ESMA Registers Increase in Total Complaints, Decline in CFDs

The European Securities Markets Authority (ESMA) has published a new document on the amount of client complaints against the financial institutions that are servicing consumers in the EU. A semiannual report is regularly being issued by the supranational regulator to assess the state of the industry.

The document shows that the total number of complaints from financial services consumers increased materially in the first half of 2016, when compared to the second half of 2015. The figure increased by 36 percent to a total of 7,026.

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ESMA elaborates in its official announcement on the most common reasons for complaints. Those are order Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term with 31 percent of the submissions, quality/lack of information with 19 percent and unauthorized businesses which total 15 percent of the total number of submissions.

Complaints Related to FX and CFDs Total 15%

The number of complaints from European clients of financial services related to the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and CFDs trading industry amounted to 15 percent of the total. This means a total of just over 1050 complaints.

The share of FX and CFDs complaints declined materially in the first half of 2016. The numbers have been consistently rising in recent years as reported by national regulators.

Debt securities and bonds accounted for 20 percent of the complaints, shares, stocks and equities were second with 17 percent, followed by options, futures and swaps with the same 17 percent.

Investment Advice Complaints Decline

According to ESMA the number of complaints related to faulty or dishonest investment advise declined in recent years. The trend is the opposite when it comes to fees and charges that retail investors incur.

The supranational regulator highlights that the increase in the latter may in part be due to the excessively low rates maintained by the European Central Bank. Investors have become increasingly risk-tolerant in search of higher returns on their investments.