Following the MFSA’s Consultation on the implementation of National Product Intervention Measures in relation to Contracts for Difference (‘CFDs’), and in line with the position adopted by ESMA, the MFSA has updated the Conduct of Business Rulebook (applicable, amongst others, to investment services providers) (‘Rulebook’), to implement important changes aimed at enhancing consumer protection. These changes deal with restrictions in the marketing and the distribution or sale of CFDs to retail investors.
Restrictions introduced in the Rulebook, include inter alia, requirements that ensure that investors do not lose more money than they invest, and restrictions on incentives offered to trade in CFDs. Furthermore, investors are to be provided with intelligible risk warnings to ensure that they are aware of the high risk associated with investing in CFDs. With this respect, the MFSA has introduced standardised warnings on the risk carried out by such investments.
ESMA has issued a formal opinion on the MFSA’s national product intervention measures relating to CFDs, which can be accessed from here.