Australia’s corporate regulator has secured the return of almost AUS$40m (US$26m) to more than 38,000 retail investors and prompted wide-ranging compliance changes across the CFD sector following an industry-wide review.
The Australian Securities and Investments Commission (ASIC) said the outcome followed its examination of 52 licensed CFD issuers between October 2024 and December 2025.
The review focused on how firms were distributing high-risk products and whether they were meeting their design and distribution obligations, complying with ASIC’s CFD product intervention order (PIO), and fulfilling regulatory reporting requirements.
CFDs allow investors to speculate on price movements in assets such as shares, currencies and commodities without owning the underlying asset.
ASIC found widespread shortcomings in issuers’ practices, as detailed in its report Risky business: Driving change in CFD issuers’ distribution practices (REP 828).
According to ASIC, more than half of the sector breached the PIO by offering so-called margin discounts to retail clients who held opposing long and short positions.
ASIC said these clients incurred higher funding costs while being unable to generate profits from the offsetting positions.
ASIC Commissioner Simone Constant said the review had resulted in significant remediation for investors.
“Each year, thousands of Australians lose money trading CFDs and through our review we have helped put $40m back in the pockets of more than 38,000 investors,” she said.
“These are complex, high-risk products, where most investors face losses, and even profitable trades can be entirely eroded by trading costs.”
ASIC said its direct engagement with issuers led to improvements across distribution and compliance practices.
“ASIC’s direct intervention has driven widespread improvements in CFD issuers’ target market determinations, client onboarding questionnaires, reporting compliance and monitoring of client trading outcomes,” Constant said.
As part of the review, 39 issuers amended their target market definitions, while 46 improved website disclosures, including one firm that updated almost 1,000 webpages.
A further 44 issuers revised client onboarding questionnaires, often making substantial changes, and 42 introduced new or enhanced processes to monitor client trading outcomes and behaviour.
ASIC also reported that 48 issuers implemented changes to comply with over-the-counter derivatives transaction reporting requirements after the regulator identified more than 70m erroneous reports.
Reportable situations lodged by issuers rose by 127% compared with the previous year, which ASIC said indicated greater awareness of compliance obligations.
The ASIC said further work was required, however,
“While the CFD industry has made important changes, there’s still work to do. Issuers must continually monitor, adapt, and strengthen their compliance practices, and we urge Australians to pay close attention to what they are being offered,” Constant noted.
She added that ASIC would “continue to act decisively, and where appropriate, will take further action to address misconduct and reduce consumer harm”.
Improving outcomes for consumers of financial products, including high-risk products such as CFDs, forms part of ASIC’s supervisory priorities for the 2025-26 period.
ASIC highlighted the ongoing risks associated with CFDs, noting that they are complex, leveraged, over-the-counter products that can expose retail investors to significant losses.
In the 2024 financial year, 68% of retail CFD investors lost money, with total losses exceeding AUS$458m, including AUD$73m in fees.
The review builds on earlier ASIC work conducted between 2022 and 2024 into CFD distribution practices.
In December, ASIC issued an interim stop order against Stratos Trading Pty Limited, trading as FXCM, over concerns relating to its target market determination.
The order was later lifted after amendments were made.
Separately, ASIC began Federal Court proceedings against eToro Aus Capital Limited in November 2023 in its first enforcement action under the design and distribution regime.
ASIC’s CFD product intervention order, introduced in 2021, is due to expire in May 2027 unless renewed.
The regulator said it plans to consult with industry this year on the future of the measure.
