What protections do ASIC-regulated brokers offer?
Verdict
- An ASIC-regulated broker gives Australian retail clients four core protections: leverage caps, negative balance protection, segregated client money and formal disclosure in a PDS and TMD; Pepperstone, our top pick, publishes all four for its AFSL 414530 company.
- Leverage is capped by asset class, from 1:30 on major FX down to 1:2 on crypto.
- What ASIC licensing does not bring, on Pepperstone's own account, is a compensation fund: none is named for Australian clients.
- The protections apply to retail clients; opting up to professional status removes most of them.
An Australian Financial Services Licence is more than a badge in a website footer. For a retail CFD client it changes the account itself: how much leverage you can use, whether you can owe the broker money, and how your cash is held. We use Pepperstone's published terms to show what each protection looks like in practice.
The four protections, as Pepperstone applies them
Pepperstone Group Limited, AFSL 414530, publishes each protection for its Australian retail clients. Leverage follows an asset-class table rather than one headline number. A negative balance is restored to zero. Retail money is kept in segregated accounts at top-tier banks. And the risk warning directs you to two disclosure documents, the Product Disclosure Statement (PDS, dated August 2026) and the Target Market Determination (TMD). It is our first pick because it publishes all of this plainly and adds low published costs on top.
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Each protection, and what it does for you
| Protection | What Pepperstone publishes | What it prevents |
|---|---|---|
| Leverage caps | 1:30 major FX, 1:20 major indices and gold, 1:5 shares, 1:2 crypto | Small moves wiping out a small account |
| Negative balance protection | A negative account is restored to zero | Owing the broker money after a gap |
| Segregated client money | Retail funds held at top-tier banks | Client cash mixing with company money |
| PDS and TMD | PDS dated August 2026; TMD referenced in the risk warning | Buying a product without its terms and target market spelt out |
What ASIC licensing does not give you
- A compensation fund: Pepperstone names none for Australian clients, unlike the £85,000 FSCS cover for its UK clients.
- A guarantee of full repayment on insolvency: Pepperstone says segregated money would be dealt with under the Corporations Act 2001 with no guarantee all funds are returned.
- Guaranteed stops: Pepperstone's PDS shows none, so stop-losses can slip.
- Protection from losing your deposit: caps slow losses down; they don't stop them.
Protections differ between ASIC brokers in the extras
The core rules are shared, so look at what each broker adds. Capital.com, licensed in Australia under AFSL 513393, publishes the same 30:1 major FX cap and negative balance protection, and also offers a guaranteed stop-loss, which Pepperstone does not. Pepperstone, for its part, publishes its segregation arrangements and full retail and pro leverage tables. If certainty on exit price matters more to you than cost, Capital.com is the stronger second account.
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Who keeps the protections and who loses them
All of the above applies to retail clients. If you qualify and choose to be treated as a sophisticated or wholesale client, Pepperstone raises your FX leverage to 1:500 and limits negative balance protection to a one-time cover of up to USD 100,000. A trader with A$20,000 who opts up gains buying power but gives up the open-ended floor under their account, which is worth weighing before you sign.
Sources
Pepperstone and Capital.com published terms.
Do all ASIC-regulated brokers offer negative balance protection?
The brokers whose terms we checked, including Pepperstone and Capital.com, publish it for retail clients. Confirm it in the PDS of any broker you consider.
Is there a compensation scheme for Australian CFD clients?
Pepperstone names none for its Australian clients. If client protection on insolvency matters to you, read the client-money section of the PDS.
What is a TMD?
A Target Market Determination describes who a product is designed for. Pepperstone's Australian risk warning refers clients to its TMD and PDS.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. This page is general information, not investment advice; read the broker's PDS and TMD before you trade.