The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Europe’s retail FX CFD ban ‘ineffective’ before being scrapped

Esma no longer feels it needs to impose EU-wide leverage limits on the FX contracts for difference (CFDs) market, but there is little evidence to suggest its efforts to protect retail traders have done anything other than push business offshore.

KNF-Poland-regulator-R-780.jpg

Poland's financial supervision authority Komisja Nadzoru Finansowego (KNF)



The European Securities and Markets Authority (Esma) recently confirmed it would not renew the temporary restriction on the marketing, distribution or sale of CFDs to retail clients in the EU.

A spokesperson for the securities markets regulator said this decision was taken on the basis that most national competent authorities (NCAs) had taken permanent, national product intervention measures that were at least as stringent as Esma’s.

The only notable outlier is Poland, where the financial supervision authority Komisja Nadzoru Finansowego (KNF) decided to introduce an additional level between retail and professional status – ‘experienced’ – where clients can trade with a maximum leverage of 1:100.

The KNF justified the lower margin requirement by referencing the results of surveys conducted by the authority and a Polish association of investment firms, which it said indicated that many Polish clients had opened an account with a broker registered outside of the EU to access higher leverage.

Offshore trading

It is impossible to know the exact extent to which this has happened, since offshore brokers don’t report their client numbers or volumes.




You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree