On 23 October 2020, the Australian Securities and Investments Commission (ASIC) announced its Product Intervention Order from 29 March 2021, strengthening CFD trades by retail clients (wholesale clients are excluded). New Order also stated the new maximum leverage ratio and negative balance protection starting from 29 March 2021.
Please note, there will be no immediate changes to your HMA trading account.
We are here to help you navigate through these changes and continue to make the most of the opportunities in the world’s financial markets. ASIC’s new measures are like regulations applied in Europe, Singapore and Japan, and HMA remains focused and committed to empowering traders in Australia.
New Leverage Ratio Limits to Retail Clients
The below table details the new changes to leverage ratio limits. The increase in margin requirements resulting from ASIC’s rules will apply to all positions opened before 29 March 2021 and all new positions from 29 March 2021.
What else are changing for retail clients on 29 March 2021?
From 29 March 2021, ASIC’s product intervention order will also impose the following conditions:
How will the new margin policy affect your existing positions?
All the existing positions will be effected by the new leverage ratio limits and the new margin close-out protection after 27 March 2021. Please be aware about depositing according to your margin level.
After margins change on 27 March 2021, any new working/pending orders that you place will be subject to the new margins.
For the orders placed yet have not been filled before 29 March 2021, the margin required will be recalculated based on the new leverage ratio on 29 March 2021. It is your responsibility to check the new margin required and you will need to have sufficient funds in your account to cover it before the new leverage ratio applies.
All these new rules will only affect retail clients. Wholesale clients are excluded from the effects.
CRITERIA TO BECOME A WHOLESALE CLIENT
Section 761G(7) of the Corporations Act 2001 allows a client to be categorized as a Wholesale Client if the client provides a copy of a certificate from an Qualified Accountant that states that the client:
(i) Has net assets of at least AUD2.5 million; or
(ii) Has a gross income for each of the last 2 financial years of at least AUD250,000 a year
The certificate is valid for two years from the date of issue.
OTHER CRITERIA TO BECOME A WHOLESALE CLIENT BASED ON EXPERIENCE
Section 761GA of the Corporations Act allows a client to be categorized as a Wholesale Client, precisely ‘Sophisticated Investor’, on reasonable grounds that the client has previous necessary experience in using financial services and investing in financial products that allows the client to assess:
(i) The merits of the product or service; and
(ii) The value of the product or service; and
(iii) The risks associated with holding the product; and
(iv) The client’s own information needs; and
(v) The adequacy of the information given by the licensee and the product issuer.
In addition, the client will be provided a written statement setting out the reasons HMA considers that the client satisfied the above criteria, which the client must then acknowledge in writing.
If you have any further questions regarding the above announcement or need help with your account, you can get in touch with our team with the following contact methods. We look forward to providing you with the best service in the CFD industry.
Further information about ASIC’s Product Intervention Order, you can find a copy of the instrument via here.
Warm reminder: To avoid triggering the stop loss because of increase on margin requirement and lower leverage, we would recommend you to deposit sufficient funds into your trading account. For bank transfer, it usually takes 2-3 working days for the bank to transfer money into your trading account, while deposit through CRM-eWay at official website would normally be completed within 24 hours on business days.
1Major forex currency pairs are those that include any two of the following: AUD, USD, GBP, EUR, JPY, CAD, and CHF. Minor forex currency pair means any currency pair that is not a major forex currency pair.
2Major stock market indices include: NAS100, SPX500, US30, AUS200, JPN225, and GER30. A minor stock market index is any stock market index that is not a major stock market index.