CySEC to reach decision on CFD restrictions by end of July

Maria Nikolova

CySEC will then inform ESMA on the content of the national product intervention measures in order for ESMA to issue an Opinion on the proportionality of the restrictions.

Following the launch of the Consultation Paper on Imposing National Product Intervention Measures (“NPIMs”) to Restrict the Marketing, Distribution and Sale of Contracts for Difference (CFDs), and the closure of the Consultation on June 14, 2019, the Cyprus Securities and Exchange Commission (CySEC) today announces that a decision on the content of the national intervention measures is expected to be reached by the end of July.

CySEC will then inform ESMA and other National Competent Authorities (NCAs) on the content of the measures so that ESMA may conduct its examination and issue an Opinion on the proportionality of the intended restrictions.

The ESMA restrictions on the CFD offering will expire on August 1, 2019. However, all Cyprus Investment Firms (CIFs) are told to continue applying the content of the measures under the ESMA Decision on CFDs irrespective of its deadline lapsing, until such time when the Cypriot measures are introduced – a process which is likely to take up to two months following the publication date of this Circular.

In particular, CIFs should comply with the content of the national product intervention measures adopted by other EU NCAs when marketing, distributing or selling CFDs in the territory of the respective Member State. Further, where a CIF markets, distributes or sells CFDs in the Republic of Cyprus or in the territory of a Member State that has not adopted national product intervention measures yet, or in a Third Country, it must abide by the content of the ESMA measures as if the measures were in force.

Let’s recall that, the Cypriot regulator wants to vary leverage caps for CFD trading depending on the type of retail investors. Put otherwise, some retail investors will see even harsher leverage restrictions than the ones introduced by ESMA, whereas others may see the restrictions relaxed.

According to CySEC, the ESMA Decision on CFDs does not distinguish between different subcategories of retails clients. MiFID II does not distinguish between different subcategories of retail clients either, but introduced the notion of target market. CySEC expects CFD providers will not sell such products to clients falling within the negative target market. However, CySEC cannot rule out the possibility that sales of such products might appear in the case of retail clients falling within the grey area of target market (i.e. those not falling neither within the positive target market nor within the negative target market).

CySEC also acknowledges that the term “retail client” encompasses different types of investors, with different levels of knowledge and financial position and the persons falling within the positive target market does not necessarily share the same level of knowledge and financial position.

For example, CySEC is proposing to introduce stricter leverage limits for retail clients falling within the ‘grey area’ of the target market, and affording slightly higher leverage limits for retail clients falling within the upper tier of the positive target market.

Read this next

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

Digital Assets

Prisma Finance suffers $10 million crypto exploit, attack ongoing

Liquid staking protocol Prisma Finance fell victim to a security exploit on March 28, resulting in nearly $10 million in Prisma mkUSD and wrapped stETH being stolen by hackers.

Digital Assets

Masa and LayerZero: Bridging Blockchains for Data Sovereignty

Masa Network is poised to revolutionize the personal data landscape with its upcoming launch as a cross-chain platform, making it accessible on a variety of blockchains right from the start.

<