This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-38219698
The article has changed 5 times. There is an RSS feed of changes available.
Version 0 | Version 1 |
---|---|
Crackdown on financial spread betting proposed by FCA | Crackdown on financial spread betting proposed by FCA |
(35 minutes later) | |
New rules to help protect investors using financial spread betting - in which 82% have lost money - have been proposed by the financial watchdog. | |
The Financial Conduct Authority (FCA) wants to tackle the "contract for difference" (CFD) market, which includes financial spread betting. | |
It fears that retail customers are using products they do not understand. | |
The CFD market offers the opportunity to speculate on a shift in the market without owning the underlying asset. | The CFD market offers the opportunity to speculate on a shift in the market without owning the underlying asset. |
Share prices hit | |
The FCA is proposing measures to limit the risks of CFD products and ensure that customers are better informed. | The FCA is proposing measures to limit the risks of CFD products and ensure that customers are better informed. |
"We have serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses," said Christopher Woolard, the FCA's executive director of strategy and competition. | "We have serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses," said Christopher Woolard, the FCA's executive director of strategy and competition. |
These complex investments are often sold to ordinary investors online. The potential losses or gains can be much larger than from traditional trading as an investor can hold a trading position representing a much higher value than the size of the stake invested. | |
The FCA's analysis found that 82% of clients lost money on such products. The average among clients checked by the watchdog was a loss of £2,200. | |
Its plans include: | |
Consultation on the plans is open until March, with a further statement expected from the FCA in the spring. | |
The share prices of firms offering these services were hit hard in early trading after the announcement was made. | |
CMC Markets and IG Group were the heaviest fallers on the FTSE 250, down 23% and 22% respectively in the first half hour. | |
Playtech, the gambling software company which is expanding into financial betting, was down 5%. |