Will Spain be next to limit leverage on Forex and CFD trading?

Spain’s financial regulator CNMV (Comisión Nacional del Mercado de Valores) has issued its Activity Plan for 2017-2018. The plan has defined four strategic areas for the next two years, and 50 specific objectives for 2017.

While the CNMV did not outline specific plans to target Forex and CFD trading (or Binary Options, for that matter), 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.

A move by Spain would not come as a surprise. Several of the leading European financial regulators have either implemented new rules governing Forex and CFD trading for retail clients, or have active proposals for new rules on the table. These include:

  • Ireland – announced just earlier this week, the Central Bank of Ireland indicated two main avenues that it is considering: 1) total prohibition of the sale or distribution of CFDs to retail clients in and from Ireland altogether; or 2) the implementation of enhanced investor protection measures including a limitation on leverage.
  • United Kingdom – the FCA has issued proposals banning bonus payments to retail clients, and limiting Forex and CFD leverage to 50x. Feedback on the FCA’s proposals were due yesterday, March 7.
  • Cyprus CySEC has banned bonus payments, and limited introductory leverage to 50x (with higher leverage allowed for experienced traders).
  • Germany – BaFin requires negative balance protection.
  • France and Hollandadvertising ban on leveraged products.
  • Belgium total ban on leveraged trading products.

The CNMV’s activity plan outline for 2017 can be seen here (pdf).

Read Also: