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This consultation outlines our concerns around increasing evidence of poor conduct and risks to investor protection from retail contracts for differences (CFDs) and proposes a package of policy measures designed to address those risks.
Retail CFDs are complex, leveraged derivative financial instruments that investment firms commonly offer to retail clients through online trading platforms.
Since 2009/10, our supervisory work and thematic reviews of CFD firms have found increasing instances of poor conduct and risks of consumer detriment across the sector. In our most recent review of retail CFD providers in 2015, we found shortcomings in the quality of appropriateness tests conducted by firms, including risk warnings, and anti-money laundering checks. According to our sample data, 82% of clients lost money on these products.
This consultation also discusses our policy considerations for binary bets. Binary bets are often marketed in
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