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

Inside View

Industry Leaders Share Insights on Framing Crypto Payments into FX Brokerage Business

While the allure of crypto payments is strong, caution is essential. The potential benefits in terms of speed, lower fees, and blockchain efficiency need to be weighed against the risks associated with cryptocurrency volatility. 

Institutional FX

FXSpotStream volumes hit 14-month high in November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2023, which moved higher on a monthly basis.

Digital Assets

Circle denies ties with Palestinian groups, TRON founder

Stablecoin issuer Circle has denied allegations that it facilitates funding for terrorist organizations.

Retail FX

CySEC hits operator of Titanedge, TradeEU with €90,000 fine

The Cyprus Securities and Exchange Commission (CySEC) announced that it has imposed a fine of €90,000 on Titanedge Securities Ltd due to shortcomings in their regulatory obligations.

Institutional FX

Cboe FX volumes retreats slightly in November 2023

Cboe’s institutional spot FX platform today announced its trading volume for the month ending November 2023, which took a step back after a strong rebound in October.

Institutional FX

Alpha Group seals Cobase majority acquisition

Foreign exchange service provider Alpha Group International plc (AIM: ALPH) has finalized its acquisition of Financial Transaction Services, operating as Cobase.

Digital Assets

TMNG Tokens Successfully Listed on MEXC Crypto Exchange

TMN Global proudly announces the successful listing of its native TMNG token on the MEXC crypto exchange, effective December 1st, 2023. This strategic partnership marks a significant milestone for TMN Global in the crypto space.

Institutional FX

Marex completes acquisition of TD Cowen’s PB business

London-headquartered commodities broker Marex has completed the acquisition of TD Cowen’s prime brokerage and outsourced trading business, which will be integrated into Marex’s capital market division. This division was established following the acquisition of ED&F Man Capital Markets in 2022.

Digital Assets

Talos introduces decentralized liquidity and onchain settlement with Uniswap and Fireblocks

“At the cornerstone of the DeFi ecosystem, Uniswap has the breadth of assets and depth of liquidity that institutional traders need. And to have this partnership powered by Fireblocks, a digital assets infrastructure provider trusted by some of the most renowned institutions, is very fitting.”