Central Bank publishes consultation on the protection of retail investors of CFDs

Discussion in 'Investments' started by Brendan Burgess, Mar 6, 2017.

  1. Brendan Burgess

    Brendan Burgess Founder

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    The Central Bank has published a Consultation on the protection of retail investors in relation to the distribution of CFDs. Contracts for Difference (CFDs) are complex, leveraged, derivative instruments which enable investors to speculate on the short-term price movements of an underlying reference asset.

    The Consultation Paper discusses the Central Bank’s concerns in relation to CFDs and outlines proposed measures currently under consideration which are aimed at protecting the interests of retail clients. Options under consideration include the prohibition of the sale or distribution of CFDs to retail clients in and from Ireland and the implementation of enhanced investor protection measures.

    Director of Asset Management Supervision, Michael Hodson said “CFDs are complex products which are widely advertised to the retail mass market in an online setting. It is timely for the Central Bank to take further and decisive action in relation to CFDs given the evidence that the probability of loss for consumers is very high. This work builds on previous work in this area and proposes stronger protections for consumers.”

    Interested parties are invited to make a submission to cfdconsultation@centralbank.ie by 29 May 2017. Submissions will be published along with a feedback statement on www.centralbank.ie following the consultation period.
     
  2. lukas888

    lukas888 Frequent Poster

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    I have traded CFDS on and off for at least ten years,and I can see why the CB are considering some form of oversight but a complete ban is preposterous.Why this sudden interest and not years ago when CFD trading was rampant.If people wish to gamble so what ,we have 2000 bookmakers shops in Ireland causing untold damage, imagine the uproar if they tried to interfere with them. Another example of the nanny state gone mad.
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    Hi Lukas

    You should make a submission so. They would particularly welcome submissions from ordinary consumers.

    A person entering bookmaker's shop knows that they are gambling.

    CFDs are dressed up as investments and punters don't realise that they are gambling.

    Brendan
     
  4. Andy836

    Andy836 Frequent Poster

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    The downside on a bookies bet is limited to the stake. The downside on a CFD, when shorting, is unlimited. Plus its a leveraged product.

    They shouldn't be advertised to retail customers, or at least there should be a massive disclaimer with flashing red lights.
     
  5. lukas888

    lukas888 Frequent Poster

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    Yes include plenty of Armageddon warnings but outright ban is way over the top.Retail customers are the main CFD market and most are well informed and don't need the CB to hold their hand.
     
  6. Nordkapp

    Nordkapp Frequent Poster

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    Unfortunately today punters don't have to leave the bar to gamble at a bookies, no doubt as they are somewhat inebriated on a saturday afternoon when they receive a text message from the bookie offering nice odds on the next goal in match and then press a button or two to place a bet. Gambling is a scourge in all forms.
    Watching darts or snooker on ITV the adverts are gambling and sponsored gambling. Watched the Pro 12 on TG4, the adverts are for a CFD provider.
    I think they should start here with CFDs and then go after the rest. The bookie is the only winner.
     
  7. Nordkapp

    Nordkapp Frequent Poster

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    I disagree that retail investors are well informed of the risks of leverage by the provider. The proof is the losses racked up