Spain sets in motion stricter marketing of retail Forex and CFD accounts

cnmv spain forex regulation

Back on March 8th, LeapRate covered when Spain’s financial regulator CNMV (Comisión Nacional del Mercado de Valores) issued its Activity Plan for 2017-2018

In that activity plan, the CNMV did not outline specific plans to target Forex and CFD trading, but it did state that one of its four strategic objectives will include “analysis of initiatives with complex, high-risk products”. Which, in regulator-speak, means leveraged products traded by retail clients – namely, Forex and CFDs.

In the latest developments, today we got an official release from the CNMV, which officially set in motion several measures to enhance the protection of retail investors in Spain when opening accounts with CFD, forex trading, or binary options brokers.

And about as interesting as what the CNMV did do, is what they didn’t do – much to the chagrin of Forex and CFD traders and brokers alike, no outright limit was put on leverage, or binary options trading.

(But, the CNMV did specifically state that they weren’t ruling out similar leverage limits or outright trading bans in the future).

What did the CNMV enact?

CNMV has required brokers that provide CFDs or forex products with greater than 10:1 leverage and binary options companies marketing accounts to retail investors to do the following: 

  1. Expressly warn investors that CNMV believes that due to their complexity and risk the purchase of these products is not appropriate for retail investors.
  2. Inform about the cost they would support if they decide to close out their position immediately after entering into the transaction and, in the case of CFDs and forex products that due to leverage losses may be greater than the amount originally invested to purchase the product.
  3. Entities must obtain from the investor a written text or voice recording that proves that the customer is aware that the product he/she is about to purchase is especially complex and that CNMV believes it is not appropriate for retail investors.
  4. Advertising used by companies to promote CFDs, forex products or binary options must always contain a warning on the difficulty of understanding these products and a disclosure of the fact that CNMV believes they are not appropriate for retail investors owing to their complexity and risk.

The companies to whom this demand has been addressed must adapt their procedures and systems so as to be able to give these warnings and obtain written or oral statements of awareness as soon as practicable, and at all events within one month from receipt of the demand.

CNMV also plans to approach the securities supervisors of other countries to ask them to require that similar warnings be given and actions be taken by entities that provides these products to Spanish retail investors under the freedom to provide services.

CNMV will actively advocate at ESMA the adoption of coordinated measures throughout the European Union to enhance investor protection in this domain.


The marketing of high levered CFD products to retail investors has raised concerns at CNMV for some time. As documented by LeapRate, you can view here the high amount of warnings emanating from the CNMV.

In October 2014 an official warning was given on the risks and the high ratio of investors obtaining losses when investing in CFDs and in July 2016, on the occasion of a release issued by ESMA on CFDs, binary products and other speculative products, CNMV issued a new warning on the risks involved in these products.

CFD’s, forex products and binary options and their risks are hard to understand for most retail investors. Research conducted by CNMV and other securities supervisors shows that most retail investors investing in these products lose money.

According to data drawn from the CNMV’s latest study, from January 1st, 2015 to September 30th, 2016, 82% of investors who entered into CFD transactions made a loss.

The total losses of 30,656 investors, including transaction costs, spreads and fees, came to €142 million (the aggregate results were losses of €52 million plus €90 million in fees, spreads and other costs).

Some European Union countries have proposed and in some cases even implemented a range of initiatives to limit the leverage of investments in these products or restrict their marketing by placing constraints on advertising or remote sales via call centres. CNMV stated they didn’t rule this option out.

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