The UK finance regulator the FCA has spread better in their sights
The FCA have announced they will be looking at the CFD market after analysis showed that 82% of customers lost money, with and average loss of £2200 per year, on CFD products.
They have said that clients do not have enough understanding of CFD's and how they are structured, or financed by brokers, and want to put in place measures so that investors are better informed.
The FCA propose to;
Make sure there are standardised risk warnings given to customers
Get brokers to publish win/loss ratios
Cap the proportion of "borrowed" funds that can be used by inexperienced clients
Stop brokers from using account bonuses to promote CFD products
They are currency in a consultation phase until March and will release a statement after.
On the face of it, it looks like retail traders could be seeing a reduction in leverage offered, and a rise in margins.
It will be interesting to see how long it takes (if it happens at all) for firms to publish win/loss ratios.
