IG Group, the industry’s biggest player, said the restrictions on borrowing were “disproportionate and go beyond what is needed to protect consumers from poor outcomes associated with excessive leverage”.
It also warned that customers could be pushed towards riskier companies. “The danger of disproportionate leverage restrictions on regulated firms is the risk that they will push retail clients to trade CFDs with unregulated firms based outside the EU, potentially resulting in poor client outcomes.”
ESMA is also proposing bans on binary options, which are win or lose bets on market moves over as little as 30 seconds, as well as ensuring clients’ positions are closed when their initial margin runs out, a guaranteed limit on losses, and restrictions on bonuses.
Analysts said IG, which stopped offering binaries to new customers at the beginning of the year, was best placed to weather the storm. The firm predicts a revenues blow of less than 10%, although shares still fell 70p to 663p.
CMC, which was down 20.25p at 147.5p, said the proposals “may have an impact” and Plus500 said it would wait to see “where it will need to implement necessary adjustments”. Plus500’s shares fell 104.5p to 820.5p.
Peel Hunt analysts warned: “We believe Plus500 is most exposed to these proposed regulatory changes.”
