ASIC has secured the return of nearly $40 million to more than 38,000 retail investors and driven substantial compliance improvement across Australia’s contracts for difference (CFD) sector following a whole of industry review.

CFDs allow investors to speculate on the price movements of assets such as shares, currencies or commodities, without owning them. Between October 2024 and December 2025, ASIC reviewed 52 licensed CFD issuers, requiring them to show how they were distributing their high-risk products.

In the report, Risky business: Driving change in CFD issuers’ distribution practices (REP 828), ASIC found widespread weaknesses in how CFD issuers complied with their design and distribution obligations (DDO), ASIC’s CFD product intervention order (PIO) and regulatory reporting requirements.

ASIC found that more than half the CFD sector had contravened the PIO by offering ‘margin discounts’ to retail clients who took on opposing long and short positions. These investors incurred higher funding costs but could not profit from their opposing CFD positions.

ASIC Commissioner Simone Constant said, ‘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.

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

Driving improvement in 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,’ Ms Constant said.

Key changes in CFD issuers’ distribution practices and compliance arrangements achieved in ASIC’s review include:

• 39 issuers made changes to their target markets
• 46 issuers improved website content, with one issuer amending almost 1,000 webpages
• 44 issuers improved their client onboarding questionnaires, with many issuers making substantial changes
• 42 issuers implemented new processes for ongoing monitoring of client trading outcomes and behaviours, or made significant improvements to existing processes
• 48 issuers implemented changes to comply with their over-the-counter (OTC) derivative transaction reporting requirements, after the review identified over 70 million erroneous reports
• Reportable situations lodged by issuers increased by 127% compared to the previous year, reflecting greater compliance awareness and responsiveness.

Ms Constant said, ‘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.

‘ASIC will continue to act decisively, and where appropriate, will take further action to address misconduct and reduce consumer harm.’

Driving better outcomes for consumers of financial products and services, including high-risk products, such as CFDs, is one of ASIC’s 2025-26 priorities for supervising market intermediaries.

Downloads

Report 828: Risky business: Driving change in CFD issuers’ distribution practices (REP 828)

Background

CFDs are complex, leveraged, over-the-counter (OTC) products that can expose retail investors to significant losses. They allow clients to speculate on the change in value of assets like shares, currencies and commodities. Leverage and associated financing fees can magnify investor losses. A small price change against a leveraged CFD position can have a big effect on trading returns or losses, even loss of the entire investment.

In the 2024 financial year alone, 68% of retail CFD investors lost money, totalling more than $458 million, including $73 million in fees.

ASIC’s Moneysmart website has further information about CFDs and forex trading.

The DDO, which commenced in October 2021, are intended to help consumers obtain appropriate financial products by requiring issuers and distributors to have a consumer-centric approach to the design and distribution of products.

ASIC’s review built on two earlier reviews undertaken between 2022 and 2024 of CFDs issuers’ distribution practices and reports setting out better practices for meeting their obligations and areas for improvement:

• Report 770 Design and distribution obligations: Retail OTC derivatives (REP 770)
• Report 795 Design and distribution obligations: Compliance with the reasonable steps obligations (REP 795).

During its review, on 5 December 2025, ASIC also issued an interim stop order against Stratos Trading Pty Limited (trading as FXCM) after it failed to respond to ASIC’s concerns regarding deficiencies in its target market determination (25-295MR). The stop order was revoked after FXCM amended its target market determination to address ASIC’s concerns.

On 3 November 2023, ASIC commenced proceedings in the Federal Court against online investment platform, eToro Aus Capital Limited (eToro), regarding its CFD product in the regulator’s first design and distribution action (23-204MR).

ASIC’s product intervention order (PIO)

The PIO on CFDs came into effect in 2021 and has been effective in reducing the risk of significant detriment to retail clients resulting from CFDs (22-082MR).

ASIC’s CFD product intervention order will expire on 23 May 2027, unless it is remade. In 2026, ASIC will engage with industry on our proposed way forward.