With the looming deadline of the lapse of product intervention measures in Europe on the part of the European Securities Markets Authority (ESMA), national regulators have been adopting their own. Poland is one of the few countries, which is shying away from adopting the same product intervention measures outright.
The regulator has been mulling over creating a new category for experienced retail traders, which will be able to use up to 50:1 leverage. The approach has also been discussed by the CySEC, but apparently, both regulators are still awaiting cues from the ESMA on the matter.
The supranational European regulator is vigilant over any deviations from the common European approach in force since the begging of August 2018. The custom measures designed by the Polish financial regulator KNF are yet to be reviewed and approved.
In a statement issued on its website, the Polish regulator informed brokers that despite the lapsing of ESMA’s product intervention powers on the 31st of July, the firms should continue to apply the restrictions until further notice.
One of the possible dates on which the Polish regulator could be announcing its national product intervention powers is August 6, at its next meeting. The KNF also communicated that it shares the views of the ESMA regarding product interventions, therefore meaning that a deviation from the recommendations of the pan-European regulator is unlikely.
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With the ESMA adopting the 30:1 cap to mitigate excessive risks of losses incurred by inexperienced retail clients, the Polish authorities are only introducing one new category of experienced clients which may use 50:1 if they so please.
August 6 is likely to become a key date for local brokers that have been awaiting the decision of the local regulator on the matter for some time. In the meantime, the KNF expects that from August 1, 2019 brokers will continue to apply existing ESMA measures until the entry into force of the KNF’s own rules.
“The same principles should apply to CFD providers established in Poland which provide their services across borders in the other Member States of the European Union,” the Polish regulator outlined in a statement.
The only other member state which is mulling over a different category of retail traders so far is Cyprus. The CySEC outlined in May that it aims to accommodate several categories of traders, with the most experienced also getting access to 50:1 gearing on forex.
The KNF is wise to consider a differentiating approach towards the market, especially in light of recent data that profitability rates for traders in the country have been somewhat higher.