Many people trading in contracts for difference (CFDs) don’t know the risks and don’t understand the risks, according to research undertaken by the Australian Securities and Investments Commission (ASIC).
Just a week after expressing concern about consumer understanding of over the counter products such as CFDs, the regulator has issued an investor guide on the issue describing them as “highly-leveraged derivatives products”.
Following on concerns he expressed last week, ASIC Commissioner Greg Medcraft (pictured) said the new guide was aimed at ensuring retail investors could make a more informed decision about CFDs and whether to trade in them.
Medcraft said last week that among the issues considered by ASIC was the fact that most investors in CFDs did not receive independent financial advice and simply relied on information supplied by CFD issuers.
He said that the latest consumer guide suggested that retail investors should consider trading CFDs only if they had extensive trading experience, were used to trading in volatile market conditions and could afford to lose all of or more than the money they put in.
