City Index updates Australian clients on CFD trading conditions
Retail Forex and CFD broker City Index, a part of financial services provider StoneX, has provided important information to its Australian retail clients regarding changes to CFD trading conditions. These upcoming changes reflect a recent announcement by the Australian Securities and Investments Commission (ASIC) indicating the regulator will restrict the marketing, distribution and sale of leveraged trading products to retail clients.
The changes are set to take effect on March 29, 2021.
Only retail clients will be affected by the new measures. Retail clients also have the option to apply for professional client status, which would allow them to maintain their current margin rates.
The maximum leverage limits on new positions will be set to:
- 30:1 for CFDs over major currency pairs (3.33% margin);
- 20:1 for CFDs over minor currency pairs, gold or a major stock market index (5% margin);
- 10:1 for CFDs over commodities (excluding gold) or a minor stock market index (10% margin);
- 5:1 for CFDs over shares or other underlying assets (20% margin); and
- 2:1 for CFDs over crypto assets (50% margin).
If you are an existing retail client of City Index Australia, any open position held over market close on Friday 26th March will have the new margin rates applied over the weekend. You will need to make sure your account is sufficiently funded before market open on Monday 29th March to support any increase.
Professional clients are not impacted by these changes, so existing positions will not be subject to margin changes.
There will be also be new protections for retail clients. These include:
- Standardised Margin Close Out Rule: If your margin level reaches the standardised margin close out (MCO) level, for example 50% (i.e. 50% of minimum required margin to cover your open positions), we are required to close any or all of your open positions as quickly as possible; this is to protect you from possibly incurring further losses.
- Negative Balance Protection: Your account will have negative balance protection applied, meaning that your losses cannot exceed your deposits.
Additional changes for retail clients include a prohibition on firms offering monetary and non-monetary benefits (excluding monthly rebates and research and information tools).
City Index notes that it is supportive of protecting retail clients and has successfully implemented similar measures in other jurisdictions.