Business
Response to ESMA Proposals
Response to ESMA Proposals.
About this update from Cmc Markets Plc
[{"type":"text","content":"\n \nRNS Number : 5761Z CMC Markets Plc 18 December 2017 \n\n18 December 2017\n \n \nCMC Markets Plc\n \nResponse to ESMA Proposals\n \n \nCMC Markets Plc (\"CMC\") notes the announcement by the European Securities and Markets Authority (ESMA) issued on Friday 15 December, further to announcements made by the Financial Conduct Authority and other European regulators in December 2016 and June 2017. \n \nThis announcement includes proposals to improve investor protection for retail clients, and ESMA will conduct a brief consultation in January 2018 on the matter.\n \nThe proposals include the following:-\n \n1. Prohibit the marketing, distribution or sale to retail clients of binary options; and\n2. Restrict the marketing, distribution or sale to retail clients of CFDs, including rolling spot forex.\n \nRestrictions on CFDs under review are:\n- leverage limits on the opening of a position between 30:1 and 5:1, whose limit will vary according to the volatility of the underlying asset;\n- a margin close-out rule;\n- negative balance protection to provide a guaranteed limit on client losses;\n- a restriction on benefits incentivising trading; and \n- a standardised risk warning.\n \nThrough its proprietary technology CMC can quickly respond to regulatory change as illustrated with the introduction of negative balance protection in Germany and a limited risk product in the UK this year. Fair client outcomes have always been a focus, with margin close-out and standardised risk warnings already in place throughout the Group.\n \nBinary products generated £2.1m of revenues from the UK and Europe in H1 18 and therefore any prohibition on the marketing of binary options to retail clients will be immaterial in a group context. Proposed margin changes are likely to have an impact on how clients trade, although at this stage it is not possible to quantify the impact. \n \nThe Group has focused on higher value clients and has one of the highest revenue per clients in the industry. This coupled with geographic diversity, growing institutional business and a partnership with ANZ Bank to provide stockbroking services in Australia from September 2018, ...