By nature, retail trading and products like CFDs (contracts for difference) involve high risk. These markets typically show low growth and present challenges for investors trying to access emerging markets.

Retail trading is also heavily influenced by changing regulations and compliance rules. These shifts continue to reshape the trading landscape and redefine what’s considered best practice.

This is especially true right now, as European regulators aim to tighten rules in the retail trading space and offer more protection to online traders.

In this post, we’ll explore how CFD trading, in particular, is likely to be affected by the proposed regulatory changes in the year ahead. 🔗 More: » CFD Brokers

An Extension of UK Plans – What Are Regulators Planning?

As part of a broader regulatory overhaul, European authorities are expected to introduce guaranteed loss limits for customers in 2018 and target products seen as overly risky. This comes after a UK crackdown last winter that shook the financial sector and caused leading firms to lose about a third of their share value.

More specifically, regulators want to limit how much customers can borrow to leverage their trades and also restrict how certain products are marketed. Their focus is on highly liquid markets and derivatives, including forex and CFDs, where investors speculate on asset performance without owning the asset itself.

These proposals will also extend to binary options, which let investors bet on whether a price will be above or below a set level. Spread betting may also face closer scrutiny, signaling broader changes in the financial sector in the short term.

How Will This Affect CFD Trading?

At first glance, these changes will place more pressure on trading platforms like Oanda. Since they give users access to various markets and CFD products, they’ll be expected to help limit client losses and promote responsible trading.

As the goal is to build a unified regulatory approach across accessible and low-cost markets, we’ll likely see new rules that target lightly regulated areas and better protect traders. This will limit access for CFD traders, aiming to cap potential losses and bring more transparency to the industry.