ESMA is still concerned about firms that market, distribute or sell CFDs to retail clients. It has now published a warning to them, saying it is particularly worried about:
- encouraging retail clients to ask to opt up to professional client status. It says any form of practice that in any way incentivises or induces a client to do this will not be tolerated; and
- firms that are attempting to circumvent ESMA’s product intervention measures by offering retail clients the chance to move their accounts to a third-country entity – which then markets in a manner that is not compliant with ESMA’s guidelines. ESMA reminds firms that in the absence of authorisation or compliance with national regimes, third-country firms are in principle allowed only to provide services at the EU client’s exclusive initiative. ESMA would also be likely to consider information on the benefits of trading CFDs with such an entity as a circumvention of its measures.