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ASIC regulations FAQs

What’s changing?

ASIC is introducing new rules on how retail investors can trade CFDs from the 29 March 2021. The key changes are:

  • Margin requirements (leverage limits);
  • Margin close-out;
  • Negative balance protection;
  • Promotional offers – providers can no longer offer discounts, rebates, gifts or rewards to potential or existing clients to open a CFD account or trade CFDs.

For more information on the latest ASIC regulatory changes click here.

When do the ASIC regulatory changes come into effect?

The changes come into effect from 29 March 2021.

For more information on the latest ASIC regulatory changes click here 

What will happen to my trades prior to 29 March 2021?

Positions opened prior to 29 March 2021 will not be affected. Any new positions opened from 29 March 2021 will be impacted by the new leverage limits.

For more information on the ASIC regulatory changes click here.

Why are these changes happening?

The nature and complexity of CFDs means they are not for everyone. ASIC, Australia’s corporate regulator has moved to limit some of the risks traders can experience when trading CFDs.

For more information on the ASIC regulatory changes click here.

Will these changes impact CMC Markets clients only?

No. The ASIC regulatory changes have been introduced for all providers onboarding clients in Australia.

For more information on the changes please click here

What is leverage?

Leverage is a way to make larger trades than your capital would otherwise allow. It allows you to use a deposit, known as a margin, to increase the size of a position you take on an asset.

A leverage ratio is your total exposure compared to your margin. For example, investing $100 using a 5% margin would give you the same exposure as a $2000 non-leveraged investment. This is a leverage ratio of 20:1.

What are new margin requirements?

Leverage ratio limits will be changing across all products from 29 March 2021.

This means that increased margins will apply to new positions from 29 March 2021.

For more information regarding the new leverage ratio limits click here.

Why are there different limits for different asset classes?

The different limits reflect the different rates of volatility and liquidity common to each asset class, helping protect your position from rapid price movements.

For more information on the new leverage ratio limits click here.

What is margin close-out protection?

Margin close-out protection means that if the total funds in your CFD account fall below 50% of the margin required for all your open CFD positions, we will automatically begin closing your open CFD positions. This will happen as soon as market conditions allow.

We’ll keep doing this until your net equity is back above 70% of the margin required for all your remaining open positions.

Will margin close-out protections change for CMC Markets clients?

No. CMC Markets is already using margin close-out protection. This means there will be no changes to current margin close-out protection for CMC Markets retail clients from 29 March 2021.

What order will my positions be closed in?

The order of margin-close out protection will be dependent on the preferences you have set up on your trading account.

You can review or update your preferences by: XX

How can I avoid a margin close-out?

There are a few ways to avoid a margin close-out.
You can:

  • Close out some of your trades.
  • Reduce the size of your position, freeing up some equity in your account.
  • Add additional funds to your account to cover any potential shortfall in margin.
What is negative balance protection?

Think of negative balance protection like a safety net that catches you if the market turns against your position too quickly for the margin close-out orders to slow your fall.

All trading carries risk, but following recent ASIC regulatory changes from 29 March 2021, this new protection means you won’t end up owing additional money to your provider if the market turns against you. You can only lose what you has been initially deposited in your account.

For more information on the ASIC regulatory changes click here.

What is a CMC Pro account?

CMC Pro is an account for CFD traders who are looking for a provider that recognises their commitment to trading. Opening a CMC Pro account gives you access to a number of exclusive benefits, including higher leverage and cash rebates.

Check your eligibility for a CMC Pro account here.

 

Does it cost money to become a CMC Pro client?

There are no costs to become a CMC Pro client, but you will need to demonstrate you meet the “wholesale client” eligibility criteria under the Corporations Act.

You can check your eligibility for a CMC Pro account here.

 

Am I eligible for a CMC Pro account?

CMC Markets Pro account holders are classified as wholesale clients. To be eligible for a CMC Pro account you must meet the “wholesale client” eligibility criteria under the Corporations Act.

To learn more about the eligibility criteria click here.

 

What is the key difference between a standard CFD account and CMC Pro account?

With all CMC Markets accounts you get the same access to our award-winning trading platform, wide range of instruments and advanced trading tools. The CMC Pro account will give you exclusive access to monthly cash rebates and priority perks, plus a dedicated account manager.

To learn more about CMC Pro click here.

What if I am not eligible for a CMC Pro account?

If you’re not eligible for CMC Pro, you can still trade thousands of financial markets on our award-winning platform using a standard CMC Markets account. Learn more

Why do I need to open an account before I can upgrade to CMC Pro?

Only clients that are new to CMC Markets will need to first open a standard CFD trading account before applying for a CMC Pro account. If you already have a CFD account with us, you can apply for a CMC Pro account - if you think you may be eligible.

You can learn more about CMC Pro and our eligibility requirements here.

Do CMC Pro clients get the same protections as retail clients?

As a CMC Pro client, you are not entitled to certain protections afforded to retail clients. This means CMC Markets is no longer required by law to provide you with the same rights and treatment as a retail client.

This includes:

  • We are not required to provide you with a PDS, FSG or any other document CMC is ordinarily required to give a retail client;
  • Derivatives retail client protections under s981D(2) of the Corporations Act are not available;
  • ​We are not required to provide you with access to our internal dispute resolution scheme. You may also be excluded from access to the external dispute resolution scheme through the Australian Financial Complaints Authority (AFCA), at AFCA’s discretion.

Despite this, CMC Markets will continue to provide all relevant disclosure documents as required to be provided under the Corporations Act. CMC Markets will also hold wholesale client funds in a segregated client money trust account which meets and exceeds the requirements of the Australian Client Money Rules and ASIC Regulatory Guide 212.

To find out more about CMC Pro click here.

How will I know when I’ve been switched from a standard account to CMC Pro.

We’ll contact you by email to notify you when your application to become a CMC Pro client has been approved and you have switched over to a CMC Pro account. Your login details, account number and platform settings will remain the same.

Remember, while you are waiting for your CMC Pro account, you can still trade on your standard account.

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