The Australian Securities & Investments Commission has issued the "health check" report on the CFD market yesterday, indicating the likelihood of the federal government launching rigid reforms in the industry given it doesn't improve its standard.

The findings of the report have appeared after a detailed analysis held by the commission, which observed that a number of investors were unaware of the risks associated with CFDs, which are put to business without the scrutiny of the regulatory officials.

It has also utilized TV commercials and investor seminars to promote CFDs to majority viewers, which are essentially supposed to be inappropriate for using the products.

ASIC Commissioner, Greg Medcraft said that the commission had been reviewing the developing CFD market for a prolonged period.

"Our study shows CFD issuers need to lift their game in ensuring investors understand how CFDs work and are aware of the risks when trading these complex financial products", he said.

ASIC has put forth numerous suggestions, a majority of which involve a sense of self-regulation by the business players.

They also include new admission benchmarks for over-the-counter CFD suppliers, in addition to the adherence of these suppliers to a policy on client fitness.