Independent Review – Australian Securities and Investments Commission
On 23 October 2020, the Australian Securities and Investments Commission (ASIC) announced a product intervention order imposing conditions on the issue and distribution of contracts for difference (CFD) to retail clients.
The objective of the product intervention order is to reduce the risk of significant detriment to retail clients resulting from CFDs. The order strengthens consumer protections by reducing CFD leverage available to retail clients and by targeting CFD product features and sales practices that amplify retail clients’ CFD losses. It also brings Australian practice into line with protections in force in comparable markets elsewhere.
Consistent with the Government’s Regulation Impact Statement (RIS) requirements, ASIC has certified their Product intervention order in relation to contracts for difference as having undertaken a process and analysis equivalent to a RIS. The Office of Best Practice Regulation (OBPR) does not assess the quality of independent reviews used in lieu of a RIS, but does assess whether the options analysed in the independent review are relevant to the regulatory proposal. The OBPR assessed the analysis in the independent review as sufficiently relevant to the proposal.
Implementation of the product intervention order will increase the annual regulatory burden on CFD providers over the expected duration of the order, ranging from $57.3 million to $22.4 million. A regulatory offset has not been identified.
Further information regarding the product intervention order can be found at CP 322 Product intervention: OTC binary options and CFDs
Please note, any accessibility queries should be directed to ASIC.