Aussie CFD Traders Got About $27 Million in Refunds After Regulatory Intervention

The Australian financial market regulator has secured about AU$40 million (around US$27 million) in refunds for more than 38,000 retail contracts for difference (CFD) investors following a sector-wide review. Announced today (Tuesday), the Australian Securities and Investments Commission (ASIC) found that more than half of the CFD brokers operating in the country were offering “margin discounts” to retail clients.

Industry-Wide Lapses in Following Mandatory Rules

According to the Aussie regulator, there were “widespread weaknesses” in CFD brokers’ design and distribution obligations (DDO), the regulator’s CFD product intervention order (PIO), and regulatory reporting requirements.

The “margin discounts” offered to retail traders also breached the regulator’s PIO rules for CFD products.

The regulator said that 68 per cent of retail CFD investors in Australia lost money in 2024, totalling more than AU$458 million (US$308.3 million), including AU$73 million (US$49.1 million) in fees.

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The action followed ASIC’s review of 52 licensed CFD issuers. However, the regulator did not name any CFD brokers that breached local regulations or issued the refunds.

During the review, ASIC issued a temporary stop order against the Aussie FXCM operator last month after the company failed to respond to concerns about deficiencies in its target market determination. The regulator later revoked the stop order after FXCM addressed the concerns and amended its target market determinations.

The Aussie regulator also issued similar orders against several brokers, including Saxo and Mitrade. These companies corrected the issues and continued offering their services.

“Each year, thousands of Australians lose money trading CFDs, and through our review, we have helped put $40 million back in the pockets of more than 38,000 investors,” said ASIC Commissioner Simone Constant.

“These are complex, high-risk products where most investors face losses, and even profitable trades can be fully eroded by trading costs.”

The High-Risk Industry Is Improving, but Lapses Remain

She added that direct regulatory intervention improved the CFD industry’s target market determinations, client onboarding questionnaires, reporting compliance, and monitoring of client trading outcomes.

The regulator said that 39 CFD issuers made changes to their target markets, 46 improved website content, and 44 improved client onboarding questionnaires. In addition, 42 Aussie CFD issuers introduced new processes for monitoring client trading, and 48 made changes to meet OTC derivative transaction reporting requirements.

ASIC’s action also led to a 127 per cent increase in the number of reported situations lodged.

“While the CFD industry has made important changes, there is still work to do,” Constant added. “Issuers must continually monitor, adapt, and strengthen their compliance practices, and we urge Australians to pay close attention to what they are being offered.”