ESMA renews restrictions on CFDs, including cryptos

ESMA renews restrictions on CFDs, including cryptos
ESMA (the European Securities and Markets Authority, or ESMA) had already expressed itself at the end of 2017 on the ICO (Initial Coin Offerings), to explain the risks to investors and the rules that apply to investors ICO project. ESMA has more recently issued restrictions on Contracts For Difference (CFDs) and has just renewed them, providing some clarifications to the passage.

In a statement on its official website, the European Financial Authority explains that it "renews the restriction on the marketing, distribution or sale of difference contracts (CFD) to private customers, in force from 1 August, to from 1 November 2018, for a further period of three months. - until 1 February 2019.

Approved by the Supervisory Board of ESMA on September 26, 2018, the renewal of restriction includes several elements, some of which concern gold, stock market indices, currencies and also cryptocurrencies.

More specifically, with regard to our dear cryptocurrencies, there is a leverage limit on the opening of a position by a particular customer, which is 2 to 1 for CFDs.

More generally, there is also a "negative balance protection" obligation, which must guarantee a loss limit for individual customers.

There will also be a new mandatory element to mention: Brokers will have to indicate the percentage of particular accounts that are losing money.

ESMA has yet to translate this renewal of CFD restrictions into the official languages ​​of the EU before publishing an official notice on its website. Only then can the measure be published in the Official Journal of the EU, and thus apply from 1 November 2018, for 3 months, until 1 February 2019.

We remind you that CFDs are risky financial instruments. Because unlike cryptos exchanges where, although you do not have private keys, you own real cryptocurrency, CFD are only contracts between the broker and the trader, there are no real cryptos underlying this contract. So let's salute the efforts of ESMA, which are clearly going in the right direction.

Source: ESMA || Image from Shutterstock
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