The Cyprus Securities and Exchange Commission (‘CySEC’) has issued a Directive for the imposition of national measures to restrict the marketing, distribution and sale of contracts for difference (‘CFDs’).
The Cyprus National Product Intervention Measures (‘CyNPIMs’) include:
- Restricting leverage limits from 30:1 to 2:1 on the opening of a position by a retail client;
- The adoption of the same leverage limits for all retail clients, with ranges from 2:1 to 30:1 dependent on the type and volatility of the underlying asset:
- Introducing a margin close-out, when the clients’ funds fall to 50% of the margin needed to maintain their open positions on their CFD account;
- Introducing a negative balance protection per account basis, so that retail clients cannot lose more than the total funds in their trading account;
- Prohibiting firms from offering cash or other inducements to encourage retail clients to trade; and;
- Requiring firms to provide standardised risk warnings informing potential customers the percentage of their retail client accounts.
Requirements for Initial Margin Protection and Leverage Limits depending on the underlying asset:
Requirements and conditions for the Risk Warning to be provided to clients can be found in Appendix II of the Directive DI87-09.
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