Retail investors are still losing hundreds of millions of dollars trading contracts for difference (CFDs), prompting Australia’s financial regulator to propose keeping existing protections in place.
The Australian Securities and Investments Commission (ASIC) is seeking feedback on extending its product intervention order for another 10 years and updating the rules to cover CFDs settled using digital assets.
The existing order is due to expire on 23 May 2027.
CFDs are leveraged derivatives that allow investors to speculate on price movements in assets such as shares, currencies and commodities without owning them.
Retail CFD Losses Remain High Despite Existing Protections
ASIC introduced the restrictions in March 2021 to reduce retail investor losses. They include leverage limits, standardised margin close-out requirements, negative balance protection and restrictions on trading incentives.
According to ASIC, aggregate net retail client losses fell 91 percent in the first six months after the order took effect, declining from A$372 million to A$33 million per quarter.
However, its latest data showed retail investors incurred more than A$458 million in losses over a 12-month period, including A$73 million in fees.
ASIC Commissioner Alan Kirkland said the measures had reduced investor harm, particularly from excessive leverage, but most retail CFD traders continued to lose money.
In January 2026, a sector-wide review led ASIC to secure nearly A$40 million in refunds for more than 38,000 retail investors.
ASIC Proposes Changes to Digital Asset and Margin Rules
Under the proposed amendments, CFDs would face the same restrictions whether settled in cash, by offsetting obligations or through digital asset transfers.
The changes would clarify margin requirements for CFDs linked to options and confirm that opposing positions cannot be offset to reduce the initial margin required for each CFD.
ASIC also wants to tighten conditions governing trading discounts and educational or research tools.
The regulator is seeking feedback on whether CFDs linked to options that could expose retail investors to losses exceeding their premiums should remain available to retail clients.
Stakeholders have until 5pm AEDT on 9 November 2026 to submit feedback.
Subject to ministerial approval, the extended order would remain in force until 2037 unless revoked earlier.
Featured image: Edited by Fintech News Australia, based on image by Magnific
