ASIC's product intervention on Premium Trading's Pro Traders

What you need to know?

ASIC made a recent announcement that will change the way Premium Trading can offer their products and services to retail clients of their ASIC licensed entity. Premium Trading has put together a summary of the main reforms below to help you understand these changes and how they may affect you. These changes are due to come into effect from Mar 29, 2021.  

Changes to leverage caps 

A key focus of the change is leverage restrictions, which will affect the amount of margin retail clients are required to deposit to trade CFDs or Forex. Here’s how the proposed changes look: 

30:1 leverage on major currency pairs 

20:1 leverage on major indices, gold and minor currency pairs 

10:1 leverage on commodities (excluding gold) and minor indices 

2:1 leverage on cryptocurrency assets 

5:1 leverage on shares or other underlying assets 

Compulsory margin close-outs 

If the funds you hold in your account fall to less than 50% of the total initial margin required for all of your open trades, there is a requirement to close out your positions. 

Prohibition on inducements 

Certain inducements to retail clients are prohibited (for example, offering trading credits and rebates or ‘free’ gifts like iPads). Some circumstances like as volume-based discounts, educational tools, information services or research tools will still be allowed. 

Negative balance protection 

Protect against negative account balances by limiting a retail client’s CFD losses to the funds in their CFD trading account. 

How will you be affected? 

The ASIC changes will impact retail clients of Premium Trading only, not wholesale clients. 

It is important to note that you will lose some retail-only protections if you become an IC Markets Pro account holder, so you do need to consider this in your decision. If you are interested in finding out more about becoming a wholesale client or ‘Pro Trader’, please visit Pro Trader page. As an IC Markets Pro client, you will have access to higher leverage and exclusive account features.  

Reprinted from Premiumtrading, the copyright all reserved by the original author.