CNMV Issues Warning On Four New Financial Firms, Including Oasis Trading
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The Spanish Securities Market Commission (CNMV) shared that it plans to introduce extra rules for CFDs (contracts for difference) on July 20, 2023. The European Securities and Markets Authority (ESMA) supported these new rules, saying they are fair and needed.
The new rules will stop companies from using some ways to talk to people. They can’t use sales helpers, phone centers, or special computer programs to find investors. They also can’t pay for events or use famous people to talk about CFDs. But if a company only sells a few CFDs or mostly sells other products, they can still do some ads or sponsorships.
CNMV Strengthens Regulations To Protect Retail Investors From Risky CFDs
The rules also explain when certain CFD information can still be shared. This includes answers to direct client questions, facts needed to finish CFD transactions, or plain information like fact sheets without opinions.
The second set of rules covers other risky investments, like some types of futures and options. For these products, providers must close a client’s position if its value drops to half of the initial deposit.
One exception is turbo products, where the maximum loss equals the amount invested. Turbo products are similar to CFDs but work slightly differently.
CNMV introduced these rules after asking for public feedback in November last year. They said their earlier rules from 2019 didn’t fully protect investors.
Around 75% of retail investors still lose money with CFDs, even with the old rules. CNMV explained that many Spanish investors buy CFDs without understanding them, often through advertising or calls from unapproved brokers.
Europe Tightens CFD Oversight For Better Investor Protection
In 2017, CNMV had required CFD providers to warn investors about risks when using high leverage. Investors were told they could lose more than their initial investment.
Elsewhere in Europe, regulators are also focusing on CFDs. In the UK, the Financial Conduct Authority (FCA) found that many brokers were not properly checking for market abuse.
The FCA also said that only 61% of UK CFD providers were ready to follow stricter consumer protection rules by the end of July 2023. These rules aim to improve safety for all financial customers.
The National Securities Market Commission (CNMV), or Comisión Nacional del Mercado de Valores in Spanish, is a government agency in Spain. It oversees and regulates the country’s securities markets and operates independently under the Ministry of Economy.
