Plus500 (LON:PLUS), another FCA-regulated major forex and CFD broker active in Europe, also said it is pleased with the decision of Germany’s Federal Financial Supervisory Authority BaFin to introduce a negative balance protection requirement for CFDs offered to retail clients.
In essence, in its statement Plus500 says it is offering negative balance protection already, “to its customers across all its product offerings in all its markets, as a core principle of its business model.” The brokerage also notes that BaFin has not implemented any leverage limits (unlike CySEC and FCA), so the new regulatory requirements in Germany are not going to affect its trading conditions.
One, then, starts to wonder whether BaFin’s restrictions are not a mere exercise in futility. Obviously the regulator has abandoned its initial intentions to introduce other retail customer protection measures like restricting the leveraged trading in CFDs and introduces very mild limitations.
Perhaps BaFin has only the retail clients’ best interest in mind, but it is highly dubious whether the negative balance protection requirement would have any significant effect, as the major brokers already offer it anyway. On the other hand, the unregulated brokers who tend to rip off their clients, would hardly take notice of the new requirements.
Plus500 is licensed by five regulators: New Zealand’s FMA, Israel’s ISA, the Cyprus Securities and Exchange Commission (CySEC), UK’s Financial Conduct Authority (FCA), and the Australian Securities and Investments Commission (ASIC).
The broker operates in the European Economic Area (EU member states, plus Norway, Lichtenstein and Iceland), Gibraltar, Australia and certain other jurisdictions across Asia, the Middle East and elsewhere. Its subsidiaries include Plus500UK, Plus500AU, Plus500CY and Plus500IL.