FCA outlines plans for major CFD review

11 January 2018

The UK Financial Conduct Authority (FCA) is to review the current process for the provision and distribution of contracts for difference (CFD) products.

In a letter to all providers of CFD services, the FCA aid its review will focus on how products are offered to clients on an advisory or discretionary basis.

In November, the FCA announced plans to begin regulating binary trading after a rise in complaints and reports of scamming.

Last month, the European Union’s financial regulator also revealed details of a crackdown on binary options and CFD.

IG Group has spoken out in support of the review, saying that the review will fit in with its own viewpoint on the distribution of CFD and related products.

The company said it does not offer advisory or discretionary services for CFD products and has terminated relationships with distributors that offer its CFD product on a discretionary or advisory basis to retail clients within the UK and European Union.

IG also said it complies with applicable rules and FCA guidance, adding that the new review has “no new financial implications” for its business.

“The company is always seeking to improve and we have taken steps to address the observations made by the FCA in their individual letter to IG on this aspect of the industry in October 2017,” IG said in a statement.

“We believe that stricter supervision of those firms who do not comply will lead to improved client outcomes in the industry.

“The company's long held view is that robust supervision around who the product is marketed to, and which applicants are accepted as clients, remains the most significant measure to drive improved client outcomes.”

Related article: Spread betting firms rocked by EU crackdown
FCA pledges to regulate binary options after scams