CFDs and Retail Clients: Will the Central Bank prohibit the sale/ distribution of CFDs to retail clients, or introduce stricter investor protection measures?


Author: Robert Cain and Maedhbh Clancy

Central Bank Consultation

On 6 March 2017, the Central Bank published a Consultation on the Protection of Retail Investors in relation to the Distribution of CFDs seeking feedback on whether it should prohibit the sale or distribution of contracts for difference (CFDs) to retail clients in and from Ireland, or put in place stronger investor protection measures to protect the interests of those retail clients.

What are CFDS?

CFD are complex financial products that allow investors to speculate on the short-term movements in an underlying reference asset. For the purposes of the Central Bank’s consultation, CFDs include contracts for difference, spread bets and rolling spot forex contracts. These products are very highly leveraged and investors can be exposed to unlimited losses. The Central Bank has noted the aggressive marketing strategies used by some providers, and is concerned that firms employing such strategies are not acting honestly, fairly and professionally, and in their clients’ best interests.

Read the full briefing here.

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