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IG Group, a major global forex broker, said it was pleased with the decision of UK’s Financial Conduct Authority (FCA) to delay its final decision on potential tighter restrictions on the trading conditions and offering of CFDs to retail clients.
In a public statement, IG said it fully supports FCA’s decision to delay, in order to achieve harmonization across Europe for the regulation of CFDs and ensure that any measures are informed by clear and robust data analysis. IG added it is supporting the regulators’ intentions to improve consumer outcomes across the industry and believes they would benefit from the measures currently being discussed.
Further IG says it is already implementing measures to minimize the risk for retail clients trading in CFDs, like testing their knowledge and trading experience, rejecting clients who do not have enough funds to trade in CFDs or do not have sufficient knowledge and placing clients with limited experience in Limited Risk Accounts.
Earlier this Thursday FCA said it will wait for the European Securities and Markets Authority (ESMA) decision on the eventual introduction of stricter requirements for the offering of CFDs to retail clients and then will implement its own.
Also on Thursday, ESMA itself came out with a statement that it is considering the use of its product intervention measures rights under Article 40 of the Markets in Financial Instruments Regulation (MiFIR). The pan-European regulator, however, is planning to use those rights not only in regard to CFDs, but rolling spot forex and binary options. The measures are still under discussion and will take into consideration those already implemented by various national regulators.
In any case, the eventual measures by ESMA will not be implemented earlier than January 3, 2018.
IG is a financial services provider with over 40 years’ trading experience. It was the first company to launch spread betting, and it also offers trading in contracts for difference (CFDs), forex, stocks, bonds, binaries, and Bitcoin. It is primarily regulated by UK’s Financial Conduct Authority (FCA), but its subsidiaries have licenses from the authorities in Australia, Japan, South Africa, UAE and Singapore.
IG is also a member of UK’s CFD association, which was set up by several of the major forex brokers in the country in response to FCA’s initial restrictions on CFDs.