Circular C208 (“the Circular”) dated 17.05.17 regarding BaFin’s General Administrative Act regarding the restriction of marketing, distribution and sale of financial contracts for difference (CFDs) should they have an additional payments obligation, to retail clients in the territory of Germany

MNK Risk Consulting > News > Regulatory Developments > Circular C208 (“the Circular”) dated 17.05.17 regarding BaFin’s General Administrative Act regarding the restriction of marketing, distribution and sale of financial contracts for difference (CFDs) should they have an additional payments obligation, to retail clients in the territory of Germany

Through the Circular, CySEC informs the Regulated Entities that provide investment services relating to financial contracts for difference (CFDs) to Retail Clients, through branch or cross border, in the territory of the German Regulator, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

  1. Regulator’s legislation:   General Administrative Act regarding CFDs dated 08.05.17;
  2. Enforcement date:   10.08.17 (within 3 months from issuance on 08.05.17);
  3. Restriction applicable:   Pursuant to Section 4b(1) of the German Securities Trading Act, the General Administrative Act regarding CFDs was issued with aim to prohibit the marketing, distribution and sale of CFDs to Retail Clients in Germany, where the CFDs establish an obligation on the part of the Retail Investor to make additional payments.

CySEC’s expects that: CIFs that provide CFDs which give rise to additional payments obligation have three (3) months from the date of publication of the said Act (i.e. by 10.08.17), to adjust their business models in accordance with BaFIN’s new measures. CySEC advises CIFs to consult with their legal consultants regarding the necessary legal actions required, to ensure compliance with BaFIN’s new regulatory measures. On the other hand, as per Section 4(2)(2) of the General Administrative Act regarding CFDs dated 08.05.17, CFDs without an additional payments obligation, may continue to be marketed, distributed and sold to retail investors.

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