Margin called: ASIC to expand retail CFD restrictions
The Australian Securities and Investments Commission (ASIC) has released a consultation (CS 64) proposing to keep its contracts for difference (CFD) product intervention order in place for a further ten years, out to 2037. The order is otherwise due to lapse on 23 May 2027. Alongside the extension, ASIC seeks to tighten the margin rules, spell out the inducement carve-outs and, of particular interest to the digital asset sector, bring CFDs settled by the transfer of digital assets within the order. Submissions on CS 64 close at 5pm AEDT on 9 November 2026, giving industry four weeks to respond.
A quick recap on the CFD order
The CFD product intervention order (PIO), formally the ASIC Corporations (Product Intervention Order - Contracts for Difference) Instrument 2020/986, came into effect on 29 March 2021. It was extended for a further five years in April 2022 and now runs to 23 May 2027. The order does four things:
it caps the leverage a retail client can be offered;
standardises margin close-out arrangements;
provides negative balance protection so a client cannot lose more than the funds in their account; and
bans certain inducements to open an account or trade.
ASIC's own numbers suggest the order did what it was designed to do. In its first six months, aggregate net losses by retail client accounts fell by 91% per quarter, from $372 million to $33 million. Margin close-outs fell by 87% and negative balance occurrences by 88%. Active retail accounts dropped by 29%, from 504,905 to 357,841, and the average number of clients trading CFDs per quarter in 2023–24 was 76% lower than in the 12 months before the order took effect.
Why ASIC wants another decade
ASIC's case rests on two propositions, the first being that the order works. Commissioner Alan Kirkland said the evidence "demonstrates that ASIC's CFD intervention order has materially reduced retail investor harm" by addressing key drivers such as excessive leverage. The second proposition is that CFDs remain, in Kirkland's words, "highly risky products”. In 2023-24, 68% of retail clients who traded CFDs lost money, with net losses totalling $458 million, including $73 million in fees. For CFDs over options, the picture was worse still, with 85% of retail clients losing money.
The consultation also lands on the back of ASIC's whole-of-industry review conducted between October 2024 and December 2025, which in January 2026 secured nearly $40 million in refunds for more than 38,000 retail investors, together with the accompanying report, REP 828 Risky business. Several of the proposed amendments are a direct response to what that review uncovered.
A ten-year term is a notable step up from the five years granted in 2022. Reading between the lines, the longer period gives the market regulatory certainty and avoids running an extension process every few years, while leaving ASIC free to revoke the order earlier if circumstances change.
Crypto-settled CFDs come into scope
The headline change for the digital asset sector is a wider CFD definition. At present the order captures derivatives settled in cash or by set-off. ASIC proposes to add derivatives settled by the transfer of digital assets, provided the other elements of the definition are met, namely that the product derives its value from an underlying ‘thing’, has no fixed termination date and can be closed out by the holder. The underlying ‘thing’ could be a digital asset, another asset, a rate or an index.
ASIC's reasoning is that products with the same economics and the same risks should carry the same protections whatever the settlement mechanic, and that leaving the gap open invites regulatory arbitrage. As the regulator puts it, some "products expose retail investors to the same risks as CFDs but may fall outside the current PIO because of how they are settled." Perpetual-style contracts that settle in stablecoins or other tokens look like the obvious target. Some fixed-expiry crypto options and futures would stay outside the order, because they have a termination date.
ASIC also proposes to retire the term "cryptoasset" in favour of "digital asset", with a new definition inserted into the instrument. It is a small change, but one more sign that "digital asset" has become the settled vocabulary across Australian regulation.
Margin rules tightened
Two margin amendments respond directly to findings from the 2024–25 review.
The first deals with CFDs over options, which were not contemplated when the order was made in 2020. ASIC found issuers applying inconsistent margins to these products and client outcomes that were materially worse than for other CFDs. Under the proposal, where a client's maximum loss is limited to the premium, the minimum initial margin would equal the premium. Where losses can exceed the premium, including on short option exposure, the margin would follow the leverage ratio for the underlying asset, index or reference.
The second closes a netting practice. Some issuers had been reducing initial margin by netting a client's long and short positions across multiple CFDs. ASIC's intervention on that point alone saw 28 issuers refund more than $36 million to retail clients. The amended order would require initial margin to be calculated separately for each CFD, with no offset for opposing positions.
ASIC has also posed a broader question. It wants evidence on whether CFDs over options that can expose a retail client to losses above the premium, potentially without limit, should be available to retail clients at all. No decision has been made, but the request for data on user numbers, loss profiles and legitimate hedging uses reads like groundwork for a future restriction.
Inducements spelled out
The order already bans most inducements to open a CFD account or trade, with carve-outs for permitted discounts and for information, educational and research tools. ASIC proposes to write the conditions into the order. A permitted discount would need to be offered unconditionally (save for conditions reasonably necessary for a volume-based discount), on substantially the same terms to all retail and prospective retail clients, and be clearly and prominently displayed on the issuer's website and trading platform. Issuers would need to keep records of each discount offer for seven years. Educational and research tools would stay outside the ban only if they are available to all retail clients and are not used to induce particular trading conduct.
The long and short of it
The direction of travel is clear. ASIC is not reopening the debate about whether retail CFD trading should be restricted. Rather, it is treating the 2021 settings as a fixture, extending them for a decade and patching the places where the 2024–25 review found slippage.
The digital asset amendment appears to be a sensible part of that exercise. A perpetual contract that pays out in a stablecoin carries the same leverage risk as one that pays out in dollars, and there is no principled reason for the settlement leg to decide whether retail protections apply. The harder question is where perpetual-style crypto products end and fixed-expiry options and futures begin.
If ASIC’s proposed changes are implemented, platforms will need to audit their compliance with the new restrictions ensuring appropriate coverage for digital asset settled products, leverage restrictions and inducements. The proposed changes demonstrate a continued focus by ASIC on high risk offerings to retail clients which demonstrate poor consumer outcomes.
Written by Will Deeb and Steven Pettigrove
