CFD providers plan to form industry body
Major Australian contract for difference (CFDs) providers have announced they plan to establish a self-regulating industry forum.
Representatives from Capital CFDs, City Index, CMC Markets, GFT Forex, IG Markets and Saxo Capital Markets met at a recent roundtable to discuss the forum, which they said aims to "enhance the efficient operation, transparency and overall investor understanding and confidence in CFDs within Australia and in the Australian CFD industry as a whole."
The forum will adopt 16 Standards that foster self-regulation and go over and above existing regulations for the CFD industry in the areas of dealing with customers, customer protection and risk management, due diligence and business continuity, and full segregation of all client funds, the representatives stated.
"Importantly, client money cannot be used for any purpose including margin to fund a provider's hedge positions with brokers, which is currently allowed by law," they said in a statement. It is expected members will be in a position to comply with the standards by 1 July 2012, according to the statement.
The standards also address disclosure benchmarks set out by the Australian Securities and Investments Commission. Over-the-counter CFD providers were required to comply with the benchmarks on an "if not, why not" basis by 31 March 2012.
"Once the forum is established it will become a voice for the CFD industry - focusing on information sharing, legislative changes and current issues facing the industry," said Tamas Szabo, head of IG markets for Asia Pacific.
Capital CFDs managing director Andrew Merry said one of the key drivers behind the forum was the need to improve investor protection across the industry, which can only be achieved by common practice.
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