Proactive Investors - Run By Investors For Investors

UK regulator to adopt European binary trade and CFD curbs

The FCA added it would consult in early 2019 on a potential ban on cryptocurrency CFDs
Heads you win

Binary-option trades face a permanent ban after the UK regulator confirmed it would adopt recently introduced European rules.

In August, Europe’s regulator, ESMA, brought in a temporary ban on these binary 'win or lose' trades alongside controls on margin trading.

Britain’s financial regulator, the Financial Conduct Authority, said today it intended to follow those rules and extend the products covered to include turbo-certificates – a leveraged form of betting on market fluctuations. ESMA’s rules limited the leverage available on CFDs, capped potential losses and curbed marketing to unsophisticated customers. The FCA added it would consult in early 2019 on a potential ban on cryptocurrency CFDs.

A permanent ban on binary options would save retail investors up to £17mln per year, the FCA added, while the curbs on CFDs might reduce their losses by £267mln.

“The FCA is acting to tackle widespread concerns about the inherent risks of these products, and the poor conduct of the firms selling them, that has led to harm to consumers in the UK and internationally through large and unexpected trading losses,” said the statement.

Broker Liberum welcomed the decision and said it was a positive for the sector that the measures are permanent.

“We anticipate this will happen across European national regulators, so reducing the perception of regulatory risk for the sector.”

The group has a buy rating on CFD broker PLUS 500 PLC (LON:PLUS) and a target price of 2,800p.

Shares rose 2% to 1,440p.

View full PLUS profile View Profile

Related Articles

April 02 2019
Directors have 'a reasonable degree of certainty' that positive basic earnings per share will be achieved in 2018
April 15 2019
The specialty finance company offers revenue-based financing, allowing SaaS (Software as a service) and knowledge-based start-ups to 'pay as they grow'
April 24 2019
Kingswood has a new management team in place to implement the group’s three-year growth strategy.
Copyright ©, 2019. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use