These regulations are similar to orders that have already been implemented in other regions around the world including the UK, Singapore, and Japan.
A key focus of the change includes restrictions on leverage trading, which affects the amount of margin retail clients are required to deposit in order to trade CFDs.
The new ASIC regulations will restrict CFD leverage to maximum ratios of the following:
- 30:1 leverage on major currency pairs
- 20:1 leverage on minor currency pairs, gold or major stock market indices
- 10:1 leverage on commodities (other than gold) or minor stock market indices
- 5:1 leverage on shares or other assets
- 2:1 leverage on cryptocurrency assets
The new regulations will also:
- Standardise margin close-out ratios before all or most of a client’s investment is lost
- Provide negative balance protection by limiting losses to the funds within an account
- Prohibit retail clients being offered incentives, such as credits, rebates or free gifts
Hedge Positions to offset margin:
Under the new rules, if you place a long and place a short, the total margin for both positions will be required - for each of the long and short positions. This rule applies only to MT5 and ThinkTrader, as hedging is disabled for MT4 accounts.
What does this mean for retail clients?
These new changes are designed to strengthen protections for retail clients. ThinkMarkets supports ASIC’s ongoing commitment to increase industry standards and ultimately improve outcomes for retail traders in Australia.
The below table shows the maximum leverage that will be available to retail clients per market once the regulations go into effect.
What happens to my open trades?
If you are trading as a retail client with ThinkMarkets and have existing open trades on MT4, your current leverage will remain on those positions (only) until they are closed.
If you have existing open trades on MT5 or ThinkTrader, any open positions will see the margin requirement revert to the new maximum leverage requirements prior to market open on March 29, 2021. Please ensure you have enough funds in your account to cover any additional margin requirement.
Any new trades, regardless of your trading platform, opened from March 29, 2021 onwards will be subject to the new leverage requirements.
If you hold a ThinkMarkets Pro account your account and positions will be unaffected by ASIC leverage restrictions which only apply to retail clients.
What are the benefits of a Pro account?
If you qualify for a ThinkMarkets Pro account, some of the key benefits include:
- Access to higher leverage
- Trading rebates
- Priority customer support
- Invitations to premium events
How do I qualify for a Pro account?
Please visit our ThinkMarkets Pro account page to see if you meet the qualifying criteria, alternatively, you can contact our 24/7 Customer Support team via live chat, email or phone to discuss any further questions you may have.
Thank you,
The ThinkMarkets team
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.