GAIN Capital responds to ESMA statement

Maria Nikolova

The broker believes that ESMA’s new regulations place less than 5% of full year 2018 total revenue at risk, based on an anticipated implementation date of the end of Q2 2018.

GAIN Capital Holdings, Inc. (NYSE:GCAP) notes that the European Securities and Markets Authority (ESMA) and the Financial Conduct Authority (FCA) have issued statements announcing regulatory changes in the provision of contracts for difference (CFDs) to retail clients.

The measures on CFDs are being introduced as a temporary intervention on a three-month basis, during which ESMA and FCA will reflect on whether it is necessary extend the intervention measures for a further three months or on a permanent basis, respectively.

While GAIN does not agree with every aspect of ESMA’s new rules, the Company is strongly supportive of measures that enhance consumer protection in the FX/CFD market and elevate standards across the sector, including curbing aggressive marketing to inexperienced investors and mandating disclosure requirements that ensure all clients fully understand the risks of FX/CFD trading.

GAIN operates a diversified business, which includes a retail FX/CFD business spanning eight regulatory jurisdictions, a U.S.-based retail futures business and an institutional trading business. As a result of this diversification, as well as due to actions being taken by the business to mitigate the impact of ESMA’s proposed regulations, the Company believes that ESMA’s new regulations place less than 5% of full year 2018 total revenue at risk, based on an anticipated implementation date of the end of the second quarter of 2018.

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