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One of the major forex brokerages IG Group (LON:IGG), also expressed its satisfaction with BaFin’s decision to introduce softer than initially planned restrictions of CFDs offered to retail clients.
“The final proposals are in line with the original proposals and mandate the provision of a no negative guarantee”, IG said in its statement. “Per the Company’s announcement of 8 December 2016, IG already actively markets its Limited Risk Account in Germany which is not only compliant with these new rules, but provides additional ‘by position’ protection to German consumers.”
The initial intentions of BaFin included the eventual prohibition of offering of CFDs with leverage to retail clients, but those plans have obviously been scrapped. Instead, BaFin introduces mandatory negative balance protection for CFDs offered to retail clients, starting from August 10, 2017.
Unlike several other European financial markets and services regulators, like the Cyprus Securities and Exchange Commission and UK’s FCA, who took a different approach by introducing a 1:50 leverage cap on CFDs, among other measures, and Belgium’s FSMA, which prohibited trading in forex, CFDs and binary options altogether, it seems BaFin is favoring a softer approach. Obviously, it is more to the liking of the major forex brokers operating on the European markets.
Earlier on Tuesday, the leader on the German forex and CFD market, CMC Markets, also expressed its satisfaction with BaFin’s decision.