Forex and CFD brokers lose another $200 million in market value Monday as FCA rule effect continues


Stock market investors have continued to dump shares of publicly traded UK Forex and CFD brokers, following new rules proposed last week by UK financial regulator the FCA for CFD trading.

We had earlier reported that the FCA’s proposals – including a ban on deposit bonus payments to retail traders, and (more importantly) a 50x limit on trading leverage – came as a surprise to the markets and to the industry, which leading industry executives were not pleased about, in particular IG Group CEO Peter Hetherington.

The FCA’s surprise move led to a 25-38% decline in the shares of leading FCA regulated online brokers that day, including IG Group Holdings plc (LON:IGG), CMC Markets Plc (LON:CMCX), and Plus500 Ltd (LON:PLUS). Hit less hard were Markets.com and CFH Group operator Playtech PLC (LON:PTEC) and NY-based Gain Capital Holdings Inc (NYSE:GCAP). Overall, more than $2 billion was wiped off the market cap of publicly traded Forex and CFD brokers in just one day.

But there has been no bounceback. In fact, shares of most of these brokers have continued downward.

After having more time to digest the news this weekend, stock market investors continued to sell shares of these brokers with IG Group down another 1.2% on Monday, CMC Markets down 8.1%, Plus500 off 3.7%, and Playtech down 1.5%.

Overall, Monday saw another $200 million lopped off the market cap of the FX sector, or more than $2.2 billion since the FCA’s bombshell was dropped last Tuesday, December 6.

It seems as though traders believe that this is just ‘the beginning’, and that the sector in the UK, elsewhere in Europe (such as Germany) and around the world will continue to be increasingly regulated and limited,  in turn limiting trading volumes and profits.

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Forex and CFD brokers lose another $200 million in market value Monday as FCA rule effect continues

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