Norway’s financial regulator reports of revoking licenses of four CFD brokers over law violations

Maria Nikolova

Over the last two years, the regulator conducted on-site inspections at six CFD brokers and took away four licenses as a result of law violations it found.

Norway has joined the growing list of jurisdictions voicing their concerns about the risks associated with contracts for difference (CFDs) trading.

On Wednesday, Norway’s financial supervision authority Finanstilsynet published the results of its oversight of CFD brokers during the past couple of years.

During the last two years, the regulator has carried out on-site inspections of six securities companies whose main activities are within CFD trading. The inspections have revealed several serious cases of breach of the Securities Trading Act’s Code of Good Practice, and the licenses of four of the six companies have been revoked as a result of these violations.

In these cases, the main reason for the loss of the licenses has been the companies’ role for short-term and loss-making CFD trading. The most serious violations include misleading marketing, providing insufficient information about risk, as well as inadequate assessments of the suitability of the product / strategy for the particular customer.

As part of these local inspections, Finanstilsynet has reviewed the business customers’ trade results. The check covered approximately 1,000 customers who traded CFDs from one to two years. Finanstilsynet found that 82% of these traders lost money, with the average loss corresponding to circa 55% of the customer’s equity.

These findings are similar to those published by the UK Financial Conduct Authority (FCA), which is seeking to reform the regulations for offering CFDs to retail investors. The FCA’s analysis of a representative sample of client accounts for CFD firms found that 82% of clients lost money on these products.

The Central Bank of Ireland is also pushing for enhanced protection of clients of CFD brokers. The regulator is currently examining two main ways of approaching the matter: the prohibition of the sale or distribution of CFDs to retail clients in and from Ireland, or the implementation of beefed-up investor protection measures. The latter option involves detailed risk disclosures, negative balance protection, as well as introducing a strict leverage limit.

Read this next

Retail FX

ThinkMarkets expands CFDs lineup to over 4000 ETFs and shares

ThinkMarkets has expanded its service offering by incorporating 2500 new CFDs on shares and ETFs on its ThinkTrader platform.

Retail FX

France regulator warns investors of Omega Pro,

France’s financial markets regulator alerted investors that scams related to Omega Pro Ltd are beginning to circulate, with the blacklisted firm capitalizing on the situation to run a range of “unrealistic” offers.

Digital Assets

Web3 platform Grand Time paid $2 million in token earnings to date

Community-driven Web3 platform Grand Time said its offering – which includes a multifaceted platforms and its native token – has been gaining significant traction highlighted by impressive operational metrics.

Institutional FX

FX volumes at MOEX halved in April as ruble gains gorund

Currency trading at Moscow Exchange (MOEX) halted its upward route in April as monthly volumes nearly halved from a month earlier.

Digital Assets

FTX US adds stock trading, fractional shares to crypto platform

FTX US, the American subsidiary of crypto exchange FTX has kicked off stock trading feature to its customers in an effort to compete with popular platforms such as Robinhood and eToro.

Industry News

UK FCA empowered to remove brokers’ permissions in 28 days

Businesses with permissions they don’t need or use, risk misleading consumers. These new powers will enable us to take quicker action to cancel permissions that are not used or needed.

Industry News

CFTC charges $44m Ponzi scheme but millions may have fled to foreign crypto exchange

The CFTC alleged that defendants transferred millions of dollars to an off-shore entity that, in turn, may have transferred funds to a foreign cryptocurrency exchange. None of these funds were returned to the pool.


Saxo Bank deploys Adenza to address Basel and EBA requirements

The integration of ControllerView will enhance Basel-driven capital calculations and reporting at Saxo Bank in support of the bank’s multijurisdictional capital and liquidity reporting requirements throughout Denmark, Switzerland and UK, with plans to expand into the Netherlands.

Executive Moves

ComplySci appoints CTO, CPO, and CLO to further regtech’s product expansion

ComplySci offers compliance software used by more than 1400 global institutions to identify risk and address regulatory compliance challenges.