CMC Markets launches limited risk accounts in France in response to new rules

Online trading services provider CMC Markets Plc (LON:CMCX) has earlier today announced the launch of a limited risk account for its French clients.

The aim of the new account, as its name suggests, is to limit the size of possible losses to the size of the initial deposit. The new type of account enables trading in more than 1,500 contracts for difference (CFDs), including contracts on shares and indices.

The launch of this specific service in France is not random. As Guilhem Tranchant, who heads CMC Markets France, explains, the new account type reflects the logic of the Sapin 2 law.

The latter envisaged changes for the regulation of the CFD sector, including a ban on advertising of certain types of CFDs that pose high risks of losses. The law reflects proposals outlined by the French financial markets regulator AMF last year.

In January this year, CMC Markets’ CEO Peter Cruddas commented on the regulatory changes in a number of European countries that are set to affect the CFD trading industry. He noted: “The regulatory changes that will be implemented later in the year will undoubtedly present the Group with some short- to medium-term challenges as clients and the industry adjust.”

Back then, Mr Cruddas indicated the future launch of risk limited products. “We will be evolving our product offer to limit clients’ downside risk with the launch of a limited risk account and continue to offer our guaranteed stop loss order”, he said.

In the meantime, the Netherlands has joined the list of European countries seeking to curtail advertising of high-risk financial products. Yesterday, the Dutch financial markets regulator AFM posted its proposals for reforms in regulations that will result in a ban on advertising of certain products like binary options and CFDs with leverage higher than 1:10. The consultation period closes on April 3, 2017.