Australia’s corporate regulator has secured the return of more than $39 million to retail investors and driven widespread compliance changes across the ‘Contracts for Difference’ (CFD) industry following a sector-wide review of issuers’ practices.
The Australian Securities and Investments Commission (ASIC) said the refunds were paid to more than 38,000 investors after it identified systemic weaknesses in how high-risk CFD products were designed, marketed and distributed to consumers.
CFDs are complex, leveraged financial products that allow investors to speculate on price movements in underlying assets such as shares, currencies and commodities without actually owning them. ASIC said leverage and associated financing fees can significantly magnify losses, with a small adverse price movement capable of wiping out an investor’s entire position.
For example, if you buy a CFD on one share in Apple and pay one-fifth of the Apple stock price for that CFD, you can buy five Apple CFDs for the price of one Apple share. If the price of Apple then rises by $1, you could make $5. But if it falls by $1, you could lose $5 dollars.
According to ASIC’s report, 133,674 retail clients lost money trading CFDs in the 2023–24 financial year alone, with net losses exceeding $458 million, including $73 million in fees. ASIC said only 32% of retail clients were profitable after fees.
The findings stem from a data-driven review conducted between October 2024 and December 2025, during which ASIC examined the distribution practices and compliance measures of 52 CFD issuers. The review built on earlier regulatory work dating back to 2022 and assessed compliance with design and distribution obligations that came into force in October 2021.
ASIC found widespread deficiencies across the sector, including poorly defined target markets, misleading or unbalanced marketing, inadequate screening of clients and little ongoing monitoring of trading outcomes. The regulator also uncovered significant failures in over-the-counter derivative transaction reporting, identifying more than 70 million erroneous reports and instances where issuers failed to identify or report legal breaches.
As a result of ASIC’s intervention, 39 CFD issuers revised their target market determinations, 46 improved website content, 44 overhauled client onboarding questionnaires and 42 implemented new or enhanced systems to monitor client trading behaviour. Forty-eight issuers also made changes to comply with transaction reporting requirements, with reportable situations lodged with ASIC increasing by 127% compared with the previous year.
ASIC said many issuer websites had failed to clearly state that they were offering CFDs rather than the underlying assets, instead promoting “shares” or “commodities”, which could mislead consumers. Other issues included overstating benefits, downplaying risks and using ASIC regulation as a marketing tool. One issuer amended almost 1,000 web pages following ASIC’s intervention.
The regulator also raised concerns that CFDs continue to be marketed predominantly to retail investors, despite being suitable only for highly experienced investors with a strong appetite for risk. ASIC noted that even among wholesale clients – who receive fewer consumer protections – only 30% made a profit.
ASIC chair Joe Longo last week raised the prospect of banning advertising for high-risk financial products, including CFDs, as part of a broader discussion on consumer harm.
ASIC said while significant improvements had been made, compliance measures could not be treated as “set and forget”, and further regulatory action would be taken where misconduct or consumer harm persists.