Top 5 CFD brokers in Australia
Whenever the world discusses financial centers, it’s usually around Western countries and power cities like New York and London. While these may be correct, Australia holds a lot of power regarding trading and financial matters on the eastern front as the major financial centers across the globe trade derivatives; Australia has its niche in dealing with derivative products, especially for CFDs. Lets us look at the basics of CFD
What is a CFD?
Contracts for difference (CFDs) are derivative contracts, which have an underlying asset, that provides value to the CFD. These instruments are used to speculate on the price movements of a variety of assets which include stocks, commodities, crypto market indices, and cryptocurrencies. Traders can also trade CFDs on currencies, but in Australia, these instruments are referred to as forex trading.
In CFD, instead of getting ownership of the asset, investors and traders buy and sell a contract that represents an underlying asset. The contract binds the buyer who purchases the contract to pay the seller the difference between the current price of the asset and the price at the time the contract was sold. CFDs bring with them the benefit of going both “long” or “short” which means a trader can try to make a profit regardless of the direction of the market. For this reason, CFD trading often becomes more popular during times of market volatility, as traders seek to profit by “shorting” the market when it falls.
CFD trading in Australia
Trading CFDs is legal in Australia and the securities watchdog Australian Securities and Investment Commission (ASIC) has been doing an excellent job in bringing regulation the market and the service providers. Before you open an account with a broker, make sure it’s regulated by ASIC or another top-tier regulator such as the FCA in the UK or BaFin in Germany.
ASIC imposed a set of conditions on the issue and distribution of CFDs in 2021 that the regulator plans to keep in place until May 2027. The limitations are the following:
- leverage ratio limits ranging from 30:1 to 2:1
- standardization of margin-close out rules
- negative balance protection
- prohibitions on offering or giving certain inducements.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. If you are not familiar with CFDs, start by reading our guide to CFD trading.
Here is the list of the top 5 brokers that provide CFD trading facilities in Australia
Operating and servicing through its entity regulated by ASIC, the global Israeli fintech company, eToro is one of the leading CFD brokers in Australia. The users can trade CFDs as well as other assets such as Forex, stocks, ETF and a lot of crypto coins and tokens. Users can trade CFD for stock, stock index, ETF, and commodity CFDs, even in CFD products. The minimum deposit here is USD 50, and users can do the transfer via Bank transfer, Credit/debit cards, PayPal, Skrill, Neteller, China UnionPay, Klarna, POLi, iDEAL
Since its existence in 2016, Capital.com has been providing CFDs to its users across countries. Having legal entities which are regulated by the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investments Commission (ASIC), the Financial Services Authority of Seychelles (FSA), the Australian subsidiary. Customers trading with this entity are not entitled to investor protection; however, Capital.com provides negative balance protection to all its customers. The minimum deposit here is USD 20, and users can use the payment options like Bank transfer, Credit/debit cards, Apple Pay, and PayPal to transfer their balance.
Admirals is an Estonia-based broker that serves Australian customers through its subsidiary. Admirals, again, is regulated by multiple financial authorities: the UK Financial Conduct Authority (FCA), the Estonian Financial Supervision Authority (EFSA), the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investment Commission (ASIC), and the Jordan Securities Commission (JSC). The minimum deposit is USD 100, and users can use Bank transfer, Credit/debit cards, Skrill, PayPal, Klarna, Neteller, SafetyPay, AstroPay, Trustly, Rapid Transfer, and NganLuong to transfer to their accounts
Listed on London Stock Exchange, Pus500 is s regulated by more than one top-tier financial authority. The broker is overseen by the Cyprus Securities and Exchange Commission (CySEC), the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), and the Financial Markets Authority (FMA) of New Zealand, among others. The broker provides Australian CFD traders with negative balance protection. The minimum deposit here is USD 100 and the platform supports Bank transfer, Credit/debit cards, PayPal, Skrill
Next markets is an online brokerage that offers CFDs and stock and ETF trading. It was founded in 2014 and is regulated by the Malta Financial Services Authority (MFSA). The assets and cash of Australian investors are protected up to €20,000 per account. The minimum deposit here is USD 0, and the deposit methods supported are Bank transfer, Credit/debit cards
Source: https://coingape.com/best-cfd-brokers-in-australia/