including a few notable local brokers, such as Pepperstone.

ASIC released its "Product intervention": OTC binary options and CFDs report last summer. This publication was released after the nation's parliament pretty much agreed to let ASIC call the shots, similar to the powers granted to Europe's ESMA a few years ago.

Specifically, the Australian regulator has proposed to ban binary options completely in the country and to put in place leverage restrictions for CFD products. Unlike ESMA, ASIC said at the time that it would not distinguish between major and minor currency pairs.

Instead, ASIC proposed a single 20:1 leverage ratio limit for all currency pairs. For stock indices, ASIC suggested a ratio of 15:1, non-gold commodities 10:1, gold 20:1, cryptocurrencies 2:1, and stocks 5:1.

Brokers are concerned about these leverage restrictions

Since the publication of its report, ASIC has received 409 submissions. Of these, 39 were from entities and the remainder from individuals. Looking at the entities' non-confidential submissions, it appears that the brokers based in Australia are angry with ASIC trying to implement such restrictive leverage.

Pepperstone, an Australia-based broker who has spoken out about ASIC's intended use of its product intervention powers, said it supports improving standards across the industry, but that it has concerns.

"... we are concerned that some of the requirements in PC 322 are too stringent and do not allow investors who understand and accept the risks associated with trading our products to trade the way they want", says Tamas Szabo, CEO of the Pepperstone group.

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