ASIC proposes applying retail CFD safeguards to qualifying derivatives settled in digital assets. The move follows a year when 68% of retail CFD clients lost money across asset classes.
Under ASIC's proposed order, a contract's settlement method would help determine which retail protections apply. On Oct. 12, 2026, the Australian Securities and Investments Commission proposed expanding its contracts-for-difference rules to cover qualifying contracts settled through digital assets. Its consultation notice sets out the changes under consideration.
The proposal is not confined to derivatives tied to cryptocurrency. Qualifying contracts linked to shares or interest rates could also fall within scope. So could contracts tied to market indices or other assets, if they settle digitally. The current rules mainly cover cash-settled or net-settled instruments. A product would have to meet the criteria for a CFD; digital settlement alone would not bring it under the order. Some fixed-expiry crypto futures and options would remain outside the framework.
ASIC treats settlement method and underlying exposure as separate features. A digitally settled CFD would keep the leverage limit that applies to its underlying exposure and contract structure. Digital settlement would not automatically trigger the 2:1 cap for crypto CFDs.
Covered products would retain the existing safeguards. Those include leverage limits and mandatory position close-out when account funds fall. The rules also provide negative-balance protection and restrict trading incentives.
ASIC wants to replace the term "cryptoasset" in the order with "digital asset." The changes are still a proposal, not a final rule. Submissions are due by 5 p.m. AEDT on Nov. 9, 2026.
The proposal would extend the existing CFD intervention order for a further 10 years, until 2037, subject to ministerial approval. The current order expires on May 23, 2027. The extension would keep protections for cash- and net-settled CFDs while adding qualifying contracts settled in digital assets. ASIC's consultation notice invites responses from brokers and industry groups. Consumer organizations are also invited to comment on affected products, compliance costs and the possible need for a transition period.
ASIC's case draws on losses across the wider retail CFD market, not just crypto derivatives. In the 2023-24 financial year, 68% of retail CFD clients lost money. Their combined losses topped A$458 million, about $325 million, including A$73 million in fees.
CFDs let customers speculate on price movements without owning the underlying asset, often with leverage. Under current Australian rules, the cap depends on the exposure: crypto CFDs are limited to 2:1. The limit is 5:1 for shares and 30:1 for major currency pairs. ASIC's proposal would set the applicable limit according to the contract's underlying exposure and structure. A derivative would not face the crypto cap solely because it settles in a digital asset.
ASIC says the restrictions cut harm after taking effect in March 2021. During the first six months, aggregate quarterly retail CFD losses fell 91%, from A$372 million to A$33 million. Quarterly margin close-outs dropped 87% over the same period. Most retail CFD investors continued to lose money in later reviews.
ASIC also wants brokers to calculate minimum initial margin separately for each CFD. Its investigation found firms offsetting customers' opposing positions to lower collateral requirements. Under the proposed clarification, one contract could not reduce the minimum margin required for another. ASIC says its intervention over margin-netting practices led 28 issuers to refund more than A$36 million to retail customers.
Margin sets the collateral a customer must put up to open or maintain a leveraged position. If collateral falls below a broker's requirements, the broker can close positions and the customer can lose money quickly, even without losing the full value of the underlying exposure. That process differs from the exchange-to-exchange collateral constraints described in this hedging analysis. Both can leave traders exposed to forced liquidation.
ASIC is seeking evidence on CFDs linked to options. In 2023-24, 85% of retail clients in those products lost money. The regulator is examining contracts that can expose traders to losses beyond the options premium, including structures with potentially unlimited downside. It has not decided whether to impose tighter limits or prohibit those products.
Some fixed-expiry crypto futures and options would stay outside the proposed framework. ASIC wants brokers and platforms to identify which digitally settled products could be affected. It is also asking consumer groups to estimate compliance costs and say whether firms would need a transition period. Submissions close at 5 p.m. AEDT on Nov. 9.
The regulator also proposes that permitted promotional discounts be offered to retail customers on substantially equal terms. Firms would have to display them prominently on trading platforms and broker websites, then keep records of qualifying offers for seven years after they end. ASIC could revoke the restrictions earlier, and the consultation process may still change the amendments' scope. Educational and research tools could not be used to encourage trading activity prohibited by the order.
