ESMA Urges National Regulators for Permanent CFDs Measures

Today the European Securities Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) publicized yet another extension to its rules on marketing CFDs across the EU. The decision comes as no surprise and is the third such move since the new framework for regulating retail brokers came into force last August.

The latest enforcement action on the part of the EU regulator is also urging national regulators to adopt permanent measures to protect consumers. In the views of the pan-European regulator, the measures which it took last August are still temporary and require a follow up on the part of every watchdog in the EU.

The ESMA's signal to national authorities is to adopt permanent measures. The supranational financial watchdog is strongly committed to enforcing its stricter regulatory regime for European companies.

Another Three Months

Just as the previous two extensions have been, the decision will take effect tomorrow and is for another period of three months. The pan-European regulator is highlighting in its decision that datasets provided from national regulators have been consistent with the desired effects of the regulatory framework.

Several national regulators across Europe have already adopted permanent intervention measures. The UK FCA and Germany's BaFin took the lead late last year, joined later by the Netherlands. The French AMF is also considering to make the temporary restrictions on CFDs permanent.

Poland on its part is possibly looking to create an intermediate group of traders between professional and retail investors. Other countries have not been very vocal about their intentions, but the majority of firms in the EU are likely to follow up on ESMA’s regulatory framework without any changes over the coming quarters.

Offshore Growth

In the meantime, brokers operating from outside of the EU have been on-boarding an increasing number of clients from the region. The Australian Securities and Investments Commission (ASIC) has highlighted in its official communications with Australian brokers that it is requesting a legal opinion on their process of welcoming EU clients.

The newly passed product intervention laws in Australia are likely to harmonize the regulatory framework in the land down under with that across the globe and contain offerings with aggressive Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term. While ASIC-regulated brokers have been the traditional choice for EU traders, other alternatives are also available.

Swiss brokers are offering up to 1:100 leverage, while offshore firms are aggressively marketing their offerings with much higher levels.