The UK’s Financial Conduct Authority (FCA) has proposed stricter rules for firms selling contract for difference (CFD) products to retail customers to improve standards across the sector and ensure consumers are appropriately protected.
The FCA says that analysis of customer accounts in the CFD sector indicate that 82% of users lose money. It adds that an increase in the number of firms in the CFD market has led the FCA to air concerns that more retail customers are opening and trading CFD products that they do not adequately understand.
Following an announcement from the European Securities and Markets Authority (ESMA) that it is considering exercising its product intervention powers to address its concerns over the use of contracts for difference (CFD), rolling spot FX and binary options contracts by retail traders, the UK’s Financial Conduct Authority (FCA) says it will delay its own rules on the products.
In a statement, ESMA says it has been concerned about the provision of speculative products such as CFDs, rolling spot FX and binary options to retail investors for a “considerable period of time” and has conducted ongoing monitoring and supervisory convergence work in this area.
Abu Dhabi-based ADS Securities announces the introduction of bitcoin CFD trading for Middle East and North Africa (MENA) clients using its MT4 platform.
Speaking about the decision to introduce cryptocurrency at this time, Jason Hughes, global head of retail sales, says: “We will be the first brokerage in the MENA region to offer bitcoin trading. We have followed the growth of this very exciting and dynamic new trading asset, but before offering a service we wanted to really understand the market and make sure we have the right systems and protection in place for our clients.
“As with all trading, it is very important to have the financial strength and the IT processes to protect positions. ADS Securities is the right partner for clients looking to trade cryptocurrencies. They understand that our capital reserves, regulation through the UAE Central Bank and the quality of the team provides a different level of support to them,” he adds.
Today we tip-toe into delicate (and to me largely unknown) territory. It remains to be seen whether or not Bitcoin will be a true phenomenon that changes the world – my instinct is still that it will inevitably be reigned in by “The Man” and become as regulated as fiat currencies – but whether or not it does revolutionise the global economy and indeed financial markets, I have a couple of concerns about how it is being treated by some brokers.
CFD broker CMC Markets has announced the completion of an integration with FlexTrade Systems to enable the wider dissemination of its proprietary CFD liquidity.
The firm says that while dissemination of foreign exchange liquidity is “a rapidly expanding market, as seen with the growth of so-called ‘prime-of-prime’ services”, few counterparties are currently offering anything similar when it comes to CFDs.
CMC Markets says that while its CFDs aren’t available as a default to all FlexTrade clients, those liquidity takers who are interested in trading the company’s 85 indices, commodities and treasuries CFDs can now request to have access.
Gain Capital has joined the growing ranks of retail FX brokers offering Bitcoin trading, with the launch of the functionality on its City Index platform, the company's FCA regulated service in the UK.
Customers are able to trade the cryptocurrency as either a spread bet or a CFD (contract for difference) – Gain says that it has established liquidity relationships with multiple Bitcoin exchanges, which it uses to create a volume-weighted average price that it claims is “reliable and transparent”.
The Australian Securities and Investments Commission (ASIC) has called on participants in the retail OTC derivatives sector to improve their practices after recent ASIC activities showed their conduct “fell short of expectations”.
The products offered by retail OTC derivatives issuers in Australia include binary options, margin foreign exchange and contracts for difference.
ASIC says that a recent review of 57 retail derivative issuers identified a number of risks associated with the products offered to retail investors by OTC derivatives issuers.
The UK’s Financial Conduct Authority (FCA) has issued two consultation papers ahead of the imposition of rules to address what it terms “harm to retail consumers from the sale of certain complex derivative products”, specifically retail –orientated contracts for difference (CFDs) and binary options.
The proposed rules would apply to firms acting in or from the UK and ban the sale, marketing and distribution of binary options, as well as restrict the sale, marketing and distribution of CFDs and similar products to retail customers.
B2C2, an OTC cryptocurrency liquidity provider, has been authorised by the UK’s Financial Conduct Authority (FCA) to arrange and deal in Contracts for Difference (CFDs) with eligible counterparties and professional clients. The FCA authorisation will allow B2C2’s clients to gain exposure to cryptocurrency markets via the firm’s CFDs.Max Boonen, founder and CEO, says: “We are excited to have received authorisation from the FCA to introduce a cryptocurrency CFD product. Eligible counterparties and professional clients can now gain derivative exposure to the cryptocurrency markets, benefiting from the competitive pricing and liquidity they’re accustomed to receiving from B2C2, while avoiding the risks associated with crypto custody.”