CFD brokers across Europe are preparing for new headwinds after the Cyprus Securities and Exchange Commission (CySEC) rolled out on Friday fresh restrictions on leverage for non-major commodity and index CFDs.

The tighter margin rules, which set a cap at 10:1 leverage for selected products, mesh Cyprus with stricter EU norms and signal a renewed push for investor protection in the retail trading space.

CySEC-Regulated Brokers May Need to Recalibrate as Traders Migrate to Major Markets

With CySEC’s latest directive now in force, brokers are recalibrating their product offerings and internal compliance systems to steer retail clients toward more traditional, liquid instruments, including gold, oil and major indices, where leverage rules remain unchanged. The regulator’s move eliminates high-leverage options for less popular and lower-liquidity CFDs, narrowing retail traders’ access to exotic assets.

Which instruments are we talking about? The list includes, among others, wheat, corn, coffee, and a wide range of other agricultural products. It also covers industrial metals such as copper, aluminum, and platinum, which, according to Finance Magnates Intelligence, were among the most popular with traders in this niche; however, they still account for only a small fraction of total CFD commodity volumes. From the index category, these include regional market indices from Italy, France, Spain, as well as emerging markets. Overall, the industry does not expect a dramatic shake-up.

“CySEC’s new restrictions don’t really change the market in any fundamental way,” said Alex Tsepaev, Chief Strategy Officer of B2PRIME Group. “In practice, what the regulator has done is tighten the rules around non-major commodities. These products can no longer be classified under the same conditions as major ones, which means margin requirements for less popular instruments with lower liquidity will now be much stricter.”

As he added, brokers won’t be able to offer exotic products with high leverage , which regulators see as a growing risk. “Clients who want higher leverage will simply migrate to more traditional instruments.”

Andreas Kapsos, CEO of Match-Prime Liquidity, echoes this sentiment from a liquidity provider perspective: "Stricter regulations and compliance requirements may make it challenging for some liquidity providers - particularly smaller ones with limited resources - to meet the new demands, significantly affecting their competitiveness".

The consolidation of trading activity around major markets could have unintended consequences for niche CFDs, which now face lower liquidity and the possibility of more speculative or questionable trading behavior. Nevertheless, leading brokers appear unfazed, pointing to robust demand for established products and the gradual shift away from questionable practices.

Gold and Nothing Else

According to data from Finance Magnates Intelligence, CFDs on metals accounted for more than 60% of global broker volumes in the first half of 2025. However, several points need to be emphasized. The vast majority, nearly 80%, came from gold contracts, another 18% from silver, while only a marginal share was attributed to other metals, let alone the rest of the commodities.

Moreover, the breakdown varies by region. Since most broker turnover is currently generated in Asia, including India, Thailand, and other markets, the statistics are somewhat skewed, as trading in gold and precious metals is particularly popular there. In Europe, by contrast, traders also turn to commodities, though with considerably less enthusiasm.

Filip Kaczmarzyk, Head of Trading and Board Member of XTB, also shares Tsepaev’s view that the recent regulatory move will not significantly impact the market. "From a trading perspective, the impact is minimal," he commented for FinanceMagnates.com. "The rules for the most popular and heavily traded instruments remain unchanged. The new regulations primarily affect less frequently selected, less liquid instruments; therefore, I don’t expect traders to seek out offshore providers."

"It's important to note that these rules have already been implemented at the EU level, and major market players like XTB are already compliant, so their business operations will not be affected. I also do not anticipate any consolidation among EU-based providers or other structural changes in the market. We do not expect traders to migrate to offshore brokers, as the affected instruments are not among those that traders actively pursue."

Industry Consolidation Will Accelerate

Executives say the changes are way less disruptive than past regulatory overhauls, such as ESMA’s landmark intervention in 2018.

Tom Higgins, CEO of Gold-i, believes the shakeout will ultimately benefit the market’s integrity: “CySEC is adjusting policies to match the regulatory ‘norm’, which will actually encourage strong players to open in Cyprus, so I see this as a good thing for the market. Good firms will adapt and poor firms will leave and find another weak regulator or simply become un-regulated.”

From the liquidity provision standpoint, the regulatory tightening is expected to accelerate consolidation among providers. "As the market continues to evolve, customer expectations regarding quality and liquidity depth are increasing," explained Kapsos. "Established liquidity providers have an advantage as they can offer competitive pricing and access to diverse liquidity sources."

Smaller brokers with limited compliance capacity may struggle to meet the new requirements, a development likely to accelerate consolidation among EU CFD providers. The trend is particularly evident in the liquidity space, where operational requirements and capital demands continue to rise. "

Smaller brokers with limited compliance capacity may struggle to meet the new requirements, a development likely to accelerate consolidation among EU CFD providers.

“Very small players with few compliance staff may, indeed, suffer and go under, or sell their client base to one of the big-boys. As an industry that is over-broked, I am not sure this is a bad thing anyway,” Higgins added.

Retail traders, meanwhile, face a choice: adjust their deposits to offset lower leverage or seek new products and offshore alternatives. “This has been proven in all the other regulatory regimes that have reduced leverage,” The Gold-i’s CEO concluded.

Financial Sector Pushes Toward Compliance

CySEC’s overhaul doesn’t just target leverage; recent legal frameworks covering sanctions enforcement and capital requirements are also raising the bar for compliance across the sector.

Tajinder Virk, CEO and Co-Founder of Finvasia, welcomed the directive, viewing it as part of a broader regulatory response to “persistent concerns around mis-selling and excessive leverage in the CFD space. There is a need for the industry to evolve and move beyond high-risk products."

"Perhaps consolidation is around the corner. And this will give room to brokers grounded in trust, transparency, and long-term value. At Finvasia, we view this as a necessary correction that will strengthen the foundation of retail investments and dealing behavior in capital markets," he added.

Brokers and liquidity providers FinanceMagnates.com spoke to say the changes point to a tougher, more resilient European financial infrastructure, with brokers required to sharpen transaction monitoring and reporting systems.

Lower leverage for specified assets, although less popular, enhanced scrutiny, and stricter enforcement mean brokerages must invest in better risk controls while client funds are protected by tighter regulatory standards.

In the words of Tsepaev, “Stricter rules will help eliminate questionable practices and push firms to be more compliant. As a result, the market will grow more resilient.”

This article was updated on Sept. 16, 2025 at 10:15 CET to include comments from Andreas Kapsos, CEO at Match-Prime Liquidity.