23rd Oct 2020 10:39
(Alliance News) - CMC Markets PLC and Plus500 Ltd on Thursday said they support the Australian Securities & Investments Commission's proposed changes to cap the amount of money customers can lose when trading contract for differences.
IG Group Holdings PLC meanwhile, said the new measures do not change its financial targets.
The rules, which come into effect from March 29, include limits on the leverage that can be offered on CFDs; new protections that stop traders from losing more than what they have in their account; a restriction on the incentives offered to trade CFDs; and leverage limits on the opening of a position by a retail client.
The restrictions vary depending on the asset, with cryptocurrencies facing the highest limit at a two to one maximum leverage and major currency pairs offering the highest possible ratio of 30 to one.
CMC said there will be no impact in the current financial year as the new regulations only come into effect in 2021.
CMC said: "We have experienced similar regulatory changes across other markets in which we operate, such as those most recently implemented by European Securities & Markets Authority. It took some time for our retail clients to adapt their trading patterns under the new regulations, and as a result they are now trading with a longer tenure."
In the short term, CMC said it believes the impact on Australian CFD revenue is likely to be similar to that experienced in the ESMA region, but the impact on the overall Australian business will be lower given the significant contribution provided by the stockbroking business.
"We will harness this experience, supported by the flexibility of our technology, when implementing ASIC's regulatory measures. Our business is built around our clients and we are confident we can ensure that our clients continue to experience the highest levels of trading services and support with minimal disruption," CMC added.
CMC said Australia will continue to remain an integral part of its business and it is committed to continuing its growth in the region.
Plus500 said it has already included the effect of the changes in its forecasts for the 2021 financial year and will continue to assess its potential impact on future years.
Plus500 Chief Executive said: "We believe these regulatory changes will further enhance the CFD trading landscape by benefitting the compliant industry leaders, such as Plus500, and helping to protect our customers as they access our products. In the meantime, we continue to aim to grow and diversify our business by introducing new product lines, and developing our presence in new geographies."
IG Group said the new measures do not change its financial targets of revenue growth in core markets of between 3% and 5% over the medium term, and an incremental GBP100 million of revenue by the end of its 2022 financial year.
Plus500 shares were up 2.7% at 1,654.00 pence each in London on Friday morning. CMC shares were also up 1.3% at 341.73 pence each. IG was up 0.5% at 777.00 pence each.
By Greg Roxburgh; [email protected]
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