New requirements on guaranteed stop loss and negative balance protection mandated to CFDs brokers
The French financial regulator, Autorité des marchés financiers
(AMF), is mandating some changes to retail brokers operating in the
country. After months of deliberations on an advertising ban for certain
products, the watchdog has come up with the final rules for brokers.
electronic advertisement of forex and binary options in France will be
banned. Companies will still be able to offer CFDs (contracts for
difference) provided that they meet certain requirements. IG Group is
currently the first company to state that the ban will have little
effect on the firm’s operations in the country.
The AMF is requiring all brokers that are
willing to operate in the country to provide a guaranteed stop loss on
client positions and a negative balance protection. Before opening a
position, clients will have to introduce their stop loss. After the
order is executed, clients will not be able to change the stop loss to a
wider level. Therefore clients will be able to lose only less than
originally anticipated on every position.
The decision is a
follow up to the adoption of the Sapin 2 law at the end of last year.
After a period of consultation with industry participants and clients of
retail brokers, the general rulebook of the AMF has been updated.
Magnates can also confirm that as long as CFDs trading accounts are
compliant with the AMF’s new requirements, no leverage restrictions
Group, one of the companies that are involved in the French market, has
released a statement via the London Stock Exchange commenting on the
latest developments on the matter. The firm appears to have edged its
competition in the country by fully complying with the new rules. The
rest of the companies operating in France are also expected to adjust to
the new requirements.
“The AMF has confirmed certain
restrictions on electronic marketing of CFDs to retail clients in
France. The key marketing restrictions do not impact the accounts that
IG now offers to new clients in France, because IG’s accounts provide a
limited loss-by-position guarantee as required, and therefore also a
guarantee of no negative balance,” IG Group’s statement reads.