Spain’s CNMV introduces a ban on the marketing of CFDs to retail investors

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Spain’s financial regulator CNMV has tightened the regulations around the marketing of CFD trading platforms to retail customers, effectively banning the practice in the country.

CNMV CFD Restrictions

CNMV or the Comisión Nacional del Mercado de Valores, which regulates financial markets in Spain, has issued new rules which prohibit the marketing of CFDs to retail customers.

The regulator has also placed a ban on influencer-led marketing including using famous people to promote CFDs and other leveraged instruments, whether through advertising or event sponsorship.

CNMV has also banned paying introducers based on the number of customers they introduce and prohibited the use of certain mass marketing techniques, such as call centres, webinars and demo accounts.

CNMV has highlighted the high win-loss percentage that retail CFD clients incur, with somewhere between 70 and 90% of those customers losing money on the products, according to its data.

It notes that the growth in retail CFD marketing took place despite the increased regulatory activity on its part, which had previously seen 12 firms that offered or promoted CFDs in Spain, without being present in the country, cease operations there.

CNMV felt that it had no choice but to introduce the new rules around the marketing and promotion of leveraged derivative products, with the regulator saying:

“CFDs are complex and high-risk products and therefore not generally suitable for retail investors”

And that:

“CNMV currently considers that these (previous) measures (ESMA 2018 & 2019) have not been efficient in sufficiently protecting Spanish retail investors.”


“Although they initially led to a reduction in CFD trading, aggressive trading practices and massive advertising of these products on the internet and social networks have made the restrictions less effective.”

No CFD ban in Spain yet

The new rules do not ban CFDs, but they will make it very difficult for CFD brokers to attract new Spanish retail customers, particularly new and would-be traders.

They will, however, be at liberty to market to professional accounts and clients and to continue to accept account applications from Spanish customers who seek them out.

CFDs are also likely to be promoted on Spanish-language websites in other parts of the world, such as Latin America and the Philippines. So there may still be some crossover though presumably, that wouldn’t please CNMV. However, whether they could do anything about that is debatable.

The biggest issue may come from the ban on influencer and sponsorship-led marketing.

Margin trading brokers have a long history of sponsorship among La Liga football teams and using high-profile personalities to promote CFD trading and their brands in the country.

In other parts of Europe where similar bans have been introduced, most notably France and Belgium, they have been enforced in a rather patchy manner, with new sponsorship deals being signed, despite the existence of rules banning sponsorship and promotion of leveraged products.

On the other hand courts in France were asked to rule on whether football matches in UEFA’s flagship competitions, featuring teams that were sponsored by CFD brokers, should be aired in France at all.

Regulators and CFDs

This is a typical response to a problem by a financial regulator and shouldn’t come as no surprise to anyone who is familiar with the drafting of legislation around financial markets.

For example, the UK Financial Services and Markets Act 2000 or FiSMA as it’s often referred to contains a “general prohibition” that effectively bans the promotion and marketing of financial services, as its starting point.

Regulators across the continent seem unable to distinguish between firms which indulge in bad or questionable practices and those that tow the regulatory line.

And rather than discriminate and try to stamp out those bad actors, they prefer to use blanket bans regardless of the consequences.

And while the regulator will say that it has acted in to protect Spanish retail investors what it’s actually done is to reduce their choices.

Of course, CFDs are not suitable for all retail investors, but that doesn’t mean they aren’t suitable for many of them.

Retail clients lose money trading CFDs because they don’t “stick to the rules” they overtrade, and they fail to manage their risk and account balances appropriately.

They often compound that by blindly opposing established trends in the market.

However, trading is an iterative business and one where people learn from their mistakes, if they don’t get the opportunity to learn they won’t ever progress.

Consumer Duty

Could the UK FCA ban the marketing of CFDs to retail customers?

It’s not impossible, but I think it’s unlikely as CFDs have been available to retail clients in the UK for almost 25 years.

The soon-to-be-introduced Consumer Duty rules will also place an additional obligation on UK brokers to ensure that their products meet customers’ needs and can deliver appropriate outcomes, all of which speaks to enhanced suitability.

There is also an increasing amount of good quality trader education and other resources available to UK retail clients, which should over time, should ultimately improve the win-loss ratio among CFD traders.

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