The CNMV restricts CFDs advertising and limits operations of leveraged instruments

The CNMV has published a Resolution to intervene in the marketing, distribution, and sale of financial CFDs and other leveraged instruments to retail investors. The aim is to protect investors from the high risks associated with these complex products.
The key points of the Resolution are as follows:
– Prohibition of Advertising: Advertising of CFDs to retail investors and the general public, including event sponsorships, brand advertising, and the use of public figures, is prohibited. Certain remuneration policies and sales techniques that encourage the distribution of these products to retail investors, such as associating remuneration with the number of customers attracted or their generated revenue, are also prohibited.
– Limiting Leverage: The maximum leverage to which retail investors can be exposed in futures and options is limited. Providers are required to close positions when the client’s position falls below 50% of the initial margin to limit losses.
– Ineffectiveness of Previous Measures: Previous intervention measures established by ESMA and CNMV have not been sufficient to protect Spanish retail investors due to aggressive trading practices and extensive advertising of CFDs on the internet and social networks.
– Scope of the Regulation: The Resolution applies to entities authorized to provide investment services in Spain, regardless of their origin, and includes entities operating under the freedom to provide services without a physical establishment. Entities offering CFDs in Spain without an establishment or agent will be reminded of their obligation to comply.
– Consultation and Implementation: In November 2022, the CNMV started the public consultation on possible intervention measures, ending on 31 January 2023. Comments received have been taken into account in amending the initial proposal for the adoption of additional measures on the marketing, distribution and sale of CFDs and other leveraged financial instruments to retail clients. Competent authorities and ESMA have reviewed and approved the measures (please see EventID#22083 for details).
– Monitoring Compliance: The CNMV will monitor the compliance of entities subject to its supervision, and collaboration with other European supervisors will be sought to ensure compliance among entities operating under the freedom to provide services regime.
The Resolution aims to strengthen investor protection and align Spain with similar regulatory measures implemented in other jurisdictions like France and Belgium.