The biggest derivative trading platforms on the market have been shaken by European and UK regulators’ focus on their activities.

Those impacted include the UK’s largest player IG Group (IGG) which along with CMC Markets (CMC) and Plus500 (PLUS:AIM) suffered heavy share price losses on 18 December.

The European Securities and Markets Authority (ESMA) and Financial Conduct Authority (FCA) want to clamp down on the marketing and sale of binary options and contracts for difference (CFD) to retail customers.

They also want to restrict the amount of leverage customers are offered and protect them from incurring large losses.

IG blasted the plans to reduce leverage limits, saying the restrictions are ‘disproportionate and go beyond what is needed to protect consumers’.

The company also says that limiting the amount of leverage will push customers wanting to use more borrowed funds (leverage) into the hands of offshore unregulated businesses. It adds this could potentially result in ‘poor client solutions’.

All three companies are less worried with restrictions on binary options as these products account for inconsequential parts of their business.

CMC seems supportive of the regulators’ plans, saying it will create a ‘level playing field’. The company adds it is ‘well positioned to take advantage of market opportunities that will arise from these proposals’. (DS)

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