IDM appeals to the PFSA regarding changes in the conditions of intervention on the Forex / CFD market

The Chamber of Brokerage Houses calls on the Polish Financial Supervision Authority to calibrate the domestic intervention on the CFD market and include it in national regulations the status of an experienced client.

The Chamber notes that the adoption of EU solutions by 1: 1, without taking into account the specifics of the domestic market, works to the detriment of Polish investors and reduces the competitiveness of domestic investment companies, which in the last months after the introduction of ESMA intervention have already lost more than half of turnover for customer migration outside of European regulations.

The outflow of customers outside the Union is a fact and you do not have to look far to find a reflection of that in numbers (read: CMC Markets earns less and less).

Cypriots want to stand out

In addition, the Chamber notes that other competitive CFD markets, such as Cyprus, want to introduce solutions that give them an edge in the industry. Cypriot financial supervision, CySEC, recently the published communication announced that it is launching a consultation period regarding future changes in customer categorization. The project takes into account the extension of current standards to 3 groups and the ability to offer 1 leverage: 50 to more experienced investors. However, there are no known details on how to verify the level of knowledge and experience that would decide about it.

Cypriot supervisor CySEC, in a published consultation document, proposes to introduce a new category of client, identical with the category proposed by the KNF "Experienced client", with a leverage of 1:50.

Taking into account the fact that the Cypriot market is the largest competitor on the Polish market, the solutions of national intervention should be competitive to those proposed by the Cypriot regulator. Therefore, the Chamber postulates to suspend the announcement of the decision on national intervention until the proposal by CySEC.

IDM wants to modify the conditions

The Chamber of Brokerage Houses has issued its own proposals for changes that would be extremely desirable in order to ensure adequate security and competitiveness of the domestic market. Below we mention the most important.

#1. Adjusting the lever

IDM representatives draw attention to the need to adjust the leverage to the value of the lever available for analogical instruments on regulated exchanges. The volatility of these instruments is also important. Only that changes would be introduced permanently, and market volatility is subject to periodic fluctuations (sometimes also in the long term). This issue is not addressed by the letter.

#2. Conditions for professionals

Another proposal is the desire to provide identical protection to clients with professional status, as well as retail (including the creation of a negative balance). In addition, professionals would receive a double leverage.

IDM would also like to change the conditions that must be met by traders applying for the status of "experienced investor". It would be:

• possession of an investment account for more than 12 months,
• execution of a minimum 40 transaction.

Both conditions would have to be met simultaneously.

#3. Debit protection

The list of the Chamber's proposals also includes another interesting idea, which in this case will not necessarily please investors, but will certainly provide greater security to brokers. The current negative balance protection covers every customer account. This means that a person having several accounts at one brokerage house may cause an overdraft on one account without any consequences for the balances on the others. The Chamber of Brokerage Houses would like to change this. The "IDM" version assumes that the negative balance protection would cover all deposits from all customer accounts as one. In practice, this would mean that if we have PLN 1 on account No. 1000, and we generate an overdraft of -2 PLN on account No. 500, this amount would also be deducted from account No. 1 towards settling the debt.

The full text of the IDM letter addressed to the Commission is available HERE.