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German authorities limit CFD customer losses

Plus500 has “welcomed” the conclusion of Germany’s financial authority’s consultation on contracts for difference (CFD) trading.

BaFin, the German Federal Financial Supervisory Authority, began its consultation in December 2016 and has now issued a final set of CFD trading restrictions to be implemented by August 10, 2017.

Plus500 said the principal change is the implementation of negative balance protection where clients cannot lose more than their account balance.

The company added that it will continue to implement necessary adjustments to its business model when required by regulatory changes.

In a statement, it said: “Plus500 welcomes this protection mechanism for the industry and reiterates that the company has always provided balance protection to its customers across all its product offerings in all its markets, as a core principle of its business model.

“Plus500 also notes that BaFin has not implemented any leverage limits. Therefore these changes will have no effect on its business.”

Plus500 added that it does not have any regulatory restrictions in any of its regulated markets.

In December, Elisabeth Roegele, chief executive of BaFin, said: “In the case of CFDs with an additional payments obligation, the risk of loss for the investor is incalculable. For consumer protection reasons, we cannot accept that.”

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