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Australia Moves to Apply Retail CFD Safeguards to…

by admin October 12, 2026
October 12, 2026

Australia’s securities regulator wants to extend its retail CFD safeguards to derivatives settled in digital assets, closing a regulatory gap that can leave economically similar leveraged products subject to different protections depending on how they are settled.

The Australian Securities and Investments Commission proposed on October 12 that its contracts-for-difference product intervention order be expanded to cover qualifying derivatives settled through the transfer of digital assets.

The existing order generally captures CFDs settled in cash or by offsetting obligations between counterparties. ASIC wants the definition updated so a product with the economic characteristics of a CFD cannot fall outside the rules simply because the final settlement takes place in crypto.

The consultation runs until November 9. ASIC is also proposing to extend the broader CFD product intervention order for another 10 years, subject to ministerial approval. The current order expires on May 23, 2027.

Which Crypto-Settled Products Would Be Covered?

The proposed change would not place every crypto derivative under Australia’s CFD rules.

To qualify, a contract would still need to meet the defining characteristics of a CFD: its value must depend on an underlying asset, rate or index; it must either have no fixed termination date or normally be closed before that date; and the holder must be able to terminate the position.

The underlying itself does not need to be crypto. ASIC says the expanded definition could capture derivatives referencing digital assets, equities, rates, indices or other assets if settlement occurs through the transfer of digital assets.

Fixed-expiry crypto futures and certain crypto options would remain outside the order because their structure differs from a CFD.

That distinction matters because ASIC is targeting economic substance rather than blockchain settlement itself. A token-settled contract tracking an equity index could therefore face CFD protections if its structure otherwise meets the definition.

Investor Takeaway

The proposal targets regulatory arbitrage: changing a CFD’s settlement asset would no longer be enough to avoid retail leverage and loss protections.

What Leverage Limits Would Apply?

Australia’s CFD regime has restricted retail leverage since March 2021. Maximum leverage ranges from 30:1 for major currency pairs to 2:1 for CFDs referencing digital assets.

Share CFDs and other assets are generally capped at 5:1, while commodities and major indices sit between those levels. The framework also requires margin close-outs, negative balance protection and restrictions on inducements.

Under the proposed amendment, crypto settlement would bring qualifying products into that same framework. The applicable margin requirement would continue to depend on the asset or reference underlying the CFD rather than simply on the asset used for settlement.

ASIC previously extended the CFD restrictions after reporting a 91% reduction in aggregate quarterly retail losses during the first six months of the regime.

The regulator now says the protections remain necessary. In the 2023–24 financial year, 68% of retail CFD clients lost money, with aggregate net losses exceeding A$458 million, including A$73 million in fees.

Why Is ASIC Tightening the Rules Again?

The consultation follows a broad review of Australia’s retail CFD sector that exposed continued compliance problems despite the existing restrictions.

ASIC found that some issuers were reducing margin requirements by netting opposing long and short positions. Under the proposed amendments, the initial margin requirement would need to be calculated separately for each CFD rather than reduced by offsetting another position.

ASIC said 28 issuers have already refunded more than A$36 million to affected retail customers over margin-netting practices. A wider sector review previously led to almost A$40 million being returned to more than 38,000 investors.

The regulator is also examining CFDs linked to options. ASIC says 85% of retail clients trading CFDs over options lost money in 2023–24 and is seeking views on whether products capable of generating losses above the option premium should remain available to retail customers.

Investor Takeaway

ASIC is moving from basic leverage caps toward closing product-design and margin practices that can recreate leverage through different structures.

How Does This Fit Australia’s Wider Crypto Regulation?

The CFD proposal arrives as Australia is simultaneously moving more digital-asset businesses inside its financial-services licensing framework.

ASIC’s temporary no-action position for firms already providing regulated digital-asset financial services expired on September 30. More than 45 businesses had entered the licensing process by the deadline, while companies that failed to take the required steps now risk enforcement from October 1.

Australia’s crypto licensing grace period has therefore already ended for activities captured by existing financial-services law.

A separate Digital Assets Framework will begin on April 9, 2027, bringing digital-asset platforms and tokenized custody platforms formally within a dedicated licensing regime.

Taken together, the changes show ASIC applying the same principle across both initiatives: regulation increasingly follows the economic function of a product rather than whether it uses conventional settlement infrastructure or blockchain technology.

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