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BaFin follows suit, restricts CFD trading permanently

Dec 21 2018
By
Jonathan Smith

 

Germany’s financial regulator BaFin plans to apply permanently ESMA’s CFD trading restrictions on a national level. The decision is intended as a protective measure for retail investors which will take effect in 2019.

 

In its official notice the German financial watchdog clarified that it aims to “permanently match the level of protection in Germany to the temporary product intervention measure issued by ESMA.” This is partly done to prevent attempts to evade these measures by providers from other EU countries. Another reason is that the ESMA can only apply such product intervention measures on a temporary basis.

 

We remind you that the European Securities and Markets Authority (ESMA) banned binary options, and set restrictions on CFDs for retail clients in March this year and keeps extending these measures since then. The restrictions on forex and CFD trades include a leverage cap of 1:30, obligatory negative balance protection, and ban on trading bonuses, among other things.

 

The decision of BaFIN comes two weeks after the Financial Authority (FCA) proposed the same permanent measures to apply in the UK. So, if there was any doubt remaining about the way EU countries will handle ESMA’s guidance, it is all gone now that FCA and BaFIN are taking derivatives regulation to the next level. 

 

Apart from restricting CFD trading for retail investors permanently on a national level, the German financial watchdog also intends to ban binary options trading on a permanent basis.

 

TAGS: BaFin  ESMA  forex restrictions  leverage cap  binary options ban 
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