Australia’s securities regulator, ASIC, has proposed extending its retail contracts-for-difference product intervention order until 2037 and expanding the definition to capture derivatives settled through digital assets. The consultation, announced on October 12, runs until November 9 and seeks to close a regulatory gap that allows economically similar leveraged products to receive different investor protections depending on whether settlement occurs in cash or crypto.
Under the proposed change, a product would still need to exhibit the defining characteristics of a CFD: its value depends on an underlying asset, rate or index; it has no fixed termination date or is normally closed before that date; and the holder can terminate the position. The underlying reference does not need to be a digital asset. ASIC says fixed-expiry crypto futures and certain crypto options would remain outside the order because their structures differ from CFDs.
The existing CFD regime, in force since March 2021, imposes retail leverage limits ranging from 30:1 for major currency pairs to 2:1 for CFDs referencing digital assets. It also requires margin close-outs, negative balance protection and restrictions on inducements. ASIC reported a 91% reduction in aggregate quarterly retail losses during the first six months of the regime. More recent data shows 68% of retail CFD clients lost money in the 2023–24 financial year, with aggregate net losses exceeding A$458 million, including A$73 million in fees.
The consultation also addresses margin-netting practices. ASIC found some issuers were reducing initial margin by netting opposing long and short positions. The regulator wants margin calculated separately for each CFD. It said 28 issuers have already refunded more than A$36 million over these practices, and a wider review of 52 licensed issuers produced almost A$40 million in refunds for more than 38,000 investors.
ASIC is separately consulting on whether retail clients should continue to have access to CFDs over options, noting that 85% of retail clients trading CFDs over options lost money in 2023–24. The regulator is also aligning this with Australia’s wider crypto licensing push: the temporary no-action position for digital-asset financial services expired on September 30, with more than 45 businesses entering the licensing process by the deadline. A dedicated Digital Assets Framework is scheduled to begin on April 9, 2027.
Responses to the CFD consultation are due by 5pm Australian Eastern Daylight Time on November 9. The current order expires on May 23, 2027, and any extension requires ministerial approval. ASIC’s central message is that product innovation will be assessed by economic substance and risk: changing the settlement rail or adding a token will not necessarily move a product outside the CFD framework.
