Stellungnahmen

Die nachfolgende Stellungnahme des CFD-Verbands zum Consultation Paper der IOSCO aus Februar 2018 wurde am 26.03.2018 an die IOSCO versandt.

Die Stellungnahme können Sie hier per PDF einsehen: Stellungnahme CFD Verband zur IOSCO aus Februar 2018

Public Comment on IOSCO Consultation Report on Retail OTC Leveraged Products

Please find below our response to the aforesaid Consultation Report. As an association of 12 leading providers offering contracts for difference (“CFDs”) in Germany, who represent a significant portion of the German overall market, potential product intervention measures may affect the economic and legal interests of our members. The members of the German association Contracts for Difference Verband e.V. (“CFD Association”) are regulated by various European supervisory authorities, have various business models and offer their clients various types of CFDs. This is why individual members reserve the right to submit their own statements in response to the Consultation Report. In this response we firstly set out some general observations in respect of the regulation of retail OTC leveraged products, particularly CFDs, before providing specific feedback on the suggested policy measures set out in the Consultation Report.

Investor protection is a major objective of the CFD Association

One of the major objectives of the CFD Association is investor protection. As a rule, the CFD Association and its members welcome measures to improve investor protection while maintaining the freedom for investors to choose from a wide range of products with different risk profiles.

Regulation to focus on providing investor with all relevant information to make an informed investment decision

Investor protection should primarily aim at providing investors with all relevant information in order to make an informed decision rather than prohibiting products or limiting access to certain investment opportunities. CFD is an established product and the CFD market is, in general, well-functioning. In order to provide CFD investors with improved protection without curtailing their freedom to make informed investment decisions, the CFD Association supports regulatory intervention focussed not on the structure of CFD as a product but rather on the advertising / distribution of CFDs, particularly by unregulated / less regulated providers. In order to maximise the impact of such regulatory intervention and avoid regulatory arbitrage, relevant measures should be adopted and enforced consistently by all IOSCO members.

Significant investor protection concerns arising from unregulated providers

From the CFD Association’s perspective, significant investor protection concerns essentially exist almost exclusively due to the existence of unregulated CFD providers and the misleading advertising promises by these unregulated CFD providers or by CFD providers regulated by supervisory authorities in jurisdictions with lower regulatory standards compared to those maintained by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”), such as Cyprus. For example, in its warning of 25 July 2016, the European Securities and Markets Authority (“ESMA”) (cf. ESMA: Warning, 2016/1166, dated 25 July 2016; pp. 2 et seq. with a reference to Cyprus-based CFD providers) criticised the misconduct of Cyprus-based investment companies offering CFDs and binary options. In the context of its supervisory action plan, the Cyprus Securities and Exchange Commission has imposed administrative fines and reached settlement agreements with a number of investment firms. It has also suspended the licence of at least one firm due to suspicions of an alleged violation of the Investment Services and Activities and Regulated Markets Law of 2007 in respect of the terms of such firm’s authorisation and the conduct of business obligations when providing investment services to clients. For France, evaluations carried out by the French securities supervisor Autorité des marchés financiers (“AMF”) showed that out of a total of 1,617 complaints made by clients with regard to foreign-exchange products and binary options in the year 2015, about 1,478 cases were attributable to providers operating without a licence from a supervisor or without notification in France (cf. AMF: Rapport Annuel 2015 de l’AMF, p. 8, and Rapport du Médiateur de l’AMF, p.19). Out of the remaining 139 complaints, 118 concerned providers with a licence issued by the Cyprus Securities and Exchange Commission (“CySec”) and only 21 concerned providers with a licence from a supervisory authority in another EU Member State. This means that about 98% of all complaints made concerned unregulated providers or providers regulated (insufficiently, as it appears) by the Cypriot CySec. In Germany, too, the risks to investor protection arise from unregulated CFD providers. Only a small number of the complaints made to BaFin concerned regulated CFD providers. According to information from BaFin, about 100 complaints were made in 2015 with regard to providers regulated by a supervisory authority in another EU Member State (cf. Report on the IOSCO Survey on Retail OTC Leveraged Products, dated December 2016). Furthermore, according to an internal survey conducted by the CFD Association, the number of complaints concerning members of the CFD Association was less than 30 in 2016, for example. In this respect, the situation in Germany is similar to that in France, with regard to regulated providers. Based on the evaluations carried out by AMF and the above-quoted ESMA warning, it can be assumed that most of the examples of misleading advertising promises quoted by ESMA in the Q&A document (cf. ESMA: Q&A, 2016/1165, dated 11 October 2016, p. 36) are likewise attributable either to CFD providers who have been licensed by a supervisory authority in a jurisdiction with lower regulatory standards or to CFD providers operating without a licence from a supervisory authority or without notification.

Existing regulation should be applied consistently by all IOSCO members

Since beginning of this year with the introduction of MiFID II and PRIIPs legislation in Europe CFD providers had to adopt these new rules. This regulation is already aiming at enhancing investor protection. It is the view of the CFD Association that the impact of such new regulation should be assessed first before introducing new regulations. Furthermore, the existing regulation should be applied consistently by all IOSCO members in order to avoid regulatory arbitrage by CFD providers.

The term “retail investors”

The CFD Association is supportive of a clear distinction between sophisticated clients and those with less experience. However, the CFD Association is concerned that the broad use of the term “retail investors” in the Consultation Report negates differences between sophisticated and unexperienced investors and may risk the potential for inappropriate / excessive regulatory intervention. The main objective of any regulation should be to enable investors to make an informedinvestment decision based on such investor’s knowledge and experience. The average CFD investor is not a typical retail investor and this should be taken into account when considering the Consultation Report. The average CFD client has a wealth of experience in trading and has been trading in CFDs for several years. A market survey published by the CFD Association (CFD-Marktstudie: Typologisierung von CFD-Investoren, November 2016 and December 2017) arrives at the conclusion that the average CFD investor has been trading in CFDs for about four and a half years. 39.8% of CFD investors have been trading in CFDs for three to five years. 24.8% of CFD investors have even been trading in CFDs for six to ten years. In addition, the average CFD client spends several hours a day carrying out CFD trades. The average CFD trading time is about 3.3 hours a day and the average number of trades carried out per year is 2,190. Furthermore, 67% of the interviewed clients stated that they obtained comprehensive information before making their decision to invest. For 73.3% of the interviewed clients, the objective of trading in CFDs is to obtain an above-average return. As such, the average CFD investor’s experience in trading is far greater than that of a typical retail investor. Consequently, a distinction in regulation should be made to cater for respective differences in the type of retail investors active in the CFD market.

Comments in respect of suggested policy measures in Consultation Report

Based on the CFD Association’s view that regulation applied consistently by IOSCO’S members should focus on the distribution and marketing of CFD’s rather than the economics and the design of the product itself, please find below our comments in respect of the suggested policy measures set out in the Consultation Report.

Measure 1: Requirement for firms offering the relevant products to retail investors to be licensed

The CFD Association fully supports this measure.

As mentioned above under ‘Significant investor protection concerns arising from unregulated providers’, from the CFD Association’s perspective, significant investor protection concerns essentially exist solely due to the existence of unregulated CFD providers and the misleading advertising promises by these unregulated CFD providers or by CFD providers regulated by supervisory authorities in jurisdictions with lower regulatory standards compared to those maintained by the BaFin.

The CFD Association and its members attach great importance to improving investor protection. The CFD Association and its members support clear action against unregulated or insufficiently regulated CFD providers and against misleading advertising promises by CFD providers. Such action would lead to more investor protection and would make it more difficult for less professional providers to act on the market.

The Consultation Report acknowledges that ISOCO members are ultimately responsible for determining the scope of their regulatory perimeter and that it is not the intention of the regulatory toolkit proposed in the Consultation Report to suggest harmonising licensing. However, while the CFD Association understands this, it has some concerns regarding the potential for clients moving to unlicensed firms or to jurisdictions where the licensing requirements or oversight are less strict. As such, to the extent possible, the CFD Association would urge a more common approach to licensing in order to mitigate regulatory arbitrage in the sector, which remains a serious ongoing problem.

Measure 2: Requirement for firms to incorporate a prescribed minimum margin requirement for retail investors

The measure seems to address two different risks:

(1) Firms shall establish the requirement for a minimum margin by retail investors in order to reduce the risk for investors to lose their investment; and

(2) Firms shall limit the applicable leverage in a product in order to reduce the volume of potential losses.

Generally, the CFD Association supports measures with a view to limit the risk of losses for retail investors. However, in the CFD Association’s opinion a minimum margin requirement is not needed, if the loss of investors is already limited to the balance on an investor’s trading account (see Measure 3 below on negative balance protection). This is the case in Germany: Prior to opening a new position the margin will be calculated in order to allow such trade in light of the current balance on the account. Consequently, it is suggested to take into account the following considerations when suggesting this measure.

> A minimum margin requirement is not needed if the loss of an investor is already limited to its balance on the account.

> A minimum margin requirement is static and non-flexible and ignores the fact that an investor is already fully aware of its maximum loss (assuming a negative balance protection).

> Regulation should focus on investor protection rather than changing the economics of a financial product by introducing, e.g. minimum margin requirements which result in a more expensive and less attractive product for investors.

> Any margin provided by investors is for the benefit of the CFD provider. If CFD providers calculate the margin according to the valued risk, why should regulation force CFD providers to request more margin?

Further, the CFD Association supports restrictions on excessive leverage which exceeds a leverage of 200:1. Nevertheless, the level of leverage is a product feature relating to the economics of the product. Any regulation should not target the economics of a product, but rather enhance the information of and disclosure to investors.

Firstly, the effect of leverage is not limited to the types of OTC leveraged products identified by the Consultation Report. The effect of leverage also exists with numerous other packaged retail investment and insurance products (“PRIIPs”) (e.g. warrants, turbo-warrants, options, futures, margin loans and securities lending), which are popular and have been frequently traded for decades. Further, the concept of unlimited personal liability is embedded in many other products like options and futures. This even extends, for example, to mortgages, where the liability may exceed the value of the underlying object. Product intervention measures in relation to CFDs would place CFDs at a disproportionate disadvantage, compared to similar financial instruments. From the CFD Association’s perspective, the risk of loss involved in trading in CFDs is comparable to the risk of loss involved in trading in other leveraged products, such as knock-out warrants.

Secondly, while the CFD Association would see the one-off cost of implementing a leverage limit as rather low, it is concerned that, as a result of leverage being limited, there would subsequently be a very significant fall in returns. Providers and brokers of the CFD Association expect that if leverage were reduced, up to 80% of clients would stop trading in the products with reduced leverage. Such a loss of clients could jeopardise the continued existence of providers offering CFDs and of CFD brokers, in particular in cases where the trade in CFDs accounts for a large portion of their business. For the firms concerned, this would therefore constitute a significant interference with the fundamental right to carry on an established business (protected fundamental rights: freedom to choose an occupation, freedom to conduct a business and right to property).

Just the UK Financial Conduct Authority’s announcement to reduce leverage to a maximum of 40, led the share prices of CMC Markets plc and the IG Group plc to drop drastically by 36% and 38%, respectively, on 5 December 2016. The imposition of even more strict margins could result in even worse drops of shares prices of listed companies. For smaller providers such measures could be existence-threatening.

The CFD Association expects that in such scenario its clients would turn to unregulated / less regulated providers outside the EU. Individual members have conducted a survey among their clients. This survey clearly confirms the expected behaviour: the clients have moved, or will move their accounts to Australia, Switzerland and Dubai and many of them are waiting for the UK to Brexit, as they are convinced that the UK financial services sector will be endeavoured to position itself very attractively. In addition, there is a substantial risk that the providers and brokers concerned, too, will relocate to non-EU-countries.

Any investors who would stay with EU regulated distributors despite the burden of the measures and wishing to achieve an equivalent trade volume upon leverage being limited, would have to invest a multiple of the capital currently invested, which would have to be withdrawn from other types of investment, such as savings accounts. Furthermore, investors trading in CFDs cover a large number of underlying assets, also for hedging purposes. Due to of the larger amount of capital invested, they would now be forced to invest their capital using only one strategy or only few different strategies, which would give rise to a higher risk of loss.
There are also other products that provide for high leverage, for example, warrants or knock-out warrants offered by banks, which are often positioned to compete with CFDs. Warrants with leverage above 100:1 are not rare. Such products would then, unjustifiably, be preferred over CFDs.

Thirdly, as mentioned above under ‘The term “retail investors”’, the average CFD investor’s experience in trading is far greater than that of a typical retail investor. The market study published by the CFD Association has additionally shown that CFD investors have a very high level of skill and education. According to said study, 49.9% of CFD investors have a university degree. Furthermore, the economic situation of clients is good. The average CFD investor has assets of € 50,000 to € 150,000, again according to the published market study. As such, the CFD Association questions whether such a protection is necessary for CFD clients who have deliberately decided to trade in CFDs and have comprehensive knowledge in this field.

Measure 3: Negative balance protection

The CFD Association is of the view that negative balance protection on a per account basis (applying to retail clients only) is the measure providing the best level of protection for clients as unlimited losses are avoided. It is sensible to calculate the balance at risk on a gross basis, i.e. across all positions of an investor. Negative balance protection on a per account basis (applying to retail clients only) has already been implemented in Germany.

Measure 4: Prescribed disclosures setting out the total costs of the product

The CFD Association is supportive of such measures.

As mentioned in the Consultation Report, firms in Europe are required to disclose to the client the total cost of the product as part of enhanced disclosure requirements stemming from the MiFID II legislation. In addition, firms offering the relevant products are required to provide other standardised disclosures to their clients, including information on the objectives of the product, target market and costs and charges as set out in the Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs).

Providers of the CFD Association supply investors with comprehensive information about costs of CFD (MiFID II) and comprehensive information about the risk and performance of each CFD (PRIIPs KIDs). In order to mitigate regulatory arbitrage in the sector, the CFD Association would support the extension of the MiFID II and PRIIPs KIDs regulations globally.

Measure 5: Disclosure of investor profit and loss ratios

The CFD Association is fully supportive of the full disclosure of the risks associated with such products. However, the CFD Association would make the following observations in respect of any proposal to require the disclosure of profit and loss statistics for CFD investors.

Firstly, the Consultation Report states that the provision of such information would support clients in making an informed decision about whether they wish to proceed with a high-risk product that, statistically, is more likely to result in a loss than a gain. In this regard, the CFD Association is aware of studies conducted by the Central Bank of Ireland and AMF showing that between 74 and 89% of clients trading in CFDs lose money. However, in the opinion of the CFD Association, the aforesaid studies are not applicable to Germany, as the German market is dominated by highly regulated providers and has a much smaller number of unregulated providers. The CFD Association, together with the CFin Research Center for Financial Services, has conducted its own comprehensive profit and loss study for the trade in CFDs in Germany (CFD Gewinnund Verluststatistik, November 2016). This study has also been presented to BaFin and is available to the latter. According to said study, only 62.7% of clients lose money when trading in CFDs.

Secondly, the CFD Association would be wary of requiring the disclosure of profit and loss ratios solely in the case of the products on which the Consultation Report focusses. From the CFD Association’s perspective, the risk of loss involved in trading in CFDs is comparable to the risk of loss involved in other trading products, such as knock-out warrants, and even day trading shares, options and futures. The Consultation Report also focusses on the complexity of the products. The CFD Association would argue that CFDs are not complex products; or rather the performance calculation for CFDs is not a complex issue. There is a 1:1 relationship between the performance of the CFD and the underlying price. An investor who trades a large volume can expect that the risk involved corresponds to the volume traded. Therefore, applying additional disclosure requirements to CFDs as compared to its competitor products would put it an unnecessary competitive disadvantage.

Thirdly, as mentioned above under ‘The term “retail investors”’, the average CFD investor’s experience in trading and knowledge of the product is far greater than that of a typical retail investor. As such, requiring such specific disclosure for CFD investors may be regarded as a disproportionate response for investors who have deliberately decided to trade in CFDs and have comprehensive knowledge in this field.

Measure 6: Adoption of a fair pricing methodology and use of externally verifiable price sources

The CFD Association is supportive of a fair and transparent CFD offering.

As the Consultation Report states, European investment firms are required to demonstrate fairness in pricing when executing in OTC products and have increased transparency around execution processes as part of the best execution requirements arising from MiFID 2. Providers of the CFD Association supply investors with comprehensive information about costs of CFD (MiFID II) and comprehensive information about the risk and performance of each CFD (PRIIPs KIDs). As mentioned above, in order to mitigate regulatory arbitrage in the sector, the CFD Association would support the global extension of regulations equivalent to MiFID II and PRIIPs KIDs regulations.

Measure 7: Enhanced disclosures about order execution quality

The CFD Association is supportive of a fair and transparent CFD offering.

As the Consultation Report states, European firms are required to disclose their order execution policy to their clients as part of their best execution requirements. The requirement for firms to disclose their pricing methodology is also consistent with the spirit of the legislation.

The enhanced best execution requirements in MiFID II require investment firms, including brokers, to make public the top five execution venues where they execute client orders and information on the quality of execution obtained. Execution venues are also required to make public detailed data relating to the quality of execution of transactions on that venue. As mentioned above, in order to mitigate regulatory arbitrage in the sector, the CFD Association would support the global extension of regulations equivalent to MiFID II.

Measure 8: A ban or restrictions on certain forms of marketing and sales techniques for the relevant products

The CFD Association is supportive of improved restrictions on aggressive marketing practices.

However, as noted above, most of the examples of misleading advertising promises quoted by ESMA in the Q&A document (cf. ESMA: Q&A, 2016/1165, dated 11 October 2016, p. 36) are attributable either to CFD providers who have been licensed by a supervisory authority in a jurisdiction with lower regulatory standards or to CFD providers operating without a licence from a supervisory authority or without notification. Most jurisdiction have already regulation in place (like MiFID II legislation) or apply the general rule against unfair competition (e.g. in Germany under the Act against Unfair Competition).

Accordingly, while the CFD Association is supportive of improved restrictions on aggressive marketing practices, it believes that such improved restrictions will be most effective if targeted specifically at unregulated or insufficiently regulated providers.

Measure 9: A ban or restriction on the sale and/or distribution of the relevant products by intermediaries

The CFD Association would always vote against a product prohibition in favour of (i) better client education and information, (ii) improved restrictions on aggressive marketing practices, (iii) a correct assessment of the appropriateness of a specific product for a specific client and (iv) a more accurate distinction between sophisticated clients and those with less experience / knowledge.

As mentioned above under ‘The term “retail investors”’, the average CFD investor’s experience in trading and knowledge of the product is far greater than that of a typical retail investor. An outright ban or restriction on the sale and/or distribution of CFDs would not be well received by CFD investors who would likely view such product intervention measures as an interference with the economic freedom of action of private investors and an act of patronising “responsible” citizens.

Die nachfolgende Stellungnahme des CFD-Verbands zum Call for Evidence der ESMA vom 18.01.2018 wurde am 05.02.2018 an die ESMA versandt.

Die nachfolgende Stellungnahme hat der CFD-Verband am 05.02.2018 an die ESMA versandt und Bezug auf den Call for Evidence vom 18.01.2018 genommen.

Die Stellungnahme können Sie hier per PDF einsehen: Stellungnahme CFD Verband zum Call for Evidence vom 18.01.2018

Our reference: ESMA-Call-for-Evidence-CFDV05022018
Response ESMA Call for Evidence – Potential product intervention measures on contracts for differences and binary options to retail clients

Please find below our response to the aforesaid Call for Evidence. As an association of 12 leading providers offering CFDs in Germany, who represent a significant portion of the German overall market, potential product intervention measures may affect our economic and legal interests, or rather those of our members. The members of the German association Contracts for Difference Verband e.V. (“CFD Association”) are regulated by various European supervisory authorities have various business models and offer their clients various types of contracts for difference (“CFDs”). This is why individual members reserve the right to submit their own statements in this Call for Evidence. Investor protection is a major objective of the CFD Association One of the major objectives of the CFD Association is investor protection.

As a rule, the CFD Association and its members welcome measures to improve investor protection.

Significant investor protection concerns arising from unregulated providers

From the CFD Association’s perspective, significant investor protection concerns essentially exist solely owing to the existence of unregulated CFD providers active on the European market as well
as owing to misleading advertising promises by these unregulated CFD providers or by CFD providers regulated by supervisory authorities in jurisdictions with lower regulatory standards compared to those maintained by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”), such as Cyprus. In its warning of 25 July 2016, the European Securities and Markets Authority (“ESMA”) (cf. ESMA: Warning, 2016/1166, dated 25 July 2016; pp. 2 et seq. with a reference to Cyprus-based CFD providers) criticised the misconduct of Cyprus-based investment companies offering CFDs and binary options. For France, evaluations carried out by the French securities supervisor Autorité des marchés financiers (“AMF”) showed that out of a total of 1,617 complaints made by clients with regard to foreign-exchange products and binary options in the year 2015, about 1,478 cases were attributable to providers operating without a licence from a supervisor or without notification in France (cf. AMF: Rapport Annuel 2015 de l’AMF, p. 8, and Rapport du Médiateur de l’AMF, p. 19). Out of the remaining 139 complaints, 118 concerned providers with a licence issued by the Cyprus Securities and Exchange Commission (“CySec”) and only 21 concerned providers with a licence from a supervisory authority in another EU Member State. This means that about 98% of all complaints made concerned unregulated providers or providers regulated (insufficiently, as it appears) by the Cypriot CySec. In Germany, too, the risks to investor protection arise from unregulated CFD providers. Only a small number of the complaints made to BaFin concerned regulated CFD providers. According to information from BaFin, about 100 complaints were made in 2015 with regard to providers regulated by a supervisory authority in another EU Member State. IOSCO Survey on Retail OTC Leveraged Products, dated December 2016). Furthermore, according to an internal survey conducted by the CFD Association, the number of complaints concerning members of the CFD Association was less than 30 in 2016, for example. In this respect, the situation in Germany is similar to that in France, with regard to regulated providers. Based on the evaluations carried out by AMF and the above-quoted ESMA warning, it can be assumed that most of the examples of misleading advertising promises quoted by ESMA in the Q&A document (cf. ESMA: Q&A, 2016/1165, dated 11 October 2016, p. 36) are likewise attributable either to CFD providers who have been licensed by a supervisory authority in a jurisdiction with lower regulatory standards or to CFD providers operating without a licence from a supervisory authority or without notification. We would like to emphasise that there have been no complaints in this connection against regulated CFD providers who have been licensed by a supervisory authority such as BaFin or the Financial Conduct Authority (“FCA”). According to the Final Report on the IOSCO Survey on Retail OTC Leveraged Products (dated December 2016), too, one of the major problems is that unregulated providers have offered CFDs to the entire retail market and have made misleading advertising promises in doing so. The CFD Association and its members support clear action against unregulated or insufficiently regulated CFD providers and against misleading advertising promises by CFD providers. Such action would lead to more investor protection and would make it more difficult for non-serious providers to act on the market. The CFD Association and its members attach great importance to improving investor protection.

Corrections to or concretisation of the statements of fact in the Call for Evidence

As for the statements of fact which are contained in the Call for Evidence launched by ESMA, the CFD Association would like to comment, correct and/or concretise as follows:

The term “retail investors”

The average CFD investor is not a typical retail investor. This definitely needs to be taken into account for the purposes of the Call for Evidence. The average CFD investor has a wealth of experience in trading, has been trading in CFDs for several years, and spends several hours a day carrying out CFD trades. The average CFD investor’s experience in trading is far greater than that of a typical retail investor. A market survey published by the CFD Association (CFD-Marktstudie: Typologisierung von CFDInvestoren, November 2016 and December 2017) arrives at the conclusion that the average CFD investor has been trading in CFDs for about four and a half years. 39.8% of CFD investors have been trading in CFDs for three to five years. 24.8% of CFD investors have even been trading in CFDs for six to ten years. The average CFD trading time is about 3.3 hours a day and the average number of trades carried out per year is 2,190. Furthermore, 67% of the interviewed clients stated that they obtained comprehensive information before making their decision to invest. For 73.3% of the interviewed clients, the objective of trading in CFDs is to obtain an above-average return.

Profit and loss statistics of CFD Association contradict the supervisory authorities’ statistics

The Call for Evidence makes reference to studies conducted by the Central Bank of Ireland and AMF showing that between 74 and 89% of clients trading in CFDs lose money. The CFD Association
is aware of these studies. In the opinion of the CFD Association, the aforesaid studies are not applicable to Germany, as the German market is dominated by highly regulated providers and has a much smaller number of unregulated providers. The CFD Association, together with the CFin Research Center for Financial Services, has conducted its own comprehensive profit and loss study for the trade in CFDs in Germany (CFD Gewinn- und Verluststatistik, November 2016). This study has also been presented to BaFin and is available to the latter. According to said study, only 62.7% of clients lose money when trading in CFDs. This shows again that the focus should be on regulating the marketing practices of CFD providers rather than on imposing restrictions on the product. According to the Call for Evidence, there is a significant risk of loss (both from trading and from transaction fees), which is magnified by the effect of high leverage. From the CFD Association’s perspective, the risk of loss involved in trading in CFDs is comparable to the risk of loss involved in trading in other leveraged products, such as knock-out certificates. In addition, the transaction fees are within the customary range for similar financial products. According to ESMA, the complexity of these products and a lack of transparent information at point of sale limit the ability of retail investors to understand the risks underlying these products. CFDs are not complex products; or rather the performance calculation for CFDs is not a complex issue. There is a 1:1 relationship between the performance of the CFD and the underlying price. An investor who trades a large volume can expect that the risk involved corresponds to the volume traded. Furthermore, the view that there is a lack of transparent information at point of sale is incorrect. Members of the German CFD Association supply investors with comprehensive information about costs of each CFD (MiFID II) and comprehensive information about the risk and performance of each CFD (PRIIPs KIDs).

Criticism about the timing of the consultation and the little time allowed for furnishing a statement

The PRIIP Regulation (Regulation (EU) No 1286 / 2014), which directly applies in all Member States of the EU, has entered into force on 1 January 2018. This Regulation provides that a key information document must be published for a PRIP or packaged retail investment product by the manufacturer of the product before the product is offered to retail investors.

CFDs are PRIPs or packaged retail investment products, according to the Regulation.

The key information document should focus on the key information that retail investors need. The key information document contains sections regarding, amongst other things, the risks of the product, potential performance scenarios, the costs and a description of the type of retail investor to whom the product is intended to be marketed, in particular in terms of the ability to bear investment loss and the investment horizon.

In addition, the Markets in Financial Instruments Directive (MiFID) 2 (Directive 2014/65/EU) on the transposing laws in the individual Member States has been applicable since 3 January 2018.

According to that Directive, a so-called product approval process is intended to specify an identified target market of end clients within the relevant category of clients for each financial instrument
and to ensure that all relevant risks to such identified target market are assessed and that the intended distribution strategy is consistent with the identified target market.

In determining the target market for CFDs, the following information is of particular importance:

– Experience with and knowledge of CFDs;
– Taking of high risks with the possibility of a total loss;
– Knowledge of risks and costs;
– Knowledge of the leverage and the related disproportionately high risk;
– Capital invested and ability to bear loss; and
– High expected return and speculative trading.

Furthermore, MiFID 2 now provides for comprehensive cost transparency through ex ante information about all costs and associated charges of the financial instruments.

Against this background, and also in light of the large number of new transparency obligations and investor protection requirements in respect of financial instruments and packaged investment products for retail investors and, hence, also in respect of CFDs, the point in time chosen by ESMA for its Call for Evidence is incomprehensible and must be strongly criticised.

To date, ESMA has not gained any insights as to the implementation and impact of the relevant investor protection and transparency requirements in the case of CFDs. However, such insights imperatively need to be taken into account when exercising discretion in the context of product intervention measures.

Exercising discretion without taking such necessary and relevant new information into account would mean exercising such discretion incorrectly.: Furthermore, a product intervention by ESMA has far-reaching consequences for the rights of the parties involved, which is why said parties need to be heard comprehensively and sufficiently. In this Call for Evidence, ESMA allows a period of little more than two weeks for the delivery of statements.

Consultations launched by ESMA typically take several months. The simultaneously running public consultation on building a proportionate regulatory environment to support SME listing, for example, provides for a consultation period of clearly above two months. Such a short period of time for statements in connection with a measure as incisive as the first product intervention intended by ESMA is inappropriate and disproportionate.

Responses to the questions raised in the Call for Evidence

Please find below our responses to the questions raised by you in your Call for Evidence.

A: Do you think that ESMA has adequately identified the instruments in the scope of its possible measures?

The effect of leverage, which has received special criticism from ESMA, also exists with numerous other packaged retail investment products (e.g. warrants, turbo-warrants, options and futures), which have been popular and frequently traded for decades. Also, the concept of unlimited personal liability is embedded in many other products like options and futures. This even extends to the example of mortgages, where the liability may exceed the value of the underlying object.

Product intervention measures in relation to CFDs would place CFDs at a disproportionate disadvantage, compared to similar financial instruments.

B: What impact do you consider that the introduction of leverage limits on the basis described above (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits. From the CFD Association’s perspective, the one-off cost of implementing a leverage limit can be classified as rather low.

However, as a result of leverage being limited, there would subsequently be a very significant fall in returns. Providers and brokers of the German CFD Association expect that if leverage were reduced, up to 80% of clients would stop trading in the products with reduced leverage.

Such a loss of clients could jeopardise the continued existence of providers offering CFDs and of CFD brokers, in particular in cases where the trade in CFDs accounts for a large portion of their business, and, for the firms concerned, would constitute a significant interference with the fundamental right to carry on an established business (protected fundamental rights: freedom to choose an occupation, freedom to conduct a business and right to property).

The mere announcement by FCA to reduce leverage to a maximum of 40 resulted in the share prices of CMC Markets plc and the IG Group plc falling drastically by 36% and 38%, respectively, on 5 December 2016. It is feared that if ESMA imposes even stricter margins, the shares prices of listed companies might fall even more drastically. For smaller providers the announced measures could be existence-threatening. Such an intervention as a “temporary” measure cannot, therefore, be proportionate. The CFD Association expects that clients would turn to unregulated providers outside the EU. Individual members have conducted a survey among their clients. This survey clearly confirms the expected behaviour: the clients have moved, or will move their accounts to Australia, Switzerland and Dubai and many of them are waiting for the UK to Brexit, as they are convinced that the UK financial services sector will be endeavoured to position itself very attractively.

In addition, there is a substantial risk that the providers and brokers concerned, too, will relocate to non-EU-countries.

The Japanese regulator foresees a leverage limit of 50:1. The UK regulator, who already has the biggest CFD Forex companies and who will soon be the biggest and closest non-EU competitor, proposes 40:1. The US regulator foresees a leverage limit of 50:1 for Forex. Investors staying with EU regulated distributors despite the burden of the measures and wishing to achieve an equivalent trade volume upon leverage being limited would have to invest a multiple of the capital currently invested, which would have to be withdrawn from other types of investment, such as savings accounts. Furthermore, investors trading in CFDs cover a large number of underlying assets, also for hedging purposes. Because of the larger amount of capital invested, they would now be forced to invest their capital using only one strategy or only few different strategies, which would give rise to a higher risk of loss.

There are also other products that provide for high leverage, for example, warrants or knock-out warrants offered by banks, which are often positioned to compete with CFDs. Warrants with leverage above 50:1 and 100:1 are not rare. Such products would then, unjustifiably, be preferred over CFDs.

C: What impact do you consider that the introduction of a margin close-out rule on a per-position basis (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits. The CFD Association expects a very high one-off cost in this regard (specification, programming and testing). Individual providers and brokers expect one-off costs for the implementation in the amount of € 250,000 to € 1,000,000. Such sums particularly jeopardise the continued existence of comparatively small providers and brokers.

The members expect that they will need 3 to 6 months, some of them even 9 to 12 months, to implement a margin close-out rule.

Such an intervention as a “temporary” measure is, therefore, disproportionate.

In light of the very high cost of implementation and the enormous amount of time needed for this purpose, it is feared that the providers and brokers concerned will relocate to non-EU countries.

The ongoing costs of a margin close-out rule cannot be foreseen; in this respect, the providers especially state that such a rule makes reasonable hedging in relation to such positions impossible – both for the provider and for the client. The CFD Association’s members fear that the product will become more complex with such a margin close-out rule and more difficult for clients to understand. Such a rule deprives the client of the option to define its own stop-loss limits and to deliberately accept a higher potential for loss.

The CFD Association would like to use the following example to demonstrate that such a rule may result in an absolutely disproportionate interference with the investor’s freedom of action and may lead to absolutely disproportionate results:

Example:
An investor has an account with a credit balance of € 5,000. The investor buys a position worth € 200 which requires a margin of € 40 (5:1). Under the proposed per-position rule, this constitutes a leveraged position. The broker must close the position immediately upon € 20 being lost. This is a loss of -10% on the position. No rule should oblige the retail investor to sell its investment when it is at -10%. Such a rule would place CFDs at a disproportionate disadvantage, compared to all other financial instruments. The introduction of a regulation forcing investors to sell, for example, their fund units or shares after a loss of only -10% is inconceivable. This would be a loss of -0.4% on the entire portfolio. Retail investors cannot be forced to immediately sell an investment when the portfolio value is at -0,4%.

This example shows that such a rule produces absolutely disproportionate results.

D: What impact do you consider that the introduction of negative balance protection on a peraccount basis (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits. Negative balance protection on a per account basis (applying to retail clients only) has already been implemented in Germany.

E: What impact do you consider that a restriction on incentivisation of trading (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

The CFD Association would welcome a restriction on incentivisation of trading. The CFD Association is of the opinion that incentivisation of trading primarily attracts inexperienced clients; experienced traders are less influenced by such offers.

Therefore, the CFD Association takes the view that a restriction on incentivisation of trading, when the incentivisation is generally only attracting clients to start trading or entrap the client to do more trading, would be an appropriate measure for investor protection.

A restriction on incentivisation would additionally ensure a level playing field among CFD brokers, in the opinion of the CFD Association.

Such a restriction would not give rise to one-off and/or ongoing costs and, therefore, would be likely to be both effective and proportionate, in the opinion of the CFD Association.

F: What impact do you consider that a standardised risk warning (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.
A standardised risk warning would give rise to only a small amount of one-off costs and ongoing costs. The members of the CFD Association would welcome a standardised risk warning for all market participants with a view to creating a level playing field. In addition the CFD Association would like to highlight that with the PRIIPs KIDs regulation being in force since 1 January 2018 the client is made aware of risk, costs and performance (even in a stress scenario) of each individual CFD.

G: Please provide evidence on the proportion of retail clients that use these products for hedging purposes and how the suggested measures will affect them.

According to the aforementioned market study conducted and published by the CFD Association, 14.5% of clients use CFDs for hedging, according to their own statement.

An increase in margin requirements and a restriction in the close out rule could make proper hedging completely impossible for clients as it would require more capital or would mean, that hedges
are closed while the original position is still held.

H: What impact do you consider that a prohibition on providing binary options to retail clients would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

The CFD Association is always voting against a product prohibition but suggest for better client education and information as well as restriction of aggressive marketing practices.

I: What impact do you consider that the envisaged measures would have on retail investors?

We would like to make reference to our responses to previous questions which cover this issue.

The members of the CFD Association particularly fear that a leverage limit might result in investors turning to unregulated providers outside the EU.

In connection with the Call for Evidence launched by ESMA, the CFD Association has received many emails and phone calls from investors considering potential product intervention measures
an interference with the economic freedom of action of private investors and an act of patronising “responsible” citizens.

J. Do you believe that specific restrictions concerning CFDs in cryptocurrencies should be introduced? In particular, what impact do you consider that assigning a leverage limit of 5:1 to such CFDs would have on firms’ business and / or any expected additional benefits for retail clients? How would such an impact compare to that from the possible alternatives of lower leverage limits such as 2:1 or 1:1, or a prohibition on the sale, marketing and distribution of such CFDs? Please describe and explain any one-off or ongoing costs or benefits.

The CFD Association is of the view that CFDs on cryptocurrencies should equally be treated as other CFD on volatile underlyings. The leverage that is to be offered by providers should solely be
determined by the risk appetite of the provider. In connection with negative balance protection, client information and restriction of aggressive marketing practices the risk for retail clients will be
manageable.

Legal considerations

ESMA bases its product intervention powers on Article 40 MiFIR (Markets in Financial Instruments Regulation) (Regulation (EU) No 600 / 2014) in order to address investor protection concerns
in respect of such products.

Article 40 MiFIR exclusively provides for only temporary product intervention measures (cf. the first sentence of paragraph 1).

Article 40 MiFIR subsidiary and subordinated

In addition, Article 40 MiFIR is subsidiary and/or subordinated in more than just one respect. It only applies if:

a) regulatory requirements under Union law that are applicable to the relevant financial instrument or activity do not address the threat (paragraph 2(b)) and

b) a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat (paragraph 2(c)).

Article 40 MiFIR is, hence, also an expression of the principle of separation of powers and of the protection of fundamental rights. A European administrative authority should not be authorised to permanently interfere in a detrimental manner with third-party fundamental rights on the basis of a European product intervention clause.

Contingency power which is limited to exceptional cases

This is why Article 40 MiFIR should be used as a basis of authority only in really exceptional cases (cf. in particular recital 29, which explicitly emphasises more than once in this respect that ESMA should act only in “exceptional cases” – and which explicitly uses the term “contingency power”).

Consequently, very strict criteria need to be applied in determining whether the conditions for the application of this general basis of authority are fulfilled and also with respect to the exercise of discretion by the Authority – Article 40 MiFIR provides for the exercise of discretion by ESMA, cf. the first sentence of paragraph 1: “may”.

In the opinion of the CFD Association, any interference must, in light of the intended subsidiary nature of this basis of authority as an “exceptional case” and “contingency power”, be considered unlawful according to Article 40(2)(b) MiFIR as long as detailed practical knowledge about the concrete impact of the investor protection rules of MiFID 2 and the PRIIP Regulation does not
exist.

Significant investor protection concerns

According to Article 40(2) MiFIR, a product intervention measure may only be taken if the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union (cf. paragraph (2)(a)).

The fact that a significant investor protection concern is placed on an equal footing with a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union shows that not all investor protection concerns justify temporary product intervention measures according to Article 40 MiFIR but only such significant investor protection concerns as are, in terms of their quality, as weighty as a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union.

Criteria and factors in respect of product intervention powers Article 19 Delegated Regulation (EU) 2017 / 567 lists and concretises the criteria and factors relating to the temporary product intervention powers of ESMA and, thus, the conditions that need to be fulfilled in order for ESMA to be able to intervene.

The CFD Association would like to elaborate on some of the criteria and factors mentioned in Article 19(2) Delegated Regulation (EU) 2017 / 567:

The degree of complexity of the financial instrument, the size of potential detrimental consequences, the type of clients to whom the financial instrument is marketed or sold, the degree of transparency of the financial instrument, the particular features or components of the financial instrument, the ease with which investors are able to sell the relevant financial instrument, and the
degree of innovation of the financial instrument.

Degree of complexity of the financial instrument

When assessing the degree of complexity of the financial instrument, the following aspects should be taken into account, amongst others:

– The type of the underlying or reference assets and their degree of transparency;
– The degree of transparency of costs and charges associated with the financial instrument;
– The complexity of the performance calculation; and
– Whether the instrument is bundled with other products.

With CFDs, the underlying or reference assets are shares (as a rule, blue chips), indexes, currencies and futures. There is a high degree of transparency with regard to these assets. Detailed information about the underlying assets can be obtained everywhere.

All costs and charges in connection with the trade in CFDs are shown comprehensively in the cost information: spread, commission and over-night charges.

Furthermore, MiFID 2 provides for comprehensive cost transparency by way of ex-ante cost information about all costs and associated charges of the financial instruments.

There is a 1:1 relationship between the performance of CFDs and the underlying or reference assets and a straight-line relationship between the performance of CFDs and the volume traded, which is why the performance of CFDs is easy to understand. In addition, CFDs are not bundled with other instruments.

All aspects taken into account, the degree of complexity of a CFD can be said to be rather small, based on the aforesaid criteria.

Size of potential detrimental consequences

When assessing the size of potential detrimental consequences, the following aspects should be taken into account, amongst others:

– The number of clients, investors or market participants involved;
– The relative share of the product in investors’ portfolios; and
– The scale and nature of any detriment, including the amount of loss potentially suffered.

The number of clients involved in the CFD market is negligible compared to the overall market. The CFD Association estimates that there are about 9 million share investors in Germany. In the CFD market, on the other hand, only about 65,000 to 80,000 clients are trading, holding about 180,000 accounts in total.

This means that the number of CFD investors in Germany is clearly less than one per cent of the number of German share investors and, in addition, clearly less than one tenth of a per cent of the entire German population.

Furthermore, the share of CFDs in the portfolios of those investors investing in CFDs at all is very small. The market study published by the CFD Association has shown that CFD investors invest not only in CFDs but also in a large variety of financial assets, such as savings accounts, investment funds, ETFs, shares, bonds, certificates, leveraged products, futures, currencies, insurance contracts und binary options.

The amounts of loss suffered by investors are generally small amounts of money. According to the CFD Association’s profit and loss statistics, as made available to BaFin, the median is € -331.

Clients to whom the financial instrument is marketed or sold

When assessing the clients to whom the financial instrument is marketed or sold, the following aspects should be taken into account, amongst others:

– Whether the client is a retail client, a professional client or an eligible counterparty;
– Clients’ skills and abilities, including the level of education, experience with similar financial instruments or selling practices;
– Clients’ economic situation;
– Clients’ core financial objectives; and
– Whether the instrument is being sold to clients outside the intended target market or whether the target market has not been adequately identified.

The reader of the Call for Evidence gets the impression, in the opinion of the CFD Association, that the only criterion that is of relevance to ESMA is the question of whether the client is a retail client, a professional client or an eligible counterparty.

However, Article 19(2)(c) MiFIR mandatorily requires that the other listed criteria and factors be also taken into account in the same manner.

As for the “retail investor” trading in CFDs and such retail investor’s experiences and financial objectives, we make reference to our statements above.

The market study published by the CFD Association has additionally shown that CFD investors have a very high level of skill and education. According to said study, 49.9% of CFD investors have a university degree. Furthermore, the economic situation of clients is good. The average CFD investor has assets of € 50,000 to € 150,000, again according to the published market study.

In the opinion of the CFD Association, these factors and criteria suggest that the client aspect alone is a reason why an interference by ESMA for temporary product intervention purposes is to be declined – for lack of a need for protection on the part of the relevant clients, who have deliberately decided to trade in CFDs and have comprehensive knowledge in this field.

Over and above this, the CFD Association takes the view – and does not hesitate to repeat this point – that no product intervention should occur as long as ESMA is not in possession of detailed practical knowledge about the target market, which imperatively needs to be taken into account in connection with this factor and criterion. When assessing the transparency of the financial instrument, the type and transparency of the underlying, any hidden costs and charges and the nature and risks and transparency of risks should be taken into account, amongst other aspects. In this respect, we make reference to our statements above. According to said criteria, CFDs can be classified as transparent.

It is true that when it comes to assessing the particular features and components of the financial instrument, one of the criteria and factors mentioned is leverage. However, such leverage can be found in a large number of financial instruments, see above.

Furthermore, CFDs are easy to sell: real-time prices are made available and the CFDs can be sold at any time during trading hours.

Degree of innovation of the financial instrument

The degree of innovation of the financial instrument is another relevant criterion and factor in relation to the product intervention power of ESMA.

In the 1990s, CFDs were developed in the area of investment banking with a view to evading socalled stamp duty, which had to be paid to the government in Great Britain on share transactions carried out at the London Stock Exchange.

In the opinion of the CFD Association, the contingency power of ESMA is intended to apply only in certain exceptional cases – “ESMA […] should be able to impose a prohibition or restriction on a precautionary basis before a financial instrument […] has been marketed, distributed or sold to clients a restriction is intended to be imposed on a precautionary basis before a financial instrument has been marketed, distributed or sold to clients” (cf. recital 29 MiFIR). In the opinion of the CFD Association – which opinion is supported by the criterion and factor “Degree of innovation of the financial instrument” – this is to be understood to mean that product intervention measures are intended to be taken on the basis of this power if a number of very specific and narrow conditions are met, and even then only temporarily in exceptional cases, with regard to new complex products – before such products are launched, but not with regard to financial products that have been known and accepted in the market for 30 years.

No risk of regulatory arbitrage
In order for ESMA to have product intervention powers under Article 40 MiFIR, it must additionally be ensured according to Article 40(3)(b) MiFIR that the action does not create a risk of regulatory arbitrage.

However, as stated above, such a risk particularly exists with the potential product intervention measures B – Introduction of leverage limits and C – Introduction of a margin close-out rule. It is to be feared with respect to each of these measures that CFD providers and brokers will relocate to a non-EU country because of the existential interference with their business or because of the very high cost of implementation, which may particularly jeopardise the continued existence of small providers.

The same holds true if clients themselves turn to unregulated providers in non-EU countries.

Discretionary clause

Article 40 MiFIR provides for the exercise of discretion by ESMA. The Authority must exercise its discretion in full within a first step – i.e. take all relevant conditions and criteria and factors into account.

As long as ESMA does not take into account detailed practical knowledge about the concrete impact of the investor protection provisions of MiFID 2, in particular, under the aspect of the relevant target market, and of the PRIIP Regulation in exercising its discretion, such discretion must be deemed misused for failure to take all relevant factors into account.

Furthermore, any potential product intervention by ESMA must be proportionate, the restriction must be necessary and there must not be any more moderate means.

The potential product intervention measures B – Introduction of leverage limits and C – Introduction of a margin close-out rule additionally seem to be disproportionate and unnecessary in light of the fact that fundamental rights may be affected, as stated above, namely the fundamental right of providers and brokers to carry on an established business and clients’ economic freedom of action.

A restriction on incentivisation of trading and a mandatory standardised risk warning would be much less drastic interventions whilst being appropriate measures. The CFD Association will be happy to meet with ESMA at any time face to face to further discuss this issue and offers to present ESMA on this occasion with the market study and the profit and loss statistics referred to in the present statement.

Stellungnahme CFD Verband zum BaFin Anhörung Call for Evidence vom 18.01.2018

Die nachfolgende Pressemeldung des CFD-Verbands bezüglich der Stellungnahme der ESMA vom 16.12.2017 wurde am 19.12.2017 veröffentlicht.

Frankfurt a.M., 19. Dezember 2017 – Der Contracts for Difference Verband e.V. (kurz: CFD-Verband) hat die Pläne der Europäischen Wertpapier- und Marktaufsichtsbehörde (ESMA) zu CFDs und binären Optionen für Privatkunden vom 15. Dezember 2017 zur Kenntnis genommen. Der Verband unterstützt sämtliche Maßnahmen zum Schutz von Privatanlegern. Dies hat der Verband als Basis seines Handelns in einem Kodex für Transparenz, Fairness sowie einen nachhaltigen CFD-Handel in Deutschland verankert.
CFD-Verband begrüßt europaweit einheitliche Regulierung
Die Ausweitung des Verbots von CFDs mit Nachschusspflicht für Privatanleger von Deutschland auf die gesamte Europäische Union wird vom CFD-Verband ausdrücklich begrüßt. Das Verbot war bereits am 10. August 2017 in Deutschland in Kraft getreten, die Mitgliedsunternehmen des CFD-Verbands haben diese Maßnahmen entsprechend umgesetzt.
Bei unerfahrenen CFD-Anlegern unterstützt der CFD-Verband die Pläne der ESMA, die Nachschusspflicht zu verbieten beziehungsweise den Hebel zu begrenzen. Über die Höhe des zulässigen Hebels ist ein Maß zu finden, welches ein ausgeglichenes Chance/Risiko-Verhältnis für den CFD-Kunden darstellt.
Für erfahrene Kunden hält der CFD-Verband eine Begrenzung des Hebels auf max. 30 indes für unangebracht. Die aktuelle Marktstudie des CFD-Verbandes zeigt, dass der deutsche Markt von sehr gut informierten Anlegern geprägt ist. Diese können mögliche Risiken beim Handel mit CFDs richtig einschätzen – etwaige Restriktionen stellen insbesondere für diese Anlegergruppe einen unangemessenen Eingriff in deren Mündigkeit dar.
Werbemaßnahmen und Risikowarnung
Auch die von der ESMA geplanten Restriktionen gegen bonus-getriebene Werbemaßnahmen sowie die geplante einheitliche Risikowarnung werden vom CFD-Verband begrüßt, da sie den Anlegerschutz europaweit stärken. Die Mitglieder des CFD-Verbandes halten sich bereits heute an hohe Standards bei der Bewerbung ihrer Produkte. Mit Blick auf die Bundesrepublik bleibt generell festzuhalten, dass ein hohes Niveau der Risikowarnungen aller CFD-Anbieter bereits erreicht ist.

Die nachfolgende Pressemeldung des CFD-Verbands bezüglich derAllgemeinverfügung der BaFin vom 08.05.2017 wurde am 09.05.2017 veröffentlicht. Die deutsche Finanzdienstleistungsaufsicht hat entschieden, dass CFDs mit einer Nachschusspflicht nicht mehr an Privatkunden angeboten werden dürfen. (Link zur Pressemitteilung: https://www.pressebox.de/inaktiv/contracts-for-difference-verband-ev/CFD-Verband-sieht-BaFin-Verfuegung-zur-Staerkung-des-Anlegerschutzes-in-Deutschland-differenziert/boxid/851928)

CFD-Verband sieht BaFin-Verfügung zur Stärkung des Anlegerschutzes in Deutschland differenziert

Der CFD-Verband hat die Allgemeinverfügung der Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) vom 08.05.2017 zur Kenntnis genommen, wonach Vermarktung, Vertrieb und Verkauf von finanziellen Differenzkontrakten (Contracts for Difference, CFDs) beschränkt und Kontrakte mit einer Nachschusspflicht Privatkunden nicht mehr angeboten werden dürfen.

Grundsätzlich unterstützt der Verband alle Maßnahmen, die dem Schutz von Privatanlegern dienen. Der Verband hält aber ein pauschales Verbot der Nachschusspflicht für wenig zielführend. Vielmehr sollte sich eine differenziertere Betrachtung der Beschränkung von Nachschusspflichten an den Bedürfnissen der Kunden orientieren. Erfahrenen Tradern sollte die Entscheidung über das Eingehen einer Nachschusspflicht selbst überlassen werden, während weniger erfahrene Kunden mittels entsprechender Risikobegrenzungsmodelle von einer Nachschusspflicht ausgenommen werden könnten. Viele der im Verband organisierten Mitgliedsunternehmen nehmen seit Längerem die dafür notwendige, differenzierte Betrachtung der Kundentypen vor und bieten entsprechende zusätzliche Produktkategorien sowie weitere Maßnahmen zur Risikobegrenzung an.

Eine Studie unter Mitgliedern des CFD-Verbandes belegt, dass diese Maßnahmen bereits Früchte tragen. Während Statistiken aus Frankreich und Irland von Verlusten von bis 90% berichten, liegt die entsprechende Quote in Deutschland bei knapp 60%.

Zusätzliche Maßnahmen zum Schutz von Privatanlegern sind allerdings auch nach Auffassung des CFD-Verbandes bei grenzüberschreitenden Produktangeboten notwendig, da viele ausländische Anbieter von internationalen Aufsichtsbehörden mit niedrigeren regulatorischen Standards überwacht werden, aber weder über eine BaFin-Lizenz verfügen noch einer Regulierung durch die BaFin unterliegen . Der CFD-Verband ist der Überzeugung, dass der Großteil von irreführenden Werbeversprechungen von diesen Anbietern abgegeben wird. Schwerpunkte der Verbraucherschutzarbeit sollten daher auf Marktzugangskriterien sowie auf die Themen Marketing und Vertrieb von CFD-Produkten in Deutschland gelegt werden.

In Rahmen einer freiwilligen Selbstverpflichtung seiner Mitglieder hat der CFD-Verband einen Transparenz- und Fairness-Kodex entwickelt, der allgemeingültige Qualitätsstandards enthält. Dieser Kodex wird fortlaufend weiterentwickelt, um sämtlichen Belangen des Anlegerschutz Rechnung zu tragen.

Die nachfolgende Stellungnahme des CFD-Verbands bezüglich der Anhörung zm Entwurf einer Allgemeinverfügung gemäß § 4b Abs. 1 WpHG bezüglich sogenannter „CFDs“, GZ: VBS 7-Wp 5427-2016/0017 wurde am 20.01.2017 an die BaFin versandt.

Der CFD-Verband hat den Entwurf einer Allgemeinverfügung der Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) vom 8.12.2016 zur Kenntnis genommen. Der Verband unterstützt Maßnahmen zum Schutz von Privatanlegern. Der Fokus der Anstrengungen sollte aus Sicht des CFD-Verbands auf einer besseren Kontrolle derjenigen Anbieter liegen, die weder über eine BaFin-Lizenz verfügen, noch von der BaFin reguliert werden, bislang jedoch im deutschen Markt CFD-Produkte vertreiben durften.

Der CFD-Verband empfiehlt zudem eine differenziertere Betrachtung der Beschränkung von Nachschusspflichten. Die BaFin schlägt vor, dass Kontrakte mit einer Nachschusspflicht Privatkunden nicht mehr angeboten werden dürfen. Der CFD-Verband indes empfiehlt, dass erfahrenen Tradern die Entscheidung über das Eingehen einer Nachschusspflicht nach wie vor selbst überlassen werden sollte, während weniger erfahrene Kunden mittels entsprechender Risikobegrenzungsmodelle von einer Nachschusspflicht ausgenommen werden könnten.

Maßnahmen gegen unregulierte und illegale Anbieter

Der CFD-Verband befürwortet eine strengere Regulierung derjenigen CFD-Anbieter, die von internationalen Aufsichtsbehörden mit niedrigen regulatorischen Standards beziehungsweise nicht von der BaFin reguliert werden, aber am deutschen Markt tätig sind. Der CFD-Verband ist der Überzeugung, dass diese Anbieter irreführende Werbeversprechungen abgeben. Die in einer Veröffentlichung der European Securities and Markets Authority (ESMA) vom 25.7.2016 genannten Fälle irreführender Werbung beziehen sich, soweit ersichtlich, mehrheitlich gegen unregulierte oder illegale Broker beziehungsweise gegen Anbieter außerhalb Deutschlands. Schwerpunkte der Verbraucherschutzarbeit sollten daher auf Marktzugangskriterien sowie auf die Themen Marketing und Vertrieb von CFD-Produkten in Deutschland gelegt werden.

Empfehlungen für Qualitätsstandards hat der CFD-Verband in einem Transparenz-Kodex dokumentiert. Der CFD-Verband plant, eng mit der BaFin zusammenzuarbeiten und den CFD-Kodex zum Schutz von Privatanlegern kontinuierlich weiterzuentwickeln beziehungsweise an aktuelle Herausforderungen anzupassen.

Differenzierte Behandlung von Nachschusspflichten

Der Entwurf der Allgemeinverfügung der BaFin sieht eine Beschränkung von Nachschusspflichten für Privatkunden vor. Eine Nachschusspflicht entsteht, wenn Verluste eines Traders das auf dem Konto für den CFD-Handel bereitgehaltene Guthaben übersteigen. Aus Sicht des CFD-Verbands sind die Voraussetzungen für den Erlass eines Produktverbotes dieser Kontrakte nicht gegeben. CFDs richten sich an risikobewusste Trader, die Erfahrung mit Wertpapieren mitbringen. Diese Trader, welche ein klares Verständnis davon haben, wie solche Produkte funktionieren, wollen und sollten selbst entscheiden dürfen, mit welcher Risikoneigung sie ihr Geld einsetzen.

Der CFD-Verband empfiehlt daher eine differenzierte Betrachtung der Kundentypen: Neukunden und weniger erfahrenen Kunden sollte eine zusätzliche Produktkategorie angeboten werden, die den Handel von CFDs ohne Nachschusspflicht ermöglicht. Viele der im CFD-Verband organisierten Mitgliedsunternehmen bieten solche Maßnahmen zur Risikobegrenzung bereits an.

Ergänzend begrüßt der CFD-Verband eine erweiterte, gemeinsam mit der BaFin erarbeitete, Risikoaufklärung.

Vollständige Stellungnahme

Die BaFin hat allen Marktteilnehmern die Gelegenheit gegeben, zum Entwurf ihrer Allgemeinverfügung Stellung zu nehmen. Die Stellungnahme des CFD-Verbandes finden Sie hier.

Stellungnahme CFD Verband zur BaFin Anhörung zu CFDs vom 20.01.2017

Die nachfolgende Stellungnahme des CFD-Verbands bezüglich der ESMA-Veröffentlichung vom 25.07.2016 wurde am 28.07.2016 publiziert. Die europäische Wertpapieraufsicht ESMA hat vor den Risiken von spekulativen Produkten wie CFDs für Retail-Investoren gewarnt. (Link zur Pressemitteilung: https://www.esma.europa.eu/press-news/esma-news/esma-issues-warning-sale-speculative-products-retail-investors)

Der CFD-Verband vertritt die Anliegen von 14 der führenden CFD-Anbieter und der CFD- Privatkunden in Deutschland. Dabei tritt der Verband als Kompetenzzentrum auf, möchte die Öffentlichkeitsarbeit für dieses Marktsegment verbessern und einen noch größeren Fokus auf die Chancen und Risiken des Einsatzes von CFDs, insbesondere bei Privatkunden, legen. Der CFD-Verband vertritt die gemeinsamen Interessen der Mitglieder gegenüber Gesetzgebung, Regierung und öffentlichen Stellen.

Über die gesetzlichen Anforderungen hinaus haben die Mitglieder des CFD-Verbandes sich auf einen CFD-Kodex verpflichtet, der besonderen Wert auf Transparenz, Fairness und Anlegerschutz legt. Darüber hinaus stellen die Verbandsmitglieder hohe Anforderungen an ihre CFD-Kunden. In jedem Einzelfall wird geprüft, ob die notwendigen Kenntnisse und Erfahrungen für CFD-Geschäfte vorliegen und ob die Geschäfte geeignet sind. Zusätzlich bieten die Mitglieder des Verbandes neben ausführlichen Risikohinweisen auch Ausbildungs- und Informationsmaterialien an.

Deshalb ist der CFD-Verband absolut davon überzeugt, dass die deutschen CFD-Kunden ausreichend aufgeklärt sind. Dies belegt auch die CFD-Marktstudie 2015, die von der Steinbeis Hochschule durchgeführt wurde: lediglich 9% der CFD-Investoren geben an, nur einen Teil der Risiken im CFD-Handel zu kennen und über 80% der CFD-Kunden befassen sich täglich mit ihrer Geldanlage in CFDs.

Die von der ESMA aufgeworfenen Kritikpunkte betreffen Anbieter, die sich in einer unregulierten Grauzone bewegen oder außerhalb Deutschlands, zumeist in Zypern, beheimatet sind. Vor diesem Hintergrund koordiniert die ESMA in Zusammenarbeit mit der zypriotischen Finanzaufsichtsbehörde seit Mitte 2015 Aktionen gegen diese Broker. Ein Beleg für die Notwendigkeit der Aktionen ist der Ombudsmann-Report 2015 der französischen AMF, in dem über 90% der Reklamationen in Bezug auf FX und Binäre Optionen auf illegale oder zypriotische Broker zurückzuführen sind. Keiner dieser Broker ist Mitglied im deutschen CFD-Verband.

Der CFD-Verband unterstützt grundsätzlich die Warnung der ESMA vor diesen Brokern, die unzureichend über Risiko-Rendite-Profile von CFDs aufklären oder gar bewußt falsch informieren oder falsche Werbeversprechungen abgeben; Anleger sollten diese Broker meiden. Die ESMA Warnung kann nach Auffassung des CFD-Verbandes allerdings nicht verallgemeinernd auf die Mitglieder des deutschen CFD-Verbandes übertragen werden.

Diese Stellungnahme des CFD-Verbands an die ESMA wurde am 29.01.2016 veröffentlicht.

Der CFD Verband hat seine erste Stellungnahme am 29.01.2016 an die ESMA – European Securities and Markets Authority – gesendet. Im Vorfeld wurde ein Arbeitskreis ESMA gebildet bei dem die folgenden Mitglieder involviert waren:
Dr. Carsten Rössner VITRADE, Samed Yilmaz FXFLAT, Fabian John AYONDO, Fabian Lippert COMDIRECT, Maik Thielen SBROKER, Matthias Schmidt BIW BANK, Andre Röhrle LUTHER, Marijana Pusic und Julia Schmitt CMCMARKETS, Andreas Kiefer im Auftrag der CONSORSBANK, Ingo Wegerich LUTHER, Markus Kegler COMMERZBANK, Rafael Neustadt FXFLAT.

Die ESMA hatte 28 Fragen in ein „Joint Consultation Paper – PRIIPS Key Information Documents“ gefasst, zudem der CFD Verband ein Antwortenpapier erstellt hat. Ein inhaltlicher Schwerpunkt lag in der Erstellung von KIDs (Key-Information-Document) der CFD Emittenten. Ein KID soll strukturierte Produkte in ihre Einzelrisiken- und kosten aufsplitten, zur weiteren Transparenz für Privatkunden.

Die Pflicht zur Aushändigung eines Produktinformationsblattes PRIIP ist zum 31.12.2016 vorgesehen. Dies gilt für Produkthersteller – in diesem Fall CFD Emittenten – und auch Vermittler. Im Vermittlungsgeschäft wären dann die Informationsblätter der jeweiligen Marketmaker zu beschaffen.

Anwendungsbereich gemäß ESMA gilt für: Derivative Finanzinstrumente aller Arten (CFD, Binäre Optionen, Optionsscheine/Zertifikate, Optionen, Futures oder Swaps. Die Pflicht besteht gegenüber allen nicht-professionellen Kunden=“Kleinanleger“.

Das gesamte Dokument können Sie hier einsehen.