IG Group has stated it does not expect to be affected by the French regulator's crackdown on contract for difference investment products, a rule change that comes in the wake of the Financial Conduct Authority's own decision to throw a spotlight on the sector.
IG Group stated the key marketing restrictions for CFDs do not impact the accounts that IG offers to new clients in France, because IG's accounts provide a limited-by-loss guarantee as required, and therefore also guarantee of no negative balance.
Contract for difference products, or CFDs, are derivatives products that allow you to trade on live market price movements without actually owning the underlying instrument on which your contract is based.
You can use CFDs to speculate on the future movement of market prices regardless of whether the underlying markets are rising or falling.
Additionally, the French regulator, the AMF, will also ban all electronic marketing involving foreign exchange and binaries.
IG Group said it does not believe these restrictions will have a material negative impact on its business in France in the short term, and could ultimately be beneficial to the company's future competitive position in the country.
In December, the Financial Conduct Authority announced it was cracking down on firms selling “contract for difference” products to retail consumers.
The FCA had noticed an increase in the number of firms offering CFD products, including spread bets and rolling spot foreign exchange products, and raised concerns that retail investors are trading products they do not understand.
IG Group added it believes the AMF's approach will provide substantial protection for consumers and greatly improve standards in the sector.
ruth.gillbe@ft.com
