What is the background to the new rules?
In August 2019, ASIC announced several proposals which, if adopted, would impact retail clients who trade CFDs.
In October 2020, ASIC announced the final rules, which includes increases to the minimum margin requirements across all CFD markets.
These came into effect on 29 March 2021 for both clients contracting with Australia and New Zealand.
The rules don't apply to traders who are classified as 'wholesale' and have qualified for Pro, that is, traders who fulfil specified wealth and experience criteria, and elect to be treated as'wholesale'.These rules also apply to clients contracting with New Zealand.
You can find out more about how ASIC’s rules affect your CFD trading with us below.
How do ASIC's rules affect you?
Minimum margin rates for retail clients
The below tables detail the changes in margin rates. The increase in margin requirements apply to new positions from 27 March 2021. CFD positions opened prior to this date are not impacted.
|Asset class||Previous minimum margin rate||Minimum margin rate from 27 March 2021|
|Major forex pairs1||0.5% (200:1)||3.33% (30:1)|
|Major indices2||0.5% (200:1)||5% (20:1)|
|Minor forex pairs1 and gold||0.5% (200:1)||5% (20:1)|
|Minor indices2||0.5% (200:1)||10% (10:1)|
|Commodities (excluding gold)||1.5% (67:1)||10% (10:1)|
|Shares or other underlying assets||5% (20:1)||20% (5:1)|
|Cryptocurrency||10% (10:1)||50% (2:1)|
Examples showing new margin requirements for retail clients:
|Asset||Previous minimum margin rate*||Minimum margin rate from 27 March 2021 *|
|1 contract AUD/USD||A$500||A$3,333.33|
|1 contract Australia 200 cash (A$25)||A$810||A$8,100|
|1 contract oil - US crude ($10)||A$835||A$5,570|
|1 contract bitcoin ($1)||A$1,725||A$8,550|
|500 shares of BHP Group Limited||A$975||A$3,900|
*Approximate figure based on prices at 26/10/2020
What else is changing for retail clients?
|Margin close-out||If the total equity of your CFD account fall below 50% of the margin required for all your open CFD positions on your account, one or more of your open CFD positions will be closed out as soon as market conditions allow.|
|Negative balance protection||The total losses on your CFD positions are limited to the funds in your trading account.|
|Prohibition on certain benefits||Benefits including certain gifts and rewards are not permitted to be given or offered to induce a retail client to open or trade on a CFD account, or to deposit funds into a CFD account. Information services, education and research tools are exempted.|
|Binary products||Binary products, including digital 100s and sprint markets, will no longer be available to retail clients from 3 May 2021.|
A global leader in online trading
IG firmly supports the implementation of robust and proportionate measures to improve client outcomes across the industry.
We’re here to help you navigate through these changes and continue enabling you to make the most of opportunities in the world’s financial markets. ASIC’s measures are similar to regulations applied in Europe, Singapore and Japan, and IG remains focused and committed to empowering traders in Australia and New Zealand.
We will continue to operate to the highest regulatory standards and are well placed to adapt and thrive in this regulatory environment.
Pro clients will not be affected by these changes
ASIC’s changes do not apply to wholesale clients.
If you think you may be eligible for Pro and would like to apply to be categorised as a wholesale client, you can elect to do so in My IG or the IG Trading app. You’ll need to answer several questions, so that we can assess whether you fulfil the eligibility criteria. As a Pro client, you will not be entitled to certain protections normally afforded to retail clients. For example, you will not receive a Product Disclosure Statement (PDS), and AFCA (our external dispute resolution scheme) will have discretion to exclude complaints from wholesale clients.
Log in to My IG or the app and follow the prompt, or go to ‘settings’>‘client and account status’ on desktop, or the 'accounts' area in-app.
5. Will my existing positions be impacted by the leverage rules?
6. How does the change impact me when using guaranteed stops?
7. How does the change impact me when buying options?
8. If existing positions won’t be affected, what will happen to my futures positions once they are rolled?
9. Can I move my account to another IG entity to avoid this?
10. Will the leverage restrictions apply to limited risk positions?
11. Will there be any margin discount for adding stops?
12. Will I get a margin discount for offsetting positions (long and short)?
13. What will happen to my collateral?
14. Will I still get a rebate?
15. What does this mean for New Zealand clients?
16. Can I upgrade to Pro if I only trade binaries?
As binaries are offered as part of our CFD account you would need to have the required CFD experience to qualify for Pro/Wholesale. Binary trades do not count towards this required experience.
1 Major forex pairs are those that include two of the following: AUD, USD, GBP, EUR, JPY, CAD, CHF. Minor forex pairs are all pairs not included as a major pair.
2 Major indices include: ASX 200, CAC, DAX, DOW, EuroStoxx, FTSE 100, Nasdaq 100, Nikkei, S&P 500. Minor indices are all indices not included as a major.