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CBA is ditching its derivatives trading account

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The major bank quietly announced the news to customers in June.

The Commonwealth Bank has confirmed it will be closing its derivatives trading account CommSec CFDs from August in a move to simplify its product offering.

The product changes are the latest made by Australia's big banks after the recent financial services royal commission shone the spotlight on risky offerings and unethical sales tactics used in the banking sector.

A CommSec spokesperson said the change was part of the CBA's focus on "becoming a simpler, better bank" and that contracts for difference (CFDs) – a type of derivative trading product – no longer align with its "purpose and strategy". The bank said they will no longer be an investment option through CommSec from 25 July 2019 and all CFD accounts will be closed from 16 August.

Key dates to know

CommSec CFD trading account closure dates
Last trading day to open positions19 July 2019, 4:00pm AEST
Last trading day to close positions25 July 2019, 4:00pm AEST
Any remaining open positions closed out by CommSecFrom 25 July 2019, 5:00pm AEST
Any cash balance transferred into your linked bank accountFrom 29 July 2019
All CFD accounts closedFrom 16 August 2019

CommSec's main share trading account will apparently continue as normal and some derivatives products, such as exchange traded options (ETOs) and warrants, will still be made available for customers.

CFDs are a relatively new product in Australia. Essentially, they're contracts that allow investors to bet on the price movements of an underlying share or other security, such as foreign currency.

But after the royal commission pointed the finger at risky bank offerings, the big four are likely rethinking their strategy around products such as CFDs and other kinds of derivatives which are closely watched by ASIC and have been flagged by the corporate watchdog as too "complex" for inexperienced investors.

The changes come as the major banks continue their retreat from financial advice businesses. Last month, CBA confirmed to The Australian Financial Review that it's reviewing options to sell off CommSec's financial advice arm, CommSec Advisory, while Westpac, ANZ and NAB have all announced similar plans to abandon their advice and personal wealth arms over the next few years.

Read our guide for more information on CFDs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

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