The French financial regulator, Autorité des marchés financiers (AMF), is mandating some changes to retail brokers operating in the country. After months of deliberations on an advertising ban for certain products, the watchdog has come up with the final rules for brokers.
All electronic advertisement of forex and binary options in France will be banned. Companies will still be able to offer CFDs (contracts for difference) provided that they meet certain requirements. IG Group is currently the first company to state that the ban will have little effect on the firm’s operations in the country.
The AMF is requiring all brokers that are willing to operate in the country to provide a guaranteed stop loss on client positions and a negative balance protection. Before opening a position, clients will have to introduce their stop loss. After the order is executed, clients will not be able to change the stop loss to a wider level. Therefore clients will be able to lose only less than originally anticipated on every position.
The decision is a follow up to the adoption of the Sapin 2 law at the end of last year. After a period of consultation with industry participants and clients of retail brokers, the general rulebook of the AMF has been updated.
Finance Magnates can also confirm that as long as CFDs trading accounts are compliant with the AMF’s new requirements, no leverage restrictions apply.
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IG Group in Full Compliance with New CFDs Rules
IG Group, one of the companies that are involved in the French market, has released a statement via the London Stock Exchange commenting on the latest developments on the matter. The firm appears to have edged its competition in the country by fully complying with the new rules. The rest of the companies operating in France are also expected to adjust to the new requirements.
“The AMF has confirmed certain restrictions on electronic marketing of CFDs to retail clients in France. The key marketing restrictions do not impact the accounts that IG now offers to new clients in France, because IG’s accounts provide a limited loss-by-position guarantee as required, and therefore also a guarantee of no negative balance,” IG Group’s statement reads.
IG Group expects no material negative impact from the new requirements from the AMF. On the contrary, since the company is already fully compliant with the new requirements it may benefit from taking additional market share.
Elaborating on the matter, the company’s statement continues: “IG believes the AMF’s approach will provide substantial protection for consumers and greatly improve standards in the sector. We support robust and proportionate regulatory oversight of the CFD sector in all the markets in which we operate.”
Finance Magnates is yet to hear from other companies operating in France to receive their feedback on the new regulatory requirements.