FCA(Financial Conduct Authority) is the main financial authority in UK, and it has announced to restrict “leverage” and “bonus offerings” on CFD products.
The restriction decision made in November 2016, isn’t related to Forex(Foreign Exchange) product, but it is only on CFD(Contract for Difference) products.
FCA has proposed a package of measures though, here is the summation of the contents.
- The maximum leverage on CFD product to be restricted to 1:25 for traders who do not have 12 months or more experience. (for other clients, the leverage can be set up to 1:50)
- All bonus promotions to promote CFD products to be banned completely.
As all UK brokerage firms needs to take actions accordingly, you may see the differences in their service now already.
In case, a broker has several financial licenses including FCA, but you are opening an account under different regulation, then you do not need to be affected by the changes.
For more information, you can find them in the official website of FCA as below.
Why the changes of conditions for UK companies?
UK’s financial authority, FCA believes that it hasn’t taken necessarily measures to protect investors who are trading on CFD products.
And the FCA’s analysis of a representative sample of client accounts for CFD firms found that 82% of clients lost money on these products.
The measures which have been taken in 2016 is intended to protect investors from risks.
For the list of currently available Bonus Promotions, please visit the page below.