IG claims no problems with Germany’s new CFD rules

Maria Nikolova

IG is set to have no problems with the new CFD rules in Germany thanks to the Limited Risk Account it offers to German clients.

Yesterday’s publication of a General Administrative Act by Germany’s Federal Financial Supervisory Authority (BaFin), outlining new rules for the offering and marketing of CFDs to retail clients, has been triggering a wave of responses from the online trading industry, with IG Group Holdings plc (LON:IGG) the next in line to comment on the regulatory order.

In a filing with the London Stock Exchange published earlier today, IG Group voiced its supportive stance on the measures outlined by BaFin. The company is set to have no compliance issues with regards to the restrictions on CFDs with additional payments obligation, given that it already actively markets its Limited Risk Account in Germany. This type of account is compliant with the new rules and also provides additional ‘by position’ protection.

The document issued by BaFin yesterday restricts the marketing, distribution and sale of CFDs with additional payments obligation. These instruments will no longer be available to retail clients given regulatory concerns about the 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 regulator requests negative balance protection for retail clients of CFD brokers.

Also today, another CFD broker which targets German retail customers – CMC Markets, welcomed the new rules. The company said 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 adjust their business models in order to comply with the new rules, with the deadline set for August 10, 2017. The German regulator said yesterday that a number of providers already offer CFDs without an additional payments obligation or have, with regards to the planned General Administrative Act, announced that they will start offering such products in the future.

Do the new rules drafted by BaFin have a disadvantage? For a detailed analysis into the consequences of implementing such restrictions, check out this FinanceFeeds’ article.

Read this next

Technology

Spotware Systems unveils version 4.4 of Desktop and Web terminals

Spotware Systems, a technology provider for the electronic trading industry, has launched updated versions of its cTrader Desktop and Web terminals, which add new functionality to join a roster of advanced trading capabilities.

Institutional FX

Integral reports best monthly FX volume in 6 months

Currency trading on Integral’s platforms rose in September to its highest levels since March 2022 as increased volatility across financial markets led to greater activity on institutional FX venues.

Retail FX

OctaFX pre-launches new trading platform as MT4 and MT5 remain suspended by Apple

Like many other brokers within the FX and CFD industry, OctaFX had all its eggs in one basket, MetaQuotes, only offering access to MetaTrader 4 and MetaTrader 5. OctaTrader will provide the much needed change.

Opinion

Is the Bank of England facing another storm? Op-Ed by Stuart Cole, macro economist at Equiti Capital

An analysis and opinion editorial by Stuart Cole, macro economist at Equiti Capital, 3 October 2022 on what triggered the UK gilt market sell-off and is the Bank of England facing another storm?

Industry News

Kim Kardashian fined $1 million for touting EMAX tokens on social media

“Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”

Retail FX

INFINOX launches IX Exchange platform with +20,000 markets in UK

“The launch of IX Exchange is a statement of intent for our growth strategy and a game-changer for our clients’ trading potential.”

Retail FX

Saxo issues gloomy report for Q4 2022 and beyond

Globalisation was the biggest driver behind low inflation over the past 30 years and instrumental for emerging markets and their equity markets. Globalisation in reverse will cause turmoil for trade surplus countries, put upward pressure on inflation and threaten the USD as the reserve currency.

Executive Moves

ICE appoints Caterina Caramaschi to oversee interest rates and equity derivatives

“As the head of a product set covering some of the biggest interest rate and equity derivative benchmarks, at a time when investor’s priorities are firmly focused on interest rate changes and the outlook for global economies, Caterina’s two decades of financial market experience, and the relationships cultivated during that, will be invaluable in developing these products to the benefit of our customers.”

Retail FX

Plus500 sponsors Chicago Bulls ahead of trading platform launch in United States

Plus500 has signed a major multi-year sponsorship deal to become an official global partner of iconic NBA team Chicago Bulls. 

<