CNMV Reporting Unregistered Investment Services: Strengthening Rules for CFD Marketing

<p>The National Securities Market Commission (CNMV) has issued
a series of warnings, alerting investors to the potential risks associated with
entities operating without proper registration and utilizing specific domain
names for their activities. </p><p>CNMV Alerts Investors to Risks Associated with Unregistered
Operators</p><p>The unregistered entities include:</p><ol><li>alfatraders.pro- ALFA TRADERS, ALFA TRADE</li><li>algotrust.trade- ALGO TRUST
LLC</li><li>gecruxinvest.io- GECRUX INVEST, BAMBOOZLE
GROUP LTD</li><li>invox.trade- INVOX TRADE</li><li>tangent-capital.pro- TANGENT CAPITAL</li></ol><p>CNMV, the regulatory authority responsible for overseeing
the securities market in Spain, has confirmed that these entities are not
registered in the corresponding registry, and as a result, they lack the
necessary authorization to provide investment services or engage in activities
subject to CNMV's supervision.</p><p>Investors and the general public are urged to exercise
caution and diligence when dealing with entities using these domain names, as
their unregistered status may pose potential risks. CNMV emphasizes the
importance of verifying an institution's registration status before entering
into any financial transactions.</p><p>To assist investors in confirming the legitimacy of
financial institutions using these domains, CNMV offers a search engine on its
official website and encourages individuals to contact its investor service to
verify the registration status of any entity. Additionally, <a href="https://www.financemagnates.com/tag/cnmv/">CNMV</a> has provided an
inquiry form and an infringements communication channel for reporting
investment service offers from unregistered entities using the mentioned
domains.</p><blockquote><p lang="en" dir="ltr">Warnings from <a href="https://twitter.com/hashtag/CNMV?src=hash&amp;ref_src=twsrc%5Etfw">#CNMV</a> on unregistered institutions: <a href="https://t.co/kGTjJv4XuA">https://t.co/kGTjJv4XuA</a></p>— CNMV (@CNMV_MEDIOS) <a href="https://twitter.com/CNMV_MEDIOS/status/1718965978023793128?ref_src=twsrc%5Etfw">October 30, 2023</a></blockquote><p>Spanish
Regulator Set to Implement Stricter CFD Restrictions</p><p><a href="https://www.financemagnates.com/">Finance Magnates</a> reported earlier
that <a href="https://www.financemagnates.com/forex/spains-expanded-restrictions-on-cfds-set-for-july-20-gets-esma-backing/">CNMV
was poised to introduce enhanced regulations governing the marketing,
distribution, and sales of contracts for difference (CFDs) instruments</a>.
These additional measures, set to take effect from July 20, 2023, were deemed
"justified and proportionate" by the European Securities and Markets
Authority (ESMA), which disclosed the development.</p><p>The
first segment of the new restrictions builds upon regulations introduced by the
CNMV in 2019 and ESMA in 2018. It prohibits marketing communications and
practices aimed at retail clients or the general public. This includes the use
of sales agents, call centers, or software providers to recruit investors.
Furthermore, the sponsorship of events and organizations, as well as the use of
public figures to promote CFDs, is banned.</p><p>The
second part of the enhanced regulations covers the marketing, sale, and
distribution to retail clients of certain "leveraged products,"
including particular types of futures and options. Providers of these high-risk
products will be required to close one or more of a retail client's open
positions when the position value is reduced to half of the initial margin.</p><p>Turbo
products, similar to <a href="https://www.financemagnates.com/tag/cfds/">CFDs</a>
and leveraged derivatives that allow investors to profit from underlying asset
movements, are excluded from these regulations when the total risk is equal to
the amount invested.</p><p>The
CNMV's decision to implement these additional restrictions follows a public
consultation conducted in November of the previous year. The regulator
highlighted that previous restrictions introduced in 2019 had limited
effectiveness in terms of investor protection. Notably,
roughly 75% of retail investors continue to suffer losses on their CFD
investments, even as a significant portion of CFD distribution in Spain is
conducted by entities with passports from other EU member states.</p><p>These
additional regulations are a response to brokers' aggressive advertising
campaigns that sometimes bypass due authorization and attract investors through
mass call centers and other methods that circumvent existing restrictions. The
CNMV has previously mandated risk warnings for providers offering leverage
higher than 1:10, ensuring that retail clients are informed of the potential
risks associated with trading in leveraged products. </p>

This article was written by Tareq Sikder at www.financemagnates.com.