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Screenshot of a breaking news alert e-mail from Q2 2017
Leading UK online brokers Plus500 Ltd (LON:PLUS) and CMC Markets Plc (LON:CMCX) have each issued statements in response to yesterday’s new directives from German financial regulator BaFin on CFD trading.
In summary, each of Plus500 and CMC Markets stated that they welcomed BaFin’s moves. Both Plus500 and CMC Markets stated that they already provide negative balance protection to their clients – the only real requirement of BaFin’s proposed rule changes.
Plus500 and CMC Market’s statements mirror that made yesterday by IG Group Holdings plc (LON:IGG).
We believe that both brokers, as well as others serving German online traders, are indeed fairly pleased with BaFin’s proposals. Mainly, because they are much milder than new rules for leveraged trading put in place recently in the UK by the FCA and in Cyprus by CySEC. The expectations were that BaFin was going to do something much harsher – such as action the FCA or CySEC took, or possibly a total ban on Forex and CFD advertising (as Holland and France did), or even a total ban on trading leveraged off-exchange instruments, put in place recently in Belgium.
The full statements made by each of Plus500 and CMC Markets follows:
09 December 2016
(“Plus500” or “the Company”)
Plus500, a leading online service provider for retail customers to trade CFDs internationally, notes the announcement by BaFin, the German Federal Financial Supervisory Authority, made yesterday regarding ‘additional payment obligations’ for CFDs traded by retail clients.
Plus500 welcomes the announcement made by BaFin as all accounts offered by the Company have always had balance protection, meaning the client cannot lose more than the value of their account. The Company therefore believes that any limitations imposed by BaFin in this respect will have no effect on its business.
9 December 2016
CMC MARKETS PLC
Response to BaFin Consultation Paper
CMC Markets plc (“CMC”) notes yesterday’s announcement by BaFin regarding the marketing, distribution and sale of CFD products to retail clients.
The BaFin consultation paper requires CFD providers to ensure that retail clients cannot lose more money than is deposited in their account, a functionality which is already available to CMC Markets clients in Germany. On the basis of the consultation paper, there are no other requirements from BaFin including no leverage limits, and where retail clients’ risk is limited to their deposits, there is no prohibition on marketing, distribution and sale of CFDs.
We welcome this balanced approach from BaFin and will respond to the consultation in accordance with the proposed timeline of 20 January 2017.
CMC is the leading provider in Germany and has had the largest retail CFD market share, based on the latest independent Investment Trends research, since the start of the study in 2011.