NEWS FCA proposes temporary CFDs restrictions to become per | FUTURE TIMES
NEWS
FCA proposes temporary CFDs restrictions to become permanent
The UK Financial Conduct Authority (FCA) has released an important update for the retail trading industry today. Only 2 years after first talks about restricting CFD trading temporarily, UK decides to make these restrictions permanent.
Despite market expecatitons of legal softening, FCA decided to leave the original regulation text intact.
In its announcement UK FCA states that it aims for increased consumer protection, thus the decision made. Moreover, they are going for permanent binary options ban.
According to authority’s analytics, measures are expected to prevent annual UK retail investor losses by £267.4m to £450.7m.
Most notably, the FCA also includes into the framework turbo certificates, a set of complex derivatives products offered by banks to retail traders. The maximum leverage on all products remains between 30:1 and 2:1, depending on the asset class.
The UK regulator is outlining that it will be reviewing CFDs on cryptocurrencies in Q1 of 2019. Earlier this year, the FCA made clear that it intends to restrict the offering of digital currencies to cash trading.
In what is a first, the FCA estimated the impact on UK consumers from binary options. The product’s ban is expected to save retail consumers up to £17 million per year. Notably, the regulator also notes that the risks from unauthorized entities offering such products are only probable.
Commenting on the matter, the Executive Director of Strategy & Competition at the FCA, Christopher Woolard, said that the design and mode of distribution of “complex derivative products” are worrying for the regulator.
“This is despite focused supervisory work over several years to try and improve firms’ conduct,”
Woolard said.
The FCA’s new CFD consultation is also asking for input on whether other derivatives, such as futures are suitable for the restrictions.
Firms have it until the 7th of February to provide comments on the binary options ban and until the 7th of March 2019.
