ASIC Secures Return of Funds After Uncovering Widespread CFD Rule Breaches

Australia's securities regulator, the Australian Securities and Investments Commission (ASIC), has secured the return of approximately USD 27 million to more than 38,000 retail traders following a major compliance review of the local forex and CFD industry.

ASIC said the review found that more than half of Australian forex and CFD brokers had breached product design and distribution obligations (DDO) by offering so-called "margin discounts." According to the regulator, these incentives effectively circumvented leverage limits imposed on retail clients, constituting a direct violation of regulatory rules.

The enforcement action followed concerning industry data. In 2024, 68% of retail forex and CFD traders in Australia lost money, with combined losses exceeding USD 308 million. Around USD 49 million of that amount consisted of broker commissions alone.

ASIC Commissioner Simone Constant said the review had helped return approximately AUD 40 million to affected investors. She noted that CFDs are complex, high-risk products and that trading costs can erase profits even when trades appear successful.

While ASIC did not name specific firms, brokers including FXCM, Saxo, and Mitrade had previously received temporary stop orders during the review process. These firms later addressed the identified issues and resumed operations.

ASIC said the intervention led to measurable changes across the industry. A total of 39 brokers revised their target market definitions, 46 improved website disclosures, and 44 updated client onboarding questionnaires. In addition, 42 firms introduced new trade monitoring processes, while 48 made changes to their reporting practices.

Despite the progress, ASIC said compliance efforts must continue. The regulator urged firms to maintain strong oversight and encouraged retail investors to remain cautious when engaging with leveraged trading products.