FCA consults on restricting contract for difference products sold to retail clients

On 7 December 2018, the FCA published Consultation Paper 18/38: Restricting contract for difference products sold to retail clients and a discussion of other retail derivative products (CP18/38). Earlier this year the European Securities and Markets Authority (ESMA) introduced a temporary product intervention measure which temporarily restricts how contracts for differences (CFDs) are sold to retail consumers because of the significant investor protection risks they pose. In CP18/38 the FCA is proposing rules making ESMA’s temporary intervention measure permanent in the UK. However, the FCA’s proposals are wider in scope than ESMA’s intervention by including products with many of the same characteristics as CFDs, which the regulator calls CFD-like options. This is to stop firms getting around these measures by offering retail consumers CFDs in slightly different legal forms. The FCA is also proposing to apply 30:1 leverage limits to CFDs referencing certain…

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