The Spanish Securities
Market Commission (CNMV) expects its additional two-part
restrictions
on the marketing, distribution and sales of contracts for difference (CFDs)
instruments, to come into effect on July 20, 2023. The European Securities and
Markets Authority (EMSA) disclosed this today (Tuesday) in its public opinion on the extra measures which it said are “justified and
proportionate.”
Spanish Regulator Goes
Harder against CFDs
The first part of the new restrictions, which expands rules introduced
by CNMV in 2019 and ESMA
ESMA
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
Read this Term in 2018, bans marketing communications or practices aimed at retail
clients or the general public. This includes the use
of sales
agents, call centres or software providers to
recruit investors.
The rules prohibit the
sponsorship of events and organizations and the use of public figures to market CFDs. However, the restriction exempts sponsorship
and brand advertisements made by brokers that do not
offer CFDs or for whom the instruments only make up a ‘small part’ of their
offerings or general activities.
In addition, the new measures exclude certain
CFDs information: those provided on the sole request of a client, those necessary to perform transactions related to CFDs
and those
related to ‘objective data on CFDs’ such as fact sheets that do not include
‘subjective elements’.
On the other hand, part two of the additional restrictions cover the marketing
Marketing
Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t
Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t
Read this Term,
sale and distribution to retail clients of
other
certain ‘leveraged products’ such as certain types of futures and options. For
instance, the Spanish regulator will require providers of these other ‘high-risk products’ to close one or more of a
retail client’s open positions when the value of the positions is reduced to
half of the initial margin.
Furthermore, the scope of this second part
comes with an exclusion: turbo products whose total amount of risk is equal to the amount invested
are exempted. Turbo products, which are similar to CFDs,
are leveraged derivatives that allow investors to profit from the movement of
an underlying asset.
75% of Spanish Retail Investors Lose CFDs Trades
CNMV’s upcoming extra restrictions follow the
Spanish
regulator’s public consultation on the additional rules made in November last year. The watchdog said restrictions it introduced
in 2019 “had
limited effectiveness in terms of investor protection.”
It explained that the extra rules became necessary as approximately 75% of retail investors still suffer losses
on their investments in CFDs despite previous restrictions. This is even as a
‘large part of the distribution of CFDs’ in Spain are carried out by entities
with passports from other European Union member states.
When explaining the trends that necessitated
the additional restrictions, CNMV in its public consultation document pointed out that CFDs remain accessible to Spanish retail clients who lack sufficient financial knowledge of the
instruments.
The regulator blamed the trend on
brokers adopting ‘aggressive generalist advertising campaigns’ which sometimes pass through third parties without due authorization to provide investment services.
It added that retail investors are even lured through mass call
centres and other methods that evade existing restrictions.
Meanwhile, Finance Magnates reported that CNMV in 2017 mandated every forex, CFDs and binary options provider offering leverage higher than 1:10 to issue additional risk warnings to their retail clients. When a client wants to trade in leveraged products, they are to issue a disclaimer that warns them that losses from such trading may exceed the amount that is required to open the position.
CFDs Regulation in the UK
Elsewhere in Europe, other regulators are closely watching the CFDs industry. The UK Financial Conduct Authority (FCA) recently found 'gaps in surveillance' among CFDs providers in the country. Specifically, the British watchdog discovered weak monitoring of market manipulation and abuse of non-equity asset classes among the brokers.
Earlier this month, the FCA disclosed that only 61% of UK CFDs brokers will fully comply with its Consumer Duty requirements for products and services open for sale and renewal by the time the July 31, 2023, deadline elapses. The Duty sets higher and more precise standards of consumer protection across the financial services industry in the UK.
Spotware appoints new CEO; XS.com welcomes Marketing Manager; read today's news nuggets.
The Spanish Securities
Market Commission (CNMV) expects its additional two-part
restrictions
on the marketing, distribution and sales of contracts for difference (CFDs)
instruments, to come into effect on July 20, 2023. The European Securities and
Markets Authority (EMSA) disclosed this today (Tuesday) in its public opinion on the extra measures which it said are “justified and
proportionate.”
Spanish Regulator Goes
Harder against CFDs
The first part of the new restrictions, which expands rules introduced
by CNMV in 2019 and ESMA
ESMA
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
Read this Term in 2018, bans marketing communications or practices aimed at retail
clients or the general public. This includes the use
of sales
agents, call centres or software providers to
recruit investors.
The rules prohibit the
sponsorship of events and organizations and the use of public figures to market CFDs. However, the restriction exempts sponsorship
and brand advertisements made by brokers that do not
offer CFDs or for whom the instruments only make up a ‘small part’ of their
offerings or general activities.
In addition, the new measures exclude certain
CFDs information: those provided on the sole request of a client, those necessary to perform transactions related to CFDs
and those
related to ‘objective data on CFDs’ such as fact sheets that do not include
‘subjective elements’.
On the other hand, part two of the additional restrictions cover the marketing
Marketing
Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t
Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t
Read this Term,
sale and distribution to retail clients of
other
certain ‘leveraged products’ such as certain types of futures and options. For
instance, the Spanish regulator will require providers of these other ‘high-risk products’ to close one or more of a
retail client’s open positions when the value of the positions is reduced to
half of the initial margin.
Furthermore, the scope of this second part
comes with an exclusion: turbo products whose total amount of risk is equal to the amount invested
are exempted. Turbo products, which are similar to CFDs,
are leveraged derivatives that allow investors to profit from the movement of
an underlying asset.
75% of Spanish Retail Investors Lose CFDs Trades
CNMV’s upcoming extra restrictions follow the
Spanish
regulator’s public consultation on the additional rules made in November last year. The watchdog said restrictions it introduced
in 2019 “had
limited effectiveness in terms of investor protection.”
It explained that the extra rules became necessary as approximately 75% of retail investors still suffer losses
on their investments in CFDs despite previous restrictions. This is even as a
‘large part of the distribution of CFDs’ in Spain are carried out by entities
with passports from other European Union member states.
When explaining the trends that necessitated
the additional restrictions, CNMV in its public consultation document pointed out that CFDs remain accessible to Spanish retail clients who lack sufficient financial knowledge of the
instruments.
The regulator blamed the trend on
brokers adopting ‘aggressive generalist advertising campaigns’ which sometimes pass through third parties without due authorization to provide investment services.
It added that retail investors are even lured through mass call
centres and other methods that evade existing restrictions.
Meanwhile, Finance Magnates reported that CNMV in 2017 mandated every forex, CFDs and binary options provider offering leverage higher than 1:10 to issue additional risk warnings to their retail clients. When a client wants to trade in leveraged products, they are to issue a disclaimer that warns them that losses from such trading may exceed the amount that is required to open the position.
CFDs Regulation in the UK
Elsewhere in Europe, other regulators are closely watching the CFDs industry. The UK Financial Conduct Authority (FCA) recently found 'gaps in surveillance' among CFDs providers in the country. Specifically, the British watchdog discovered weak monitoring of market manipulation and abuse of non-equity asset classes among the brokers.
Earlier this month, the FCA disclosed that only 61% of UK CFDs brokers will fully comply with its Consumer Duty requirements for products and services open for sale and renewal by the time the July 31, 2023, deadline elapses. The Duty sets higher and more precise standards of consumer protection across the financial services industry in the UK.
Spotware appoints new CEO; XS.com welcomes Marketing Manager; read today's news nuggets.
