CNMV's New Rules Have a "Minor" Impact on the Operations, Says XTB

The National Securities Market Commission (CNMV) expanded restrictions on the marketing, distribution, and sales of CFD instruments, which Warsaw-based forex and CFD broker XTB stated have had a "minor" impact on its business. The Polish broker pointed out that the new regulations have not had "any significant changes" in its customer acquisition rate.

In July, CNMV revealed that its two-part additional rules to further restrict CFD marketing are expected to come into force on July 20, 2023. The regulatory agency explained that despite previous restrictions, about 75% of retail investors still suffer losses in CFD investments, making it necessary to establish additional rules.

Therefore, the new restrictive measures prohibit marketing activities targeting retail customers or the general public, including the use of sales agents, call centres or software providers to recruit investors.

In addition, these restrictive measures also require providers of certain "leveraged products" such as futures and options to close one or more of a retail client's open positions when the value of the positions is reduced to half of the initial margin, providing greater protection for investors.

However, XTB welcomed the new rules in a note to its investors, stating that they "will help clean the local market of unfair practices that negatively affected the image of the entire industry." In addition, the broker believes that due to the limited products provided by its competitors, the new rules will help further consolidate its market position in Spain.

"We have not conducted advertising activities related to CFDs in Spain for almost two years; hence, the impact of the new regulation on XTB’s operating activities is assessed as minor," XTB explained. "In recent years, our marketing activities in this market have focused primarily on the promotion of the stock offer and educational activities."

Nevertheless, XTB stated that it has made certain modifications to its website, social media activities, cooperation principles with partners, and payment methods provided for customers in accordance with the extra rules.

Besides, the Polish broker also noted that its marketing strategy for the Spanish market "will not change significantly". XTB added, "At the beginning of 2024, we are planning a large advertising campaign related to our new concept of communication with clients."

(Source: Finance Magnates)