The FCA said it was stepping aside from making conduct rules while ESMA was considering action
Companies: CMCX, IGG, PLUS
The CFD regulation saga took another turn on Thursday after the European Securities and Markets Authority said it was considering taking action to clampdown on online retail trading platforms across Europe following moves by several European Country-specific regulators to intervene in the growing sector.
ESMA announced that it is planning European-wide rules for Forex and CFD trading that could potentially include a leverage cap, balance protection, and potentially even limit advertising across the EU.
The move, if implemented, will remove concerns that tighter regulation from within the UK would see non-domiciled providers move offshore and compete unfairly. Which would be good news for CMC Markets, Plus500, and IG Group.
The FCA said it was stepping aside from making conduct rules while ESMA was considering action, which suggests the FCAs guidelines on the CFD industry, due out earlier this year, will be delayed further.
"Given progress in ESMA’s own consideration of the use of its product intervention powers in this area, the FCA has decided to delay making final conduct rules for UK firms providing CFDs to retail clients, pending the outcome of ESMA’s discussions...
The FCA will continue to engage with ESMA to support the development of measures that promote a consistent level of investor protection across the European Union."
It seems the FCA and ESMA still have concerns about failures in a "number" of areas in the industry, including failures to check client knowledge and experience, and failure to check if punters understand the risks from trading.
The FCA also said that if there was a "signifncant delay" from ESMA, it would consider delaying making final rules at the domestic level in H118. However it also said it expected to publish the outcomes of its thematic work on CFD intermediaries in the near-future.