Plus500 Reveals its Take on ASIC Proposed Restrictions

The Australian financial watchdog has received one more response to its latest swipe against the sale of risky investments to retail investors, with Plus500‎ showing a similar reaction to its industry peers by claiming that it already operates in compliance with most of these restrictions.

"Plus500 welcomes robust and consistent regulation, which provides a level playing field for all operators to compete on the strength of their customer offering and service levels. The Company looks forward to the outcome of this consultation and the regulatory certainty this will bring to an important market,” Plus500 CEO Asaf Elimelech said.

The Australian Securities and Investments Commission (ASIC) announced plans on Thursday to ban binary options sales to retail investors and restrict the sales of Contract for Differences (CFDs).

The corporate regulator is preparing to flex its new regulatory muscles after a recent review found in 2018 alone 80 percent of binary traders and 72 percent of clients who traded CFDs lost money. Retail traders lost nearly $490 million and $1.5 billion a year in trading binary options and CFDs, respectively, according to ASIC data.

CMC Markets and IG also responded

Israeli-based but London-stock market listed CFD provider Plus500 noted that ASIC’s proposed rules are similar “in spirit and effect” to the regulatory changes implemented by the European Securities and Markets Authority (ESMA) last year.

Still, the regulatory updates, which will include Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term limits, margin closeout rules, and Negative Balance Negative Balance In its most basic form, a negative balance represents an account balance in which debits exceed credits. A negative balance indicates that the account holder owes money. A negative balance on a loan indicates that the loan has not been repaid in full, while a negative bank balance indicates that the account holder has overspent.In the retail brokerage space, this phenomenon occurs when a position’s losses in an account exceeds the available margin on hand from a given trader. When a trader place In its most basic form, a negative balance represents an account balance in which debits exceed credits. A negative balance indicates that the account holder owes money. A negative balance on a loan indicates that the loan has not been repaid in full, while a negative bank balance indicates that the account holder has overspent.In the retail brokerage space, this phenomenon occurs when a position’s losses in an account exceeds the available margin on hand from a given trader. When a trader place Read this Term protection, is anticipated to affect Plus500's profit from its Australian customers, which accounted for 15 percent of the broker’s revenues in H1 2019.

Of note, the Australian regulator revealed that the number of local traders in these toxic products more than doubled in size over the past two years, from about 450,000 clients to over 1 million.

CMC Markets and IG Group, the UK’s largest spread-betting company, also revealed their take on ASIC’s proposals, saying they are well prepared and expect the review to have limited financial implications for their business.

Shares in IG Group and Plus 500 closed lower between 0.8 and 4 percent while CMC Markets reversed course after early trading and was up nearly two percent.