Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten has released a discussion paper seeking industry comment on the regulation of over-the-counter (OTC) derivatives, including CFDs.
In particular, the paper covers the handling and use of client money.
IG Markets fully supports this move and has been lobbying both the government and ASIC to look at the issue for the past four years. IG Markets has never used client money for hedging purposes, exceeding our contractual and regulatory obligations - the protection of client funds is of utmost importance.
Head of IG Markets Asia Pacific, Tamas Szabo, takes pride in IG Markets' transparency and high industry standards; "this consultation paper, along with ASIC’s recent release of CFD disclosure benchmarks, is a positive step towards providing clarity to new and existing investors about the dynamics of CFD trading, as well as the strengths and weaknesses of different offerings."
Client Money Protection
While ASIC requires CFD providers to segregate client funds from company funds, this does not include money that the CFD provider might use to hedge in the underlying market. Consequently, the provider could subsequently withdraw client money from this account for hedging purposes.
This practice is permitted under ASIC rules, even though it is restricted in other jurisdictions, such as the UK. IG Markets believes that these restrictions should also apply to the Australian market.
Mr Szabo commented that "we are proud to say that we only use our own money for hedging purposes."
IG Markets is one of the few CFD providers in Australia to offer all the following protection for your funds and your net running unrealised profits:
| Client Money Protection | Offered by IG Markets |
|---|---|
| IG only uses its own funds for hedging |  |
| All of your funds are held in a regulated trust account |  |
| All of your funds are held in top-tier Australian bank | |
| Your net running unrealised profits are also held in a regulated trust account | |
| This exceeds contractual obligations | |
| This exceeds regulatory obligations | |
| IG Markets is regulated by ASIC | |
| IG Group is a listed company | |
IG Markets has also created a beginner's guide to client money protection, which covers our policies on hedging client positions and holding client funds and compares these policies to the industry standard.
Choosing a CFD Provider
When trading any financial product, it is essential that you thoroughly research the company you choose to trade with.
IG Markets is regulated by ASIC and is the longest established CFD provider in Australia, having introduced CFDs to the Australian market in 2002. It is also one of the longest established providers globally. IG Markets is a part of IG Group, a FTSE® 250 company with over 130,000 clients worldwide and a market capitalisation of AUD2.5 billion (November 2011).
Find out more about us. Full information about the financial position of all IG Group businesses, including IG Markets, can be found at www.iggroup.com.
IG Markets is a reputable, regulated and established CFD provider with large cash reserves and sophisticated risk management systems. This makes counterparty risk much lower when trading with IG Markets than when trading with some other providers, and is one of the reasons why 40% of active CFD traders in Australia have an account with IG Markets.*
*Investment Trends May 2011 Australia CFD Report
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