50:1 or 500:1? Print
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Wednesday, 21 December 2016 10:09

HomeThe FCA is at long last catching up with US regulators and proposing changes to what has become the wild west amongst questionable spread betting, CFD and Binary providers.

The main area of concern for the FCA is to save private punters from themselves and the temptions of "Get rich quick" marketing promotions that are just great at getting the brokers rich quick! Why? Because the majority of spread betting and binary punters lose money. Punters losses can result in bumper 'broker' profits as most of these providers are not brokers at all, they take the other side of your trade. 

The FCA have now proposed:

 Limit leverage to 25:1 for punters with less than 12 months experience. and 50:1 above 12 months.

Ban 'Free' cash Bonus Promotions 'enticements to trade' and publish agregate customer profit and loss.

So will this help reduce punters losses? It's a no brainer. Take a look at the collapse in share prices of IG group and CMC Markets when the FCA probe was announced. The market expects the providers super profits to fizzle away once this comes into force.

The FCA have started the consultation phase to which anyone can contribute here: https://www.fca.org.uk/cp16-40-response-form