CFD Restrictions Permanent in Malta
Another financial regulator in Europe has confirmed that the product intervention measures first created by the European Securities and Markets Authority, will become permanent in their country. The Malta Financial Services Authority confirmed on Tuesday, August 20, 2019, that the measures on CFD’s would be applied on a national scale permanently in the next week. Already the Conduct of Business Rulebook has been updated to restrict distributing and marketing of contracts-for-difference on retail investors.
The Maltese Financial Regulator was somewhat forced to make this decision. The ESMA threatened to investigate finance authorities that didn’t make their product intervention measures permanent. This has been evident as more than 90% of finance authorities in the European Union have finalized these measures into their codes of conducts. This news will surely be a blow to Maltese traders.
The one positive aspect of the Malta Financial Services Authorities decision is that a special requirement has been added. This requirement ensures clients won’t lose the money they’ve put into the Maltese exchange. The regulator mandates that all trades must offer easily identifiable risk warnings. This has allowed for the MFSA to provide a secure environment for traders in Malta.
The regulator published a statement that reads: “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.”
The European Securities and Markets Authority has responded to the MFSA’s decision. They indicated publicly that the national measures implored in Malta are proportionate and justified. This ensures that the ESMA won’t be barking on the MFSA’s door anytime soon.
The Head of Conduct Supervision for the Malta Financial Service Authority, Michelle Mizii stated: “These rules are in line with the MFSA’s Vision. We 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.”