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#1 16-03-2021 17:29:19

johnedward
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From: Paris - France
Registered: 21-12-2009
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ASIC announces regulatory costs ahead of CFD and trading restrictions

ASIC announces regulatory costs ahead of CFD and trading restrictions


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ASIC has issued a 2019-2020 Cost Recovery Implementation Statement (CRIS), which provides regulated entities with details of the costs and regulatory activities expected by ASIC, by sector and sub-sector. The total cost of the regulatory transaction is $320 million.

The regulator detailed that the market infrastructure and intermediaries sector has total operating expenses of $53 million. Surveillance costs for the sector are the highest, at $13 million. By adding the provision for capital expenditures and adjustments, ASIC achieves a total cost of $62 million to be recovered by direct debit.

The regulation of stock brokers cost $1.4 million, over-the-counter (OTC) traders $9.7 million, and retail OTC derivatives issuers $10.4 million.

ASIC currently oversees 1,029 securities brokers, 80 over-the-counter (OTC) traders and 100 issuers of retail OTC derivatives.

Stock brokers pay a minimum tax of $1,000, plus $2.7 per million dollars of annual sales. Over-the-counter (OTC) securities traders pay a minimum drawdown of $1,000 plus $4,000 per ETP. Issuers of OTC derivatives pay a fixed amount of $108,100.

"ASIC is keenly aware of the challenges many businesses face as a result of COVID-19 and is committed to working with regulated entities that have difficulty paying industry funding levies. ASIC will consider waivers due to the impact of COVID-19 on a case-by-case basis, the announcement says.

This announcement precedes the new CFD trading rules that will come into effect at the end of March. Leverage will be limited to such an extent that trading volumes are expected to decline by around a third - according to European brokers' experience with ESMA's new leverage rules.

The regulator called CFD products "detrimental to retail clients" in order to justify restrictions on marketing methods and leverage in Australia.

From 30 March 2021, the ASIC Product Intervention Order will limit the leverage of CFDs offered to retail traders:

Arrow 30:1 for major currency pairs
Arrow 20:1 for minor currency pairs, gold or major stock indices
Arrow 10:1 for commodity CFDs (other than gold) and minor stock indexes
Arrow 2:1 for cryptocurrency CFDs
Arrow 5:1 for CFDs on stocks or other assets

Brokers will also need to standardise the margin close agreements of CFD issuers that act as a kill switch to liquidate one or more CFD positions of a particular client before all or most of a trader's capital is lost. And offer protection against negative account balances and end all cashbacks, discounts or gifts to traders.

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