Released 12 October 2026. Comments close 9 November 2026.
Contracts for difference (CFDs) are complex, high-risk products. The CFD PIO limits the leverage available to retail clients and provides protections that reduce the scale and speed of potential losses.
Despite the reduction in harm achieved by the CFD PIO, retail client losses remain substantial. In the 2023–24 financial year, 68% of retail clients who traded CFDs made a net loss. Aggregate net retail client losses exceeded $458 million, including $73 million in fees. Additionally, 85% of retail clients trading CFDs over options made a net loss.
We propose to continue the CFD PIO protections for a further 10 years. We also propose making targeted amendments to address industry practices and product developments identified through our regulatory work since the CFD PIO first came into effect.
We have assessed that the CFD PIO continues to operate effectively and remains a necessary part of the regulatory framework.
We consider a 10-year extension would provide regulatory certainty and avoid frequent extension processes while preserving our ability to revoke the CFD PIO earlier, if appropriate.
Most of the proposed amendments clarify or refine the existing framework. We propose to:
We also propose to modernise the definition of a CFD to ensure products with the same economic characteristics and risks as CFDs are treated consistently, whether they are settled in cash, by set-off or through the transfer of digital assets.
Providing feedback
We invite feedback on our proposal, including:
- the proposed 10-year extension of the CFD PIO
- the proposed amendments, including responses to the questions under each proposal: see Proposed amendments
- the likely regulatory, competition and compliance impacts, such as:
- who would be directly affected and, where possible, how many, and
- any one-off or recurring costs or savings
- any unintended consequences
- whether any transitional period is required for the proposed amendments and, if so, why, and
- any other material impacts, costs or benefits we should consider.
We are also seeking evidence to inform our consideration of whether CFDs over options that expose retail clients to losses greater than the premium should continue to be available to retail clients. We have not decided whether these products should be prohibited or otherwise restricted for retail clients: see Separate issue for feedback.
You should send your submission to Market.Intermediaries@asic.gov.au by 5 pm AEDT on Monday 9 November 2026.
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Background
A CFD is a leveraged over-the-counter derivative that allows a client to speculate on, or manage the risk of, changes in an asset, rate, index or other reference value.
We made the CFD PIO after finding that CFDs had resulted in, and were likely to result in, significant detriment to retail clients.
The CFD PIO provides four key protections:
- leverage limits
- standardised margin close-out arrangements
- negative balance protection, and
- a prohibition on certain inducements.
Data collected for the extension of the CFD PIO in 2022 showed substantial reductions in retail client harm during the first six months of the CFD PIO’s operation, including:
- a 91% reduction in aggregate net client losses per quarter
- an 87% reduction in margin close-outs per quarter, and
- an 88% reduction in negative balance occurrences.
Our 2024–25 CFD sector-wide review collected updated data on retail client participation and outcomes. The data showed that the average number of retail clients trading per quarter in the 2023–24 financial year was approximately 76% lower than in the 12 months before the CFD PIO commenced. However, as outlined above, most retail clients continue to lose money trading CFDs and aggregate losses remain substantial. This demonstrates why the CFD PIO protections remain necessary.
Proposed amendments
CFDs over options
A CFD over an option is a CFD whose value is determined by reference to an option contract. We propose to clarify how the initial margin requirements apply to a CFD over an option.
Where the retail client’s maximum loss exposure is limited to the premium paid for the CFD, the minimum initial margin would be the amount of that premium.
Where the retail client’s maximum loss exposure is not limited to the premium, the minimum initial margin would be determined by applying the margin requirement for the asset, index, or other reference on which the option is based. This includes CFDs that provide short exposure to an option and may expose retail clients to losses greater than the premium received.
CFDs over options were not contemplated when the CFD PIO was introduced. Our 2024–25 sector-wide review found that issuers apply different margin requirements to these products and that retail client outcomes for CFDs over options are materially worse than for CFDs generally.
Questions
- Does the proposed amendment provide an appropriate and workable basis for calculating the initial margin requirement for CFDs over options? If not, what alternative approach should we consider?
- What operational or compliance impacts would arise from implementing the proposal?
Separate issue for feedback
The proposed amendment described above concerns the initial margin requirements for CFDs over options.
Separately, we are seeking evidence to inform our consideration of whether CFDs over options that expose retail clients to losses greater than the premium should continue to be available to retail clients. Unlike CFDs over options where the client’s maximum loss is limited to the premium, CFDs over options in this category may expose retail clients to losses substantially greater than the premium and, depending on their structure, potentially unlimited losses.
We have not decided on whether these CFDs should be prohibited or otherwise restricted for retail clients. Please provide reasons and supporting evidence, including information about:
- the number of retail clients using these products
- consumer outcomes
- the nature and extent of retail client losses
- the types and structures of products currently offered
- any legitimate investment or risk-management uses, and
- the likely impact of any restriction.
Margin requirements for each CFD
We propose to clarify that the minimum initial margin requirement must be separately applied to each CFD issued to a retail client.
Under the proposed amendment, long and short exposures under multiple CFDs held by a retail client could not be netted when calculating the initial margin required for a CFD.
We identified margin netting practices during our 2024–25 sector-wide review. Following our intervention, 28 issuers refunded more than $36 million to affected retail clients.
Questions
- Is the proposed amendment clear that the initial margin needs to be calculated separately for each CFD?
Digital asset settlement
The current CFD PIO generally covers derivatives settled in cash or by set-off (i.e. netted out) between parties.
We propose to modernise the definition of a CFD to also include derivatives settled through the transfer of digital assets. A derivative would still need to satisfy the other elements of the CFD definition, including that it:
- derives its value from changes in the amount or value of an underlying
- does not terminate on a fixed date, or is typically terminated before a fixed date
- can be terminated by the holder, and
- is settled in cash, by set-off between the parties or through the transfer of digital assets.
The proposed amendment may bring certain derivatives, within the CFD PIO where they have the same economic characteristics and risks as CFDs but are currently outside the definition because of how they are settled. The underlying for these derivatives may be a digital asset, another asset, a rate or an index.
The proposed amendment is intended to ensure that equivalent products are subject to consistent consumer protections, regardless of their settlement method, and to reduce the risk of regulatory arbitrage.
Some fixed-expiry crypto derivatives, including certain crypto options and futures, would remain outside the CFD PIO.
Questions
- Does the proposed amendment appropriately identify derivatives that have the defining characteristics of a CFD but are settled through the transfer of digital assets? In responding, please identify the products and product features you consider would, or should, be captured.
- What products, issuers and clients would be affected, and what compliance costs or other impacts would arise?
- Do you agree that products with the same economic characteristics and risks as CFDs should be subject to equivalent consumer protections, whether they are settled in cash, by set-off or through the transfer of digital assets? Please provide reasons and supporting evidence.
Inducements, discounts and educational tools
We propose to clarify the existing exclusion for discounts in costs or fees.
A permitted discount would need to be:
- offered unconditionally, except for conditions reasonably necessary to give effect to a volume-based discount
- offered to all retail clients and prospective retail clients on substantially the same terms and conditions, and
- clearly and prominently displayed on the CFD issuer’s website and trading platform.
A person offering a permitted discount would also need to retain records for seven years. These records would need to document the terms, conditions, duration and manner of the offer and demonstrate compliance with the conditions applying to the discount.
The proposed changes are intended to clarify the requirements for industry and improve our ability to assess compliance with the inducements prohibition.
We also propose to clarify that information services and educational or research tools are only excluded from the inducements prohibition where they are provided or made accessible to all retail clients and are not used as inducements to engage in specified CFD-related conduct.
Questions
- Are the proposed conditions for permitted discounts clear and workable?
- What systems or process changes would issuers need to make to comply with the disclosure and record-keeping requirements?
Updated digital asset terminology
We propose to replace the term ‘cryptoasset’ with ‘digital asset’ and insert a definition of ‘digital asset’.
This change is intended to align the CFD PIO with our current terminology and drafting approach.
Proposed amendments: Summary of questions
Related information
