As part of its ongoing efforts to enhance consumer protection, the MFSA has updated the Conduct of Business Rulebook to implement important changes essentially restricting the marketing, distribution or sale of Contracts for Differences (CFDs) to retail investors. This update follows an extensive consultation process which the Authority held with industry earlier this year.
During the last years, the European market has witnessed a rapid increase in the marketing, distribution or sale of CFDs to retail clients across the EU. CFDs are inherently risky and complex products. European regulators have expressed widespread concerns on the increasing number of retail clients trading in these products and having them losing their money. These concerns are also supported by the numerous complaints received from retail clients across the EU who have suffered significant losses when trading CFDs.
Head of Conduct Supervision of MFSA Dr Michelle Mizzi Buontempo, remarked that “these rules, in line with the MFSA’s Vision, seek to strike a balance between the market’s need to provide fair competition and client choice, while at the same time protecting consumers of financial services, and safeguarding the integrity and stability of the financial system.”
