UK watchdog clamps down on spread betting companies

December 6th, 2016, 05:37 AM

The Financial Conduct Authority has proposed a clampdown on trading in contracts for difference (CFDs), spread betting instruments popular with retail traders, triggering a steep sell-off in the sector�s shares.

The UK financial watchdog�s proposals, sparked by fears that many clients do not understand the risks associated with the products, sent shares in spread betters down 30 per cent when markets opened after the news on Tuesday morning.

The FCA laid out plans to restrict how much risk retail investors can take on with relatively small deposits, known as margin, calling for lower limits for inexperienced traders in particular.

It also wants spread betting platforms to provide standardised risk warnings and disclose profit-loss ratios on client accounts, after its own analysis showed that 82 per cent of clients lose money on the products.

Article on the FT

December 6th, 2016, 07:56 AM

I think this is in line with a general tendency to 'protect' retail investors in many countries against risky products. Where the regulator has been caught by the rapid development of fintech, they are doing their best to catch up and regulate where needed.

First a few scandals and lots of complaints are needed
then the regulator gets into action...

UK watchdog clamps down on spread betting companies

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UK watchdog clamps down on spread betting companies