FXOpen AU announces US share CFD offering

Rick Steves

The Australian Securities and Investments Commission (ASIC) has recently imposed new leverage limits for retail clients, but FXOpen’s Pro Account is exempt from the new rules.

ASIC-regulated retail FX and CFDs broker FXOpen has expanded its trading offering to include over 100 US shares to trade as CFDs on an ECN account, for its Australia-based customers.

The announced offering addresses the growing demand from its customer base following FXOpen’s first launch of equity CFDs last year in the United Kingdom, through its FCA-regulated firm.

Gary Thomson, Chief Operating Officer at FXOpen UK, said: “We’ve seen an increased uptake in equity trading in recent months within our UK brokerage and are delighted to widen the reach of equity markets to the wider FXOpen group.”

The Australian Securities and Investments Commission (ASIC) has recently imposed new leverage limits for retail clients.

The maximum CFD leverage available to retail clients will range from 30:1 to 2:1, depending on the underlying asset class:

30:1 for CFDs referencing an exchange rate for a major currency pair
20:1 for CFDs referencing an exchange rate for a minor currency pair, gold or a major stock market index
10:1 for CFDs referencing a commodity (other than gold) or a minor stock market index
2:1 for CFDs referencing crypto-assets
5:1 for CFDs referencing shares or other assets
Brokers will also have to standardize CFD issuers’ margin close-out arrangements that act as a circuit breaker to close-out one or more a retail client’s CFD positions before all or most of the client’s investment is lost. Protection against negative account balances and end all trading credits, rebates, or gifts to customers.

Before now, a retail investor’s CFD exposure could be as much as 500 times their original outlay. This is expected to result in a drop in operating revenues for retail CFD brokers as it happened in other jurisdictions which have made similar changes, such as the European Union and the United Kingdom.

ASIC also targets CFD product features and sales practices that amplify retail clients’ CFD losses, such as providing inducements to become a client or to trade, which is also in line with the recent CFD product intervention by ESMA.

Violations of the new CFD products may result in a maximum of five years’ imprisonment for individuals and pecuniary penalties of up to $555 million for corporations.

Retail clients will have the right to recover the amount of loss or damage suffered because of any given product contravention made by a broker.

Most retail brokers offering CFD products have updated their processes and announced the changes to their clients while reminding them that Professional Accounts are exempt from the new ASIC rules.

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