Regulatory Alerts2018-12-06
Added · Updated
PS19/18: Restricting contract for difference products sold to retail clients
The Financial Conduct Authority imposes final rules requiring firms to limit leverage for contracts for difference (CFDs) and CFD-like options sold to retail clients to between 30:1 and 2:1 depending on asset volatility. Firms must close out customer positions when funds fall to 50% of the required margin, guarantee that clients cannot lose more than their total account funds, and prohibit cash or other inducements for trading. The rules also mandate a standardized risk warning displaying the percentage of retail client accounts that incur losses. These measures apply to MiFID investment firms and UK branches of third-country firms marketing or selling these products to retail clients, with CFD rules effective from 1 August 2019 and CFD-like option rules from 1 September 2019.
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