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by Charlie Roberts on January 12th, 2021

CNMV announces new measures to reinforce its monitoring activities

Because of the recent high-risk activities in the market, the regulatory agency of Spain, National Securities Market Commission, CNMV, announced that it has made a decision to adopt different types of measures to protect traders both in Spain and the EU. The regulatory body has reinforced the monitoring and supervision activities of products that are particularly complex.

CNMV notes in a special statement that it has detected different types of inappropriate firms located in EU member countries, promoting their services without having an establishment or representation in Spain. The regulatory body noted that these companies include those that offer services and practices that require special guidelines and rules.

The statement of the regulatory body states that it is very common for such companies to offer third parties special payments for the purpose of finding new clients. These third parties are companies or individuals who have not received or obtained any type of license for providing such services.

In most cases, these third parties are using different types of channels, such as the internet, mobile phones, and many other things to attract more users. The regulatory agency also added that sometimes, these are a special type of call centers working for this purpose without having needed knowledge or right to do this.

CNMV is the main financial regulator of Spain. It oversees the whole financial market, including Forex trading, and works very hard to keep the safety of local traders.

Aggressive acquisition

CNMV also noted that these people are doing this acquisition activity in a, particularly aggressive manner. According to the official laws in Spain, in particular, Article 144 of the Spanish Securities Market Act, marketing of the financial and investment services and client acquisition should only be carried out by professionals working for investment firms or through tied agents with appropriate knowledge and experience.

According to local laws, engaging in such paid activities for marketing or popularization of services can only be done with the help of the companies that are authorized with specific licenses and rights.

Other than this case, client acquisition in Spain by investment companies is unacceptable and goes against the local laws. The main reason for this is that this could potentially allow promoting unauthorized services that could endanger the safety of local investors.

Promotion of CFDs transactions

The statement of the Forex regulatory agency of Spain also talked about CFDs trading and the issues that it was able to find. The statement reads that it is very common for websites in the country to popularize Contracts for Differences, CFDs, and other complex assets. In most cases, many of these companies are located in third countries, and the companies are not licensed to offer services in the EU. This enables traders to transact through these websites, which reduces the protection levels.

To guarantee the safety and protection of local retail traders, CNMV decided to transmit to financial intermediaries who provide different types of investment services in Spain the duty of complying with Article 144 and to ensure that the marketing of the services and acquisition in Spain is only carried out by licensed companies and agents.

Also, when offering such services, the companies have to warn clients that such programs are only applicable to authorized companies in the country. CNMV also noted that it might adopt additional measures to maintain the safety of investor’s rights. The regulatory agency also noted it will continue to actively support the adoption in ESMA to enhance investor protection in this area.

Spain is not the only country that faces the same challenge, however. There are many other jurisdictions where people lacking appropriate knowledge and skills are offering retail traders special services. This way, traders are open to a lot of risks. In most cases, the acquisition process is very aggressive, and the risks that might come with the investment opportunities are not fully disclosed.

By Charlie Roberts

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