The Australian Securities & Investments Commission published a report on contracts for difference (CFD) issuers following a whole-of-industry review, securing the return of nearly AUD 40 million to more than 38,000 retail investors and prompting changes to distribution and compliance practices. Its review of 52 licensed CFD issuers identified widespread weaknesses in compliance with design and distribution obligations (DDO), the CFD product intervention order (PIO) and regulatory reporting requirements. More than half the sector was found to have contravened the PIO by offering margin discounts to retail clients who took on opposing long and short positions, which increased funding costs without allowing clients to profit from the opposing positions. The review drove changes including updates to target market determinations (39 issuers), improvements to website content (46), strengthened client onboarding questionnaires (44) and new or enhanced processes for ongoing monitoring of client trading outcomes and behaviours (42). It also identified over 70 million erroneous over-the-counter (OTC) derivatives transaction reports, leading 48 issuers to implement reporting changes, while reportable situations lodged by issuers increased by 127% compared with the previous year. ASIC noted the CFD PIO expires on 23 May 2027 unless remade and said it will engage with industry in 2026 on its proposed way forward. The report also references supervisory and enforcement actions during the review period, including a 5 December 2025 interim stop order against Stratos Trading Pty Limited (FXCM) that was later revoked after amendments to its target market determination, and Federal Court proceedings commenced against eToro Aus Capital Limited in November 2023 relating to its CFD product.

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