Document ID: chunk:federal_register_of_legislation:F2020L01338:body:0:p7
Version: federal_register_of_legislation:F2020L01338
Segment Type: other
Provision Reference: 
Character Range: 15299–18048

greater than the aggregate close out protection amount for the retail client's remaining open CFDs at the later time that are connected to that account;
           (d) all the following being terminated:
              (i) the retail client's open CFDs that are connected to the retail client's CFD trading account and that were issued on or after 29 March 2021;
              (ii) any other of the retail client's open CFDs that are connected to the retail client's CFD trading account and that are specified in the terms of the CFD for the purposes of this subsection (3).
           Note 1: The CFD issuer must do all things necessary to ensure that it acts efficiently, honestly and fairly in terminating open CFDs: paragraph 912A(1)(a) of the Act.
           Note 2: Before specifying, in the terms of the CFD for the purposes of this subsection, a CFD (other CFD) that was issued before 29 March 2021, the CFD issuer will need to ensure that specifying the other CFD (meaning that the other CFD may be terminated in the circumstances contemplated by subsection (3)) is consistent with the terms of the other CFD.
       (4) In subsection (3):
       aggregate close out protection amount means, in relation to open CFDs of a retail client at a time, an amount that is one of the following:
           (a) in any case—at least 50% of the aggregate initial margin required under paragraphs (2)(a) to (e) for those open CFDs;
           (b)   if the margin (current margin) which the CFD issuer requires to be provided by the holder in relation to the holding of each open CFD at that time is equal to or greater than the initial margin that would have been required under paragraphs (2)(a) to (e) if the open CFD had been issued at the time the current margin was determined—at least 50% of the aggregate current margin for those open CFDs.
    Negative balance protection
(5) The terms of the CFD must provide that if the retail client incurs a liability under the CFD, the recourse of the CFD issuer is limited to the following:
           (a)  derivative retail client money held both:
              (i) in a client money account for the benefit of the retail client; and
              (ii) in relation to the retail client's CFD trading account;
           (b) any other money:
              (i) held both:
                  (A) in the client money account for the benefit of the retail client; and
                  (B) in relation to the CFD trading account; and
              (ii)  that was paid into the client money account by the CFD issuer in relation to a dealing in a CFD by the retail client;
            (c)  derivative retail client property held for the benefit of the retail client and in relation to the CFD trading account.

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