FCA Proposals Send Shockwaves Across Atlantic, GAIN's Shares Fall 9%

The UK’s Financial Conduct Authority (FCA) made waves today when the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term and contracts for difference (CFDs) regulator issued a consolation paper to companies from the industry – the paper outlined several proposed changes to the existing regulatory framework that polices conduct of rolling spot FX, CFDs and spread betting providers.

Following the announcement, the FCA has given companies until March 7^th, 2017 to submit their comments directly to the regulator on listed proposed changes. The proposals themselves are ultimately designed to help better shield retail traders are listed below:

For its part, GAIN Capital (NYSE:GCAP) has weighed in on the proposals, offering an endorsement of the precautionary measures for clients that will aim to fortify consumer protection. In addition, GAIN is also in favor of supporting all measures meant to curb aggressive marketing to inexperienced investors. A dearth of education has routinely been cited as an issue for FX and CFD traders, making them vulnerable to such instruments without understanding the risks incurred.

Moreover, the company has also noted a parallel in its current practices with much of the proposed changes by the FCA, suggesting that implementing such requirements will not require much reconciliation or derivation from its current practices or procedures. The broker also stated that it looks forward to working with the FCA over the next three/four months as well.

Unfortunately for GAIN, its shareholders were not as optimistic of the news, with the company's stock (NYSE:GCAP) crashing -9.09% during US trading to $6.20 at the time of writing.

Other groups are perhaps due for more of a change, given the Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term cap, which could be the biggest alteration for brokers. By issuing a mandatory threshold for newer clients, the consequences could be manifold, namely for brokers who have thus far operated without any such restrictions.