What does an ASIC licence actually protect?
An Australian Financial Services Licence lets a company issue CFDs to Australians, and ASIC's CFD product intervention order then sets extra rules for retail clients. Those rules protect you from a few specific harms: borrowing too much, losing more than your deposit, and losing your money if the broker fails while your funds sit in its own accounts.
They do not protect you from bad trades. ASIC itself says a licence is not an endorsement of a company or its products. Pepperstone Group Limited holds AFSL 414530, and if its protections suit you, you can open a Pepperstone account as a retail client.
The main retail protections and what they cover
| Protection | What it does | What it does not do |
|---|---|---|
| Leverage caps | Limit how large a position your margin can open | Stop a capped position from losing |
| Margin close-out | Closes positions before your equity is used up | Pick the exit price for you |
| Negative-balance protection | Stops your loss at the account balance | Return money already lost |
| Segregated client money | Keeps your funds apart from the broker's | Promise every dollar back if the broker fails |
What are the ASIC leverage caps for retail CFD traders?
ASIC caps retail leverage by asset class, from 1:30 on major currency pairs down to 1:2 on crypto. Pepperstone's Australian costs table applies these limits, and it lists a few extra categories, such as non-deliverable forex at 1:10.
Retail leverage caps at Pepperstone Australia
| Market | Maximum retail leverage | Margin as % of position |
|---|---|---|
| Major forex pairs | 1:30 | 3.33% |
| Minor forex pairs, gold, major indices | 1:20 | 5% |
| Other commodities, minor indices | 1:10 | 10% |
| Shares and ETFs | 1:5 | 20% |
| Crypto | 1:2 | 50% |
What is the margin close-out level for Australian retail clients?
50%. Under ASIC's order, a broker must start closing a retail client's positions when the account's net equity falls below 50% of the total margin required for the open positions. If you hold trades that need $1,000 of margin, closing begins once your equity drops under $500.
Close-out is a safety net, not a stop-loss. Positions are closed as market conditions allow, so in a fast move the fill can be worse than the level. Read Pepperstone's Product Disclosure Statement for the exact way it applies the rule.
Do Australian brokers offer negative balance protection?
Yes, for retail clients. ASIC's order limits a broker's claim against a retail client to the money in the CFD account. Pepperstone states it plainly: if your account goes negative, it will restore it to zero.
Professional and wholesale clients are different. Pepperstone gives its pros a one-time negative-balance cover of up to USD 100,000; beyond that, a pro can owe money. That is one of the main reasons to think hard before you give up retail status.
Are client funds segregated at Australian CFD brokers?
Yes. Licensed brokers hold retail client money apart from their own funds, and Pepperstone says it keeps retail funds in segregated accounts at top-tier banks. Segregation protects you if the broker fails, not if a trade goes wrong.
Read Pepperstone's own caveat, too. It says that on a liquidation, segregated money is dealt with under the Corporations Act and that it cannot promise all funds will be returned. Pepperstone names no compensation scheme for Australian clients, unlike its UK company, whose eligible clients are covered by the FSCS.