XTB, the biggest Polish retail trading company, announced today (Monday) that it will continue operating in Spain despite new restrictions on marketing activities related to Contracts for Difference (CFDs) imposed by the Spanish National Securities Market Commission (CNMV).

XTB to Optimize Costs as Spain Clamps Down on CFD Advertising

The company's decision follows a thorough analysis of the CNMV's interpretative criteria published on July 12, 2024, regarding implementing its resolution on product intervention measures for CFDs and other leveraged products. XTB was the first to respond to the mentioned changes. However, in Spain, several other popular retail brokers also offer CFDs to retail clients, including CMC Markets and Plus500. The changes will therefore affect not just a single broker, but the entire industry.

According to XTB's assessment, the CNMV's guidance prohibits advertising CFDs and other business practices in Spain, regardless of the client's residence, but does not ban trading itself. The sale of CFDs is permitted, provided it occurs at the investor's sole initiative.

“As a result, the decision does not imply any changes in the way retail investors can trade CFDs through brokers they are already clients of, nor does it prevent them from opening new CFD trading accounts, provided that the entities meet all regulatory obligations,” XTB commented.

The CNMV's interpretation effectively bars investment firms offering CFDs from placing promotional information about these products on their websites. It also prohibits sponsorship of events or organizations and brand advertising if the purpose or effect is to directly or indirectly advertise CFDs.

XTB “decided to continue operations in the Spanish market,” the company commented in Monday’s statement. “Effective immediately, marketing restrictions compliant with the guidelines will be implemented in this market.”

XTB acknowledged that these restrictions could negatively impact the number of new clients acquired in the Spanish market in the medium to long term, potentially affecting revenue levels. However, the company stated it was unable to quantify this impact at the time of the announcement precisely.

The Polish broker noted that it has not conducted significant CFD-related advertising activities in Spain for over two years. In 2023, revenues from the Spanish market accounted for approximately 11.3% of XTB's consolidated group revenues. Considering that the company's revenues amounted to PLN 1,588.2 million in 2023, excluding the results reported from Spain would mean a decrease in revenue of approximately PLN 180 million ($46 million).

The assurances have not comforted investors, as XTB's shares on the Warsaw Stock Exchange plunged by 7% on Monday, testing the level of PLN 67.20. However, they remain close to their historical high of PLN 76.

A year ago, when the CNMV introduced the first restrictions on CFD marketing, the company claimed they had a “minor” impact on its operations. The Polish multi-product broker noted that it has not seen “any significant changes” in its rate of customer acquisition as a result of the new rules.

XTB Promoted Passive Investing in Spain

Although the company claims it has not undertaken any significant marketing activities in Spain, it launched a campaign with VanEck at the end of May to promote passive investing in the country using ETFs. This collaboration also aimed to boost the savings culture in Spain and address the limited saving capacity of Spaniards. Currently, Spain's savings rate is below 6%, compared to over 12% in other European countries like France and Belgium.