Eightcap Pty Ltd: ASIC's 2023 review of collective CFD leverage remediation

On 9 November 2023 the Australian Securities and Investments Commission (ASIC) published media release 23-298MR, in which it stated that seven over-the-counter (OTC) derivative issuers, including Eightcap Pty Ltd, had self-reported issuing contracts for difference (CFDs) that exceeded the leverage-ratio limits permitted under ASIC's CFD product intervention order. According to ASIC, each of the seven issuers self-reported the breaches, proposed remediation programmes, and cooperated with ASIC through the subsequent review and remediation of affected clients. [1]

This report records what ASIC's release establishes about that episode and, equally importantly, what it does not establish about Eightcap specifically. The outcome is described as resolved only in the narrow sense that ASIC reported a completed review of the seven issuers' compensation payments and methodologies. It is not an ASIC declaration that every issue concerning Eightcap was closed, nor any assurance of current compliance. [1]

Entity and scope

Eightcap states on its legal documents page that Eightcap is a brand of Eightcap Pty Ltd, ABN 73 139 495 944, regulated by ASIC under Australian Financial Services Licence 391441, and that the Australian entity provides retail CFD and forex services. This report concerns the Australian entity and its Australian retail CFD service only. The legal documents page is used solely to establish this brand-to-entity link and jurisdictional scope; it is not treated as evidence of historical remediation or present compliance. [2]

The leverage-limit regime

ASIC stated that the CFD leverage limits had applied from 29 March 2021 and ranged from 30:1 to 2:1 depending on the underlying asset. The release does not assign any particular ratio to any specific Eightcap product or trade, and none should be inferred from it. The relevant point for this record is that issuers were subject to these limits from that date, and that the self-reported breaches concerned CFDs issued above those permitted ratios. [1]

Collective figures, not Eightcap figures

The monetary and client figures in ASIC's release are totals across all seven issuers collectively. They must not be read as amounts attributable to Eightcap alone. [1]

• A combined $4.3 million had been paid or agreed to be paid since March 2021 to more than 1,500 retail clients across all seven issuers. This is not an Eightcap figure. [1]
• Affected clients reportedly suffered losses on more than 150,000 CFD trades across 100 different CFD instruments across all seven issuers. These trade and instrument counts are not Eightcap-specific. [1]
• ASIC said each issuer's total compensation ranged from tens of thousands to millions of dollars, but it did not disclose which amount belonged to Eightcap or to any other named issuer. [1]
• In July and August 2023 ASIC reviewed the seven issuers' compensation payments and methodologies. That review resulted in four of the seven paying or agreeing to pay more than $2.8 million in additional compensation collectively. ASIC did not name the four issuers, and the source does not state whether Eightcap was among them. [1]

The $17.4 million headline is not an Eightcap amount

The title of ASIC's release refers to more than $17.4 million in compensation overseen by ASIC. Per the verified scope of that release, this headline total includes a separate matter of approximately $13.1 million involving Binance Australia Derivatives. It is not an Eightcap amount and must not be attributed to Eightcap or presented as connected to the Seven-issuer CFD leverage remediation described here beyond appearing in the same publication. [1]

Dated sequence of events

1. 29 March 2021: ASIC's CFD leverage limits came into application, ranging from 30:1 to 2:1 depending on the underlying asset, as stated by ASIC. [1]
2. From March 2021 onwards: compensation was paid or agreed to be paid to affected retail clients, reaching a combined $4.3 million across all seven issuers by the time of ASIC's report. [1]
3. July and August 2023: ASIC reviewed the seven issuers' compensation payments and methodologies; four of the seven paid or agreed to pay more than $2.8 million in additional compensation collectively, unnamed by ASIC. [1]
4. 9 November 2023: ASIC published media release 23-298MR reporting the completed review and the cooperation of all seven issuers, including Eightcap Pty Ltd. [1]

What the source establishes and what it does not

Established by ASIC's release: Eightcap Pty Ltd was named as one of seven CFD issuers that self-reported leverage-limit breaches, proposed remediation programmes, and cooperated with ASIC through the review and remediation process. Established separately by Eightcap's own legal page: the brand-to-entity link between Eightcap and Eightcap Pty Ltd and the entity's Australian regulatory identifiers. [1] [2]

Not established by the sources for this report: [1]

• No Eightcap-specific compensation amount, client count, or trade count is disclosed. [1]
• No statement that Eightcap was one of the four issuers that paid or agreed to pay additional compensation following the July and August 2023 review. [1]
• No fine, penalty, court order, enforcement action, admission of wrongdoing, culpability finding, or Eightcap-specific closure notice appears in the source. [1]

Readers should therefore treat every collective figure in this report as spanning all seven issuers. Any attempt to divide the $4.3 million, the client count, or the trade count proportionally would be speculation unsupported by the source. [1]

Interpreting the outcome

The outcome recorded here is 'resolved' in a deliberately narrow sense. ASIC reported that its review of the seven issuers' compensation payments and methodologies was complete, and that all seven issuers, including Eightcap Pty Ltd, had self-reported, proposed remediation programmes, and cooperated through the review and remediation of affected clients. That is the full extent of the resolution described. The release does not announce that ASIC declared every Eightcap issue closed, does not publish an Eightcap-specific closure notice, and says nothing about the current compliance status of the firm. Nothing in this report should be read as a guarantee of present conduct. [1]

Scope limits and reproducibility

This report draws exclusively on two sources. First, ASIC media release 23-298MR, 'ASIC oversees more than $17.4 million in compensation to retail investors by OTC derivative issuers', published on 9 November 2023 on the ASIC website, which supplies all regulatory facts, dates, and collective figures cited above. Second, the Eightcap Legal Documents and Disclosures page at eightcap.com, which supplies the statement that Eightcap is a brand of Eightcap Pty Ltd, ABN 73 139 495 944, regulated by ASIC under AFSL 391441, and describes the Australian entity's retail CFD and forex service. No other source was consulted, no figure has been apportioned to Eightcap from collective totals, and readers can reproduce every factual claim by consulting those two pages directly. [1] [2]