Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), proposed to extend its rules protecting retail traders who use contracts for difference (CFDs) for another 10 years.
According to an official release published on October 12, the proposal follows substantial trading losses and seeks to keep existing protections while bringing eligible digital asset-based contracts under the same rules.
Retail traders lose over $458 million in one year
ASIC reported that 68% of retail clients who traded CFDs lost money during the 2023–24 financial year. Their combined net losses exceeded $458 million, including $73 million in fees. The regulator also found that 85% of retail clients who traded CFDs over options recorded losses.
“We consider a 10-year extension would provide regulatory certainty and avoid frequent extension processes while preserving our ability to revoke the CFD PIO earlier, if appropriate. “ the regulator said.
How CFDs work and why traders face risks
CFDs allow traders to bet on whether an asset’s price will rise or fall without owning the asset itself. These contracts can track prices of shares, currencies, commodities and other financial products.
Traders can also use leverage, which allows them to open larger positions with a smaller deposit. However, leverage can also increase losses when the market moves against them.
ASIC wants to keep protections for another 10 years
ASIC introduced its CFD product intervention order on March 29, 2021, to reduce the risks retail traders face. The rules limit how much leverage providers can offer and include measures designed to prevent traders from losing money too quickly. The current order is due to expire on May 23, 2027, and any extension requires ministerial approval.
The regulator said the rules had reduced harm, but losses among retail traders remained high. It wants to extend the protections for another decade to provide businesses and clients with greater certainty and avoid repeated extension processes. ASIC would retain the ability to revoke the order earlier if necessary.
The existing rules include requirements for providers to close positions when a trader’s account funds fall below certain levels.
They also include negative balance protection, which prevents clients from losing more than the money held in their CFD accounts. Restrictions on incentives are intended to stop providers from using certain offers to attract retail traders.
Proposed changes target margin rules and trading incentives
Under the proposed changes, ASIC wants to clarify the rules on initial margin, especially for CFDs linked to options. Initial margin is the money required to open a trading position. Providers would have to apply this requirement separately to each CFD rather than reducing it by combining opposing positions.
The regulator also plans to clarify how restrictions on incentives apply to discounts and educational or research tools. Providers would need to keep records of permitted discount offers. ASIC also proposes to replace the term “cryptoasset” with “digital asset” throughout the order.
ASIC wants products with similar risks to receive the same protections, regardless of their settlement methods. Certain cryptocurrency futures and options with fixed expiration dates would remain outside the order.
Digital asset firms face licensing requirements
Alongside the proposed CFD changes, ASIC has continued enforcing licensing requirements for digital asset businesses.
On September 2, 2026, the regulator issued a final warning to firms relying on temporary relief, giving them until September 30 to take the required steps to obtain licences needed to continue operating under Australia’s financial services laws. That deadline has since passed.
ASIC warned that firms operating outside the conditions of the temporary arrangement could face civil or criminal penalties. Potential fines under applicable financial services laws can reach 10% of annual turnover. The regulator also had recorded more than 45 licence applications from businesses seeking approval for digital asset-related financial services since updating its guidance in October 2025.
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