FCA clears 74 brokers to offer CFDs to UK retail clients

The Financial Conduct Authority published a list of 74 brokers authorized to offer Contracts for Difference to UK retail clients on its website. The list will be updated as firms gain or lose permission to operate in the sector. The firms were cleared after meeting the FCA’s requirements for systems, governance and consumer protections. Authorized brokers may market and execute CFD products to retail customers subject to the regulator’s product intervention rules, which limit leverage on many CFD products, require standardized risk warnings and client disclosures, and provide protections such as negative balance protection and margin close-out arrangements. The approval process evaluated whether each broker can comply with these obligations on an ongoing basis. The FCA assessed capital adequacy, risk-management systems, trading software and execution quality, client money arrangements and complaint-handling procedures. Firms that did not demonstrate adequate controls were excluded from the list and remain restricted from offering CFDs to retail accounts. According to the FCA, “Only firms that meet our standards for treating customers fairly and managing risk appropriately have been approved to provide CFDs to retail clients. We will continue to monitor these firms and take action where standards are not met.” Contracts for Difference are derivatives that let traders take positions on the rising or falling prices of assets such as stocks, indices, currencies and commodities without owning the underlying instruments. Because CFDs are often traded with leverage, small market movements can lead to large gains or losses; regulators have repeatedly highlighted the high risk they pose to retail investors. In 2021 the FCA introduced limits on leverage for retail CFD products, banned the sale of crypto derivatives to retail consumers and required clearer risk disclosures. The current approvals follow those measures. The list includes a mix of UK-incorporated firms and overseas providers that have been granted permission to operate in the UK market. The FCA urged customers to check the FCA register before opening accounts and to review product terms and risk information carefully. The FCA stated it will update the list and take supervisory action where firms fail to meet required standards.