The UK’s Financial Conduct Authority announced on Friday morning that it is delaying publishing final rules that will govern the retail trading industry.
In December of last year, the British regulator said that it was likely to make the European Securities and Markets Authority’s (ESMA) product intervention measures permanent.
Introduced last August, those rules, which will be familiar to most of our readers, banned binary options and put caps on leverage available to retail customers trading in contracts for difference (CFDs) and foreign exchange (FX).
Currently, those rules are temporary and have to be renewed every three months – something ESMA has done consistently since they were first implemented almost a year ago.
Thus, to ensure that the rules remain in effect permanently, the FCA said that it wanted to put them into British law. Regulators in the Netherlands, Germany, and France plan on doing the same or have done so already.
The legislation that the British regulator wants to introduce appears to be almost exactly the same as ESMA’s. One difference is that the FCA has said it plans on making sure products similar to CFDs, such as turbo contracts, will be included in the regulations.
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After announcing its plans in December, the FCA issued another statement in February saying that it would announce the new rules in April.
Perhaps as a result of Brexit negotiations being extended until October, the financial watchdog has now said it will publish its CFD regulation in the coming months.
“As we are still considering the consultation feedback and ESMA’s temporary restrictions continue to apply to FCA-authorised firms, we now plan to publish a Policy Statement and any final Handbook rules in Summer 2019,” said the regulator in a statement issued on Friday.
“Our final rules for CFDs would apply from the date that ESMA’s restrictions expire, if not earlier.”
Though it seems unlikely to happen, there has been some hope in the FX trading industry that a post-Brexit Britain would be more lenient in its treatment of retail trading firms.
Speaking earlier this week, Andrew Bailey, the FCA’s chief executive officer, said that “left to our own devices, the UK regulatory system would evolve somewhat differently [to the EU’s].”