Its a long post but they have basically given you warning in alot of mumbo jumbo. This is just for IG. CMC are similar but are Sydney based from what I understand, but do have similar terms and conditions.
I posted this a while ago more for updating markets on disclosure requirements of CFD provider's hedge positions. Key Terms and Conditions are at the bottom of the post.
Points that stand out to me are 1). they can use your cash balance for any purpose they see fit, 2).They say they will not purchase the underlying in one clause, but... 3). In the next they say they may hedge your contract by instructing a third party to buy the underlying. 4)Their liquidation terms are very grey 5).Jurisdiction of court proceedings are outside Australia.
Keep in mind these questions when reading below 1).THE BIG QUESTION: who is the third party buying the shares as instructed by IG, and how are these shares being held and used. (Smells of Opes Prime)
2).If they are not purchasing the underlying, why cant they offer prices outside ASX trading hours.
3). If they are not buying the underlying, are they using anything other than cash as security.
4). If the govt/ASIC cracks down on the third party that is buying the underlying on instruction from IG - how will that effect IG's hedging.
4.3 Your money is deposited in a separate account Any money that you deposit with us will be held separately from our money, in a trust account, and held and dealt with in accordance with the Governing Legislation and the Customer Agreement. However, you consent that we are entitled amongst other things to: withdraw, deduct or apply any sums payable by you to us and/or any Associate Company of ours including, without limitation, making a payment in respect of the margining, adjusting or settling of CFDs entered into by you with us or the payment of finance charges or interest to us, with all such amounts belonging to us under the Customer Agreement; pay, withdraw, deduct or apply any amounts from your money held in any separate account, and to use such money in our business from time to time, including for the payment of amounts to our counter-parties; your money may be co-mingled into one or more separate accounts with our other customers’ money; we are obliged to pay any money due to you in relation to dealings in CFDs into a separate account; the obligations to you under the Customer Agreement and the CFDs are unsecured obligations, meaning that you are an unsecured creditor of ours.
5.17 Other matters you should consider No interest in underlying instrument Neither you nor we acquire any interest in or right to acquire, and neither party is obliged to sell, purchase, hold or deliver or receive, the underlying instrument of any CFDs that you and we deal in.
4. Providing a quote (f) when you offer to open a Transaction, the number of shares, contracts or other units in respect of which the Transaction is to be opened must be neither smaller than the Minimum Size nor larger than the Normal Market Size;
19. Market abuse (1) We will frequently hedge our liability to you by opening analogous positions with other institutions or in the Underlying Market. The result of our doing this is that when you open or close a Transaction relating to a share or other Instrument with us, your Transactions can, through our hedging, exert a distorting influence on the Underlying Market for that Instrument, in addition to the impact that it may have on our own prices. This creates a possibility of market abuse and the function of this Term is to prevent such abuse.
22. Suspension and insolvency (4) If a company, who’s Instrument represents all or part of the subjectmatter of a Transaction, de-lists from the exchange where its shares are listed, ceases to be publicly traded, goes into external administration or a receiver or a receiver and manager is appointed or it is otherwise wound up, the day on which the company de-lists, ceases to trade publicly, or (at IG’s reasonable discretion in the event of several of these listed events being applicable) the day external administrator or receiver or receiver and manager is appointed or the company is otherwise wound up will be the closing date of that Transaction. The Closing Level will be the value of any distribution a holder of a security of the same type as the Instrument underlying the Transaction would receive. The provisions of this Term 22(4) will not apply to Transactions on stock indices. 9. Information about IG Markets Ltd
4. Termination and Liquidation (This whole section is one grey area)
12. Governing Law and Jurisdiction Unless the Parties specify otherwise in Schedule 1 or otherwise: 12.1 These terms shall be governed by, and construed in accordance with, the laws of England and Wales. 12.2 With respect to any Proceedings, each Party irrevocably (i) agrees that the courts of England shall have exclusive jurisdiction to determine any Proceedings and irrevocably submits to the jurisdiction of the English courts and (ii) waives any objection which it may have at any time to the bringing of any Proceedings in any such court and agrees not to claim that such Proceedings have been brought in an inconvenient forum or that such court does not have jurisdiction over such Party.
IG Markets Limited is a company incorporated in England and regulated by the UK Financial Services Authority and which holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission, number 220440. IG Markets Limited is registered in Australia as a foreign company (ABN 84 099 019 851). IG Markets Limited is a subsidiary of IG Group Limited, a UK speciality finance and derivatives company offering off-exchange/over-the- counter (OTC) derivatives including CFDs. The IG group was founded in 1974 and employs approximately 400 staff worldwide. The Australian Securities and Investments Commission holds no responsibility for the contents of this PDS or any other materials provided to you by IG Markets Ltd.
(20min delay)