CMC Markets is launching a new limited risk account for trading CFDs in France, the company has shared in an official statement. The firm is aiming to comply with the regulatory changes in France after the beginning of enforcement of the Sapin 2 law, which is limiting the advertisement of most retail trading products.
The French financial regulator, Autorité des Marchés Financiers (AMF), announced that it will limit the product offerings of brokers that advertise their services in France. According to the guidance which the AMF issued earlier this year, only brokers that offer guaranteed stop loss execution and negative balance protection will be allowed to operate.
In addition, brokers have to adapt their technology to prevent traders from moving their initial stop loss, which they are required to enter once they submit their market or entry order. For example, if a trader enters into a long EUR/USD position at 1.0550 and has a stop loss at 1.0520, the stop loss level will only be allowed to be moved to a higher level.
This action is aimed at limiting risks for traders that are falling into the trap of increasing their risk on a given position. The AMF has studied the retail market in detail for a period of 4 years with the outcomes showing that 90 percent of traders lose money over time.
Rob Frasca Talks Ndau as an Adaptive Store of ValueGo to article >>
Consolidation of Brokers in France Just Starting
CMC Markets is initially launching the product for its French clients in order to appease the demands of the AMF, but the offering could be extended to other countries.
Commenting on the new limited risk account offering, the Managing Director of CMC Markets France, Guilhem Tranchant, said: “The new account offering is part of our logical response to the implementation of the Sapin 2 law. Our main priority remains to be to serve to the best interests of our clients.”
CMC Markets has become the second broker in France to introduce the changes to its accounts in the country.
At present, IG Group and CMC Markets have introduced accounts that are specifically designed to accommodate the new regulatory framework in the country. The Sapin 2 law has prohibited the advertisement of forex and CFDs brokers if they don’t adhere to the specific requirements introduced by French authorities.
Brokers that wish to advertise their products in the country need to commit substantial financial resources to adapt their offering to the provisions of the law. For companies like CMC Markets and IG Group that are using their own proprietary platforms, the changes are much easier to implement than they are for firms that rely on white label solutions.