New Spanish Directive Requires Brokers To Disclose Warnings To Clients

New Spanish Directive Requires Brokers To Disclose Warnings To Clients

By TLB Contributing Financial Writer: Andrew

Spain’s financial regulator has issued a new notice that a lot of people seem not to understand. This notice affects forex in Spain and it specifically touches on how brokers should relate to their clients going forward. The regulator, CNMV, seeks to clarify some gray areas in the financial realm with this new notice. The regulator is specifically targeting entities that deal in leveraged financial products. It appears that the regulator wants these brokers to make particular warnings clear to their clients and other shareholders in the forex market.

This new notice seems to signify a resurrection of the same issue that was a focus of the regulator back in 2017. Back then, the regulator introduced a raft of warnings that they needed to be disclosed by forex brokers. It seems that Spain is finally catching up to the European neighbors when it comes to leveraged products regulation. Spain has for a long time been indifferent to the laws in place in the leveraged services market. Most of its neighbors in Europe have quite elaborate laws that govern this business. The regulator of the European market is particularly quite strict regarding the financial market as a whole.

The CNMV notice is specific as to exactly what needs to be updated. The particular area that is of interest to the Spanish regulator involves the consent given by clients after they have been given warnings by their service providers. Brokers in the forex market have already been operating under a 2017 directive that requires written consent from clients. The Spanish regulator not only made it mandatory for brokers to disclose all the warnings that pertain to the trade, but to also have the proof of understanding written by clients. The 2017 directive was to apply not just to forex brokers but also Binary options traders and CFD brokers.

While the new notice has generated a lot of commotion, it is not particularly any different from the directive given in 2017. Much of what is covered in the new notice was already known to all the stakeholders in the industry. The specifics that the regulator wants to be clarified and emphasized are nevertheless what is detailed in the notice. The major difference now is that the warnings will be served to clients who will, in turn, confirm their understanding of the warnings in a handwritten consent note. The language used in the warnings has also been given much more emphasis than it was initially.

The warnings that the regulator wants to be given and signed by clients will include the mentioning of the particular product in question. A warning by the CNMV will also be contained in the handwritten notice as well as an explicit confirmation by the client that they understand the product they are investing in. Also contained in the warning will be the confirmation by clients that they understand the risks of committing to leveraged products. The Spanish regulator has availed the verbatim text of the warnings to the public through its official website.


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