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Saxo quits CFD and FX Association amid FCA crackdown

Saxo quits CFD and FX Association amid FCA crackdown

Saxo Capital Markets has quit the UK CFD and FX Association amid growing regulatory pressure.  

At the end of last year the Financial Conduct Authority said it had identified a number of 'serious concerns'  after a six-year study into the CFD market.  

The watchdog said it was working on imposing stricter rules on the market, claiming firms are failing to adequately consider whether CFDs are appropriate products for their customers. The news sparked a huge sell-off in spreadbetting firms. 

Ultimately the FCA wants businesses providing these types of products - which are described as 'margin' - to place responsible caps on the levels of leverage offered and enhanced transparency. 

The Saxo Bank Group said it 'strongly supports' the FCA proposals and that it had taken the decision to withdraw from the margin trade body following a thorough consideration of consumer protection.

Saxo Bank CEO and founder Kim Fournais said the UK CFD and FX Association no longer reflected its views and interests.  

'Trading CFDs and FX instruments brings a number of advantages to retail investors that have previously been the preserve of larger financial institutions. However, trading these instruments also carries risks that should not be neglected and warrant high industry standards and firm and fair regulation,' Fournais said. 

'For the Saxo Bank group it is important that our interests are aligned with our clients’ interests. When our clients succeed, we succeed and to support that, we offer responsible levels of leverage, risk education and relevant information to clients.

Fournais added that Saxo supports regulators efforts to set higher standards in the industry in a bid to enhance protection for clients. 

'The Saxo Bank group takes a prudent approach to leverage and welcomes the proposals from the FCA to set responsible boundaries on leverage that are in fact roughly in line with the maximum leverage used by our active trading clients today,' Fournais said. 

'Trading with excessive leverage leads to a significant risk of frequent stop-outs which leads to client losses. We have no interest in offering clients too high leverage just to see clients being stopped out.'

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