ASIC lodges federal court case against eToro’s CFDs

<img width="250" height="187" src="https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-250×187.jpg" class="webfeedsFeaturedVisual wp-post-image" alt="ASIC lodges federal court against eToro’s CFDs" decoding="async" style="float: left; margin-right: 5px;" link_thumbnail="" srcset="https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-250×187.jpg 250w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-700×525.jpg 700w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-768×576.jpg 768w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-120×90.jpg 120w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-245×184.jpg 245w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1-500×375.jpg 500w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-iStock-472147871-1.jpg 1183w" sizes="(max-width: 250px) 100vw, 250px" /><p>The financial watchdog questions the suitability of eToro’s contract-for-differences (CFD) target market. A CFD is a leveraged derivative contract that allows a trader to invest in the value changes of underlying assets.</p>
<p>ASIC alleges that eToro’s CFD market is too wide considering the high-risk and volatile nature of this trading niche, where most lose their money. The regulator maintains that eToro’s screening checks fall short when assessing retail clients. ASIC further alleges that due to this negligence, a significant number of retail clients fell victim to the product, which was inconsistent with their investment goals and financial reach.</p>
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<p>Specifics of the case refer to the period between 5 October 2021 and 14 June 2023, during which time an estimated 20,000 <a href="https://www.leaprate.com/financial-services/fintech/etoro-partners-with-moneyfarm-to-provide-its-uk-customers-with-stock-shares-isa/" target="_blank" rel="noopener">eToro</a> clients lost money with CFD trading. Previous administrative actions by ASIC to protect consumers from high-risk CFD investments included orders against Saxo Capital Markets and Mitrade Global Pty Ltd.</p>
<div><img aria-describedby="caption-attachment-450087" decoding="async" class="wp-image-450087" src="https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court.png" alt="ASIC lodges federal court against eToro’s CFDs" width="98" height="102" srcset="https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court.png 540w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court-250×259.png 250w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court-120×124.png 120w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court-245×254.png 245w, https://www.leaprate.com/wp-content/uploads/2023/08/FIN-LP-ASIC-moves-forward-with-federal-court-proceedings-4925965253-Sarah-Court-482×500.png 482w" sizes="(max-width: 98px) 100vw, 98px" /><p>Sarah Court Source: Anzsog</p></div>
<p>Sarah Court, ASIC deputy chair, expressed the regulator’s disappointment with eToro, especially considering the trading platform’s market reach. Court commented:</p>
<blockquote><p>Our message to the industry is that CFD target markets should be narrowly defined given the significant risk that retail clients may lose all of their deposited funds.</p></blockquote>
<p>The post <a rel="nofollow" href="https://www.leaprate.com/news/asic-lodges-federal-court-against-etoros-cfds/">ASIC lodges federal court case against eToro’s CFDs</a> appeared first on <a rel="nofollow" href="https://www.leaprate.com">LeapRate</a>.</p>