City Index, IG and Other Brokers Change Margin Requirements as ASIC’s Product Intervention Order Set to Take Effect

Multiple forex and CFD brokers, including City Index, IG and Saxo Markets have recently announced changes to margin requirements as the Product Intervention Order issued by the Australian Securities & Investments Commission (ASIC) on 23 October 2020 and set to take effect from 29 March 2021.

The key changes City Index will take on margin rates and retail customers protection from the effective date of ASIC's Product Intervention Order include:

New Margin Rates

· 30:1 for CFDs referencing an exchange rate for a major currency pair

· 20:1 for CFDs referencing an exchange rate for a minor currency pair, gold or a major stock market index

· 10:1 for CFDs referencing a commodity (other than gold) or a minor stock market index

· 5:1 for CFDs referencing shares or other assets

· 2:1 for CFDs referencing crypto-assets

New Protections

· Negative balance protection will be applied, preventing customers from losing more than the balance in their account.

· A standardised margin close-out level of 50% of the total margin required for all open CFD positions will be applied to customers' accounts.

· Certain promotional inducements such as rewards or gifts will be prohibited (monthly rebates, information services and educational tools are excluded from this).

In addition to City Index, Saxo Markets and IG also introduced new margin requirements and calculation models for CFD and Forex products.