# Australian Brokers may be forced to reduce leverage on FX & CFDs



## T0BY (24 August 2019)

ASIC is proposing 20:1 leverage restrictions on spot FX, to come in line with ESMA, Japan, South Korea, Hong Kong, ect..
Little annoying, as not having to keep so much capital tied up with the broker is something I liked.. but I guess it was just a matter of time.


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## T0BY (24 August 2019)

https://www.financemagnates.com/for...sic-overshot-esmas-cfds-product-intervention/


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## Triple B (26 August 2019)

T0BY said:


> ASIC is proposing 20:1 leverage restrictions on spot FX, to come in line with ESMA, Japan, South Korea, Hong Kong, ect..
> Little annoying, as not having to keep so much capital tied up with the broker is something I liked.. but I guess it was just a matter of time.




Yes not just fx. banning binary options(who trades them?) 20:1 on Gold. 5 :1  stocks 15:1 Indices and a few other things like ,no free incentives .
Probably the responsible thing to do as leverage could cause a big crisis if let  go too high. 
But ! it does as you say , introduce more broker risk for the trader.
Rough math tells me that with a 100:1 leverage fx acc. with 6 x 2% risk trades I would need for a 100 pip average stop on the daily charts.about 10% initial margin(based on AUD /USD 100 pips $1340 initial margin per 2% risk)then 12% for trade losses then maybe a few % extra for unknown event slippage etc.
So Around 25% of trading account in the brokers hands.
Now with 20:1x 6 x2% Risk trades 
40% initial margin( 1x 2% risk trade is now $6700 initial Margin) then 12% for trade losses a few % xtra , 
About 55% of your account in brokers hands.


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## Triple B (26 August 2019)

https://www.asic.gov.au/media/5241542/cp322-published-22-august-2019.pdf


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## T0BY (27 August 2019)

IG are offering clients the chance to upgrade from retail to wholesale client status, inorder to avoid restrictions. To qualify you need 2.5 mil net assets, or have made quarter mil p.a last 2 consecutive years.
Australian brokers with overseas entities (eg. IC Seychelles) are no longer letting Australian citizens move their accounts offshore.


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## T0BY (27 August 2019)

When ESMA imposed leverage restrictions for retail traders, Australian brokers enjoyed an influx of European clients opening accounts with Australian firms.
Now they will be leaving in thier droves in seek of less regulated pastures. No doubt they'll lose some locals as well.
Australian brokers will suffer, retail clients will suffer. The purpose of these changers isn't going to save traders from themselves. It's just international regulatory P.R.
The only real winners will be less regulated offshore brokers as far as I can see.


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## T0BY (17 September 2019)

cfd  crackdown will  cost 400m tax revenue 

https://www.afr.com/companies/finan...wn-will-cost-400m-tax-revenue-20190913-p52qw9


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## john5 (20 September 2019)

i cant read the article toby as its behind a paywall, but in any case, bloody asic, sitting on their hands re things that urgently need to be addressed, especially in the banking sector, while sticking their beak into things which help people to manage their risk and make some money ...


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## Philo Beddoe (17 January 2020)

Does anyone know when this legislation is goin to come into effect? IG told me early january but I have not heard anything. But i am still reluctant to open any new positions until i have clarity.


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## John Rolfe (29 September 2020)

CFD class action being explored by Sydney law firm, Telegraph reports today... 





						No Cookies | Daily Telegraph
					

No Cookies




					www.dailytelegraph.com.au


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## Joules MM1 (29 September 2020)

John Rolfe said:


> CFD class action being explored by Sydney law firm, Telegraph reports today...
> 
> 
> 
> ...



keep us in the loop ....specifically "..by law firm" ....against whom ?

John Rolfe replied to a thread you are watching at Aussie Stock Forums.

*Trading the XJO with CFDs*


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## Joe Blow (29 September 2020)

Joules MM1 said:


> John Rolfe replied to a thread you are watching at Aussie Stock Forums.




I moved John's post out of the CFD trading thread and into a CFD thread with more of a regulatory focus.


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## cynic (23 October 2020)

Philo Beddoe said:


> Does anyone know when this legislation is goin to come into effect? IG told me early january but I have not heard anything. But i am still reluctant to open any new positions until i have clarity.



According to the following ASIC media release, the changes will come into effect 29 March 2021:

https://asic.gov.au/about-asic/news...tervention-order-strengthens-cfd-protections/


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