BaFin: Ban of CFDs with additional payment obligations

On 8 May 2017 the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) issued a General Administrative Act pursuant to section 4b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). The General Administrative Act restricts the marketing, distribution and sale of certain financial contracts for difference (CFDs) with respect to retail clients. After long discussions with other European regulators regarding these types of financial instruments BaFin for the first time makes use of the product intervention option. CFDs that include obligations for additional payments may no longer be offered to retail clients in Germany. Providers of CFDs with an additional payments obligation have three months from the date of publication of the General Administrative Act to adjust their business models. The English version of BaFin's announcement follows.