Spanish regulator CySEC Forex Brokers warning: Comply with the CNMV rules

Today, the CNMV has issued a warning for Cypriot brokers. What is Spanish regulator CySEC Forex Brokers warning about? How will it affect CIFs?

23 May, AtoZForex – The Comision Nacional del Mercado de Valores (CNMV), the financial regulator of the Spanish market, has issued a new circular today. As Spanish watchdog CNMV unmasks seven unregulated brokers in Spain, the latest announcement by the watchdog outlines the fact that the Cypriot brokerages need to comply with the new CNMV rules.

Spanish regulator CySEC Forex Brokers warning

Today, the CNMV has warned the CySEC regulated brokers to comply with new issued Spanish financial market rules. The CNMV has stated the following in the Spanish regulator CySEC Forex Brokers warning:

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As a follow-up to CNMV’s Communication issued on 21 March on "Measures in relation to the trading of CFDs and other speculative products between retail clients", it is reported that the Cyprus Securities and Exchange Commission (CySEC), the Cypriot financial market regulator, in response to a request from CNMV, has issued a circular so that entities domiciled in Cyprus that trade CFDs, forex products or binary options in Spain, issue the same warnings and measures required of the entities registered in Spain.’

The CNMV states that it will be able to act ‘in the event that the entities of the aforementioned country under the regime of free provision of services do not apply the measures communicated by the CySEC in transactions with Spanish investors.’

CySEC CNMV circular to CIFs

Earlier last week, the Cypriot regulator has issued a circular to point out the new guidelines for Spanish Forex and Binary options brokers.

The warning from CySEC is stressing the increasing complexity of running a brokerage under modern EU and MiFID standards. The broker must ensure that the operations are meeting the requirements of each individual market.

New CNMV Forex market rules

Earlier this March, Spain’s CNMV has set certain parameters for the industry brokers providing services to the retail customers. According to the communication, the regulator’s requirement is that every brokerage dealing in CFDs, Forex. Binary options brokerages will have to mention additional risk warnings to the investors if the leverage is higher than 1:10.

As per the regulator’s requirement, a warning sign should pop up educating the investor about the risk associated with the position or order that the investor is placing. As per the tentative translation from the CNMV document, the warning sign should look something like this:

“The financial product you are about to acquire (product must be identified) is a product with leverage. You must be aware that losses may be greater than the amount disbursed initially for acquisition.”

In addition, the financial regulator wants the CFD, Forex, and binary options advertisement should contain a similar warning sign. This move is taken for educating the investors regarding the risk associated with the said financial products.

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