CMC Markets says in shape for full compliance with BaFin restrictions on CFDs

Maria Nikolova

CMC Markets already offers negative balance protection and will have no problem complying with the new CFD rules in Germany.

As expected, the announcement of the new rules concerning CFD offering to retail clients in Germany has provoked a response from the industry, with online trading firm CMC Markets Plc (LON:CMCX) being one of the first to voice its stance.

In a filing with the London Stock Exchange earlier today, CMC Markets welcomed the outcome of the consultation into the retail CFD industry regulation in Germany.

The company referred to the General Administrative Act published Germany’s Federal Financial Supervisory Authority (BaFin) yesterday. The document restricts the marketing, distribution and sale of CFDs with additional payments obligation. These instruments will no longer be available to retail clients in light of regulatory to concerns of unlimited losses and substantial risks that investors face when the difference to be paid exceeds the capital they have invested, as investors must pay the difference amount from their other assets. Putting it otherwise, the measures demand negative balance protection.

In its announcement today, CMC Markets notes that it already provides negative balance protection through its proprietary Next Generation platform, and, hence, will fully comply with the BaFin proposals.

BaFin is giving CFD providers three months to comply with the new rules, with the deadline set for August 10, 2017. The German regulator said yesterday that some providers already offer CFDs without an additional payments obligation or have, in response to the planned General Administrative Act, announced that they will in future offer such products.

CMC highlights the lack of further changes for clients that have been proposed by BaFin, including no regulator-imposed limitations on margins. This, however, may be a double-edged sword, as a detailed analysis by FinanceFeeds has shown. According to it, imposing an obligatory negative balance protection, accompanied by the lack of leverage restrictions may foster the b-book execution model.

Meanwhile, a crucial set of rules regarding CFD offering to retail clients is expected from the UK Financial Conduct Authority (FCA). The consultation has closed and the outcome announcement is scheduled for the summer.

Read this next

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets

Crypto.com enables Shopify merchants to accept crypto payments

Crypto.com has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.

<