The European Securities and Markets Authority (ESMA), which oversees financial markets in the European Union, has provided its feedback on action taken by the Spanish financial regulator, the Comisión Nacional del Mercado de Valores (CNMV).
The measures include two parts. First, stricter rules on advertising CFDs to the public. Second, requiring investors to put up initial funds and implementing rules to quickly close positions if they are at risk of losing more than they initially invested.
ESMA believes that these national measures are reasonable and appropriate.
Furthermore, the EU regulator advises all National Competent Authorities (NCAs) to keep an eye on potential risks similar to those highlighted by the CNMV in their respective regions.
NCAs can implement measures to intervene in the market in accordance with Article 42 of Regulation (EU) No 600/2014. Before these measures come into effect, an NCA must inform all other NCAs and ESMA about the specifics of the proposed measure and the supporting evidence. This must be done at least one month prior, unless there are extraordinary circumstances requiring immediate action.
As stated in Regulation (EU) No 600/2014, Article 43, ESMA has a role to assist and coordinate actions by NCAs regarding product intervention measures. When an NCA informs ESMA about its planned measure, ESMA must evaluate if the measure is reasonable and fair. If ESMA believes other NCAs should also take action, it must mention it in its evaluation.
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