proposed changes to cfd legislation, page-2

Thanks for posting Gabbie but what a a crock of crap .

I didn't realize treasury had put out a paper and will read it with glee as some of us here actually wrote to Bill Shorten [treasury ] to clean up this barbaric act from cfd providers ,whether dma or market maker is irrelevant .
ie ; we take a posi and our provider /dealer uses our funds to trade against us !!!!! ummmm hello .
We pay commisions whether in the spread or pay to use like an asx broker to place trades and if our provider can't afford to take the risk it means they shouldn't be in business of taking our bets .
Could u imagine walking into the TAB and laying down 20 bucks on x horse to win x race and the TAB turns around and says we will take your bet but u have to give us another 20 bucks so we can hedge your bet . ummmmmm hello !!!
Business is business and only those like IG markets who are a public company which one can track should be allowed to run a business like cfd's . The rest may have a licence from ASIC but who the stuff knows how liquid they are ???
Never ever leave to much cash with a cfd provider !!!

As for segregated accts I note most asx brokers now require traders to open a bank acct with them under their own name so segregation from other traders and the provider aren't an issue ever again . THIS IS HOW IT SHOULD BE WITH CFD providers as well .

Below is a copy of the letter I wrote to Treasury .
cheers ge

Dear Bill Shorten ,

I am a part time commodities trader and like many people in Australia am absolutely mortified at the regulations or lack of regulations on segregated accounts being offered by Contract for Difference [CFD] and Commodity futures brokers in Australia .

In the last few years we have witnessed the collapse of Sonray capital markets , Opus prime and now Mfglobal . Sometimes business's fail but it shouldn't mean that thousands of clients of those firms should face loss and hardship . As traders we face the constant risk of making a mistake and losing our capital as that is the nature of our business but our losses should be limited to our mistakes and not the incompetent bungling of a Broking house .

The simple solution to curing our risk of another broking house collapse is to remove the provision of segregated accounts under the Australian Securities and investment commision [A.S.I.C ] guidlines and simply allow all traders to have a seperate bank account to other traders and the broking house . This model has been adopted for trading shares at the A.S.X and I note several cfd providers like IG markets and Commsec cfd broking allow this function as well .

Unfortuntately many others don't as I believe they like to obtain financial gain from our money [interest bearing accts ] and use our cash for hedging positions taking out by us [which is moronic as we bet against the house and then they use our money to hedge that bet ]
Some broking houses also like to use the segregated accounts for their own benefit which is also moronic as it is our money not theirs and A.S.I.C allows this by approving their Product disclosure statements [PDS] . Please read this statement from the Citindex product disclosure statement ;

http://www.filesandimages.com/Brand/CityIndexAustralia/PDF/PDS_CA.pdf

and in brief from section 2.4 ; ? We may pay, withdraw, deduct or apply any amounts from your monies held in any segregated account by CIA.

and to use such moneys in our business from time to time, including for the payment of amounts to our counterparties.

Your monies may be co-mingled into one or more segregated accounts with the monies of other CIA Clients in accordance with the provisions of the Corporations Act. etc etc

Mr Shorten I believe there is approximately 20,000 thousand clients of MF with frozen accts in Australia at present and Sonray had 8000 approx . Our capital markets can ill afford another financial meltdown and I believe you have the power to change the morononic laws through A.S.I.C re segregated accounts .
Please change that and then review PDS statements put out by CFD and broking houses , maybe making a generic PDS the normal . I note some PDS and financial service guides {FSD} guides run out to 130 plus pages of bamboozling and moronic statements as shown above .

Thanks and cheers