Sydney-based multi-asset prime broker Invast Global has implemented a new account structure in response to the new rules for offering CFDs introduced by the Australian Securities and Investments Commission (ASIC).

The new account structure incorporates “Retail”, “Sophisticated” and “Wholesale” account classifications.

To commence trading, a client must complete the relevant investor assessment during onboarding.

For the Account types above, all of your named Directors, Trustees or account holders need to be approved as Sophisticated or Wholesale Investors in order for the account to be classified as a Sophisticated or Wholesale account.

A client cannot hold more than one account under different account classifications at the same time. A client can only be classified as one as a single investor type at any point in time.

Traders can opt-out from being classified as Sophisticated clients and return to retail client status at any time.

In summary, from 29 March 2021, ASIC’s product intervention order:

1. Restricts CFD leverage offered to retail clients to a maximum ratio of:

  • 30:1 for CFDs referencing an exchange rate for a major currency pair.
  • 20:1 for CFDs referencing an exchange rate for a minor currency pair, gold or a major stock market index.
  • 10:1 for CFDs referencing a commodity (other than gold) or a minor stock market index.
  • 2:1 for CFDs referencing crypto-assets.
  • 5:1 for CFDs referencing shares or other assets.

2. Standardises CFD issuers’ margin close-out arrangements such that all open positions will be reduced or automatically closed out if a client’s net equity falls below 50% of the initial margin requirements. Invast is obliged to keep closing out until net equity is equal to or greater than the above aggregate close out protection amount.

3. Protects against negative account balances by limiting a retail client’s CFD losses to the funds in their CFD trading account, and;

4. Prohibits giving or offering certain inducements to retail clients (for example, offering trading credits and rebates).

Traders can find out more about the new account structure at Invast Global here.