The Chamber of Brokerage Houses or also known as IDM wants all trading providers in Poland to comply with the newly announced and implemented standards.
The Chamber of Brokerage Houses (IDM), is a self-regulatory organisation in Poland. As everything is changing, some new standards and regulations are needed in order to catch up with the dynamics. Changes mostly should be addressed to the working force in order to make it more efficient and modern. Noting on that point, IDM has announced a set of measures, which expects domestic brokerage houses to follow, the whole point is reclassifying retail traders to the “experinced trader” category.
Earlier this year, the Polish Financial Supervision Authority (KNF), defined ESMA’s advice regarding national product intervention measures for contracts for differences, or shortly CFDs, by introducing an experienced trader category, which allows eligible retail traders to trade with a leverage of up 1:100.
CFD is a turn-key factor in this situation, as this document aims at making buyers responsible for paying the difference between the current value of the asset and its value at contract time.
Following on from this, in order to promote good industry standards and increase customer protection, which is of vital importance in terms of sales escalation, the Chamber of Brokerage Houses has introduced standards to ensure the uniform verification of experienced traders on the CFD market.
Waldemar Markiewicz, President of the Chamber of Brokerage Houses has commented on the standards: “The latest solutions introduced on the domestic CFD market meet the needs of individual investor security and the challenges of the domestic industry.
Back to School
Who thought that the school was over and so the studies are put away for some time. Members of IDM will need to provide clients applying for the experienced trader status. Basically all they have to do is to get a diploma! Learning till the end.
To get the status of an experienced trader, there will be conducted training, that is divided into five thematic blocks. Once the training is completed, brokers will then take an examination, to ensure the customer has fully understood the material.
The successful completion of this training is one step of the customer verification process, for investors who want to change their status to an experienced trader, the statement released today said.
This step in the verification process aims to protect retail clients whilst maintaining Poland’s competitiveness in the CFD market. The IDM has not made any specifications concerning training, their type, and quantity, though there is not much left to wait, as the adjustment has already been implemented.
“We hope that, above all, it will increase customer safety and their trust in domestic brokerage houses under the supervision of the Polish Financial Supervision Authority (KNF), as well as limit the outflow of customers to companies outside the European Union and improve the competitiveness of the domestic brokerage house industry.” – highlighted President Markiewicz.
Poland confronts the EU
KNF’s unique approach marked yet another case of Poland defying EU-mandated norms. The main reason for taking this step for KNF is to keep the local market competitive and assist in expansion of it. This urge is due to the retail investors fleeing offshore, which was one of the motivations for the higher leverage classification and made amendments.
When ESMA’s more restrictive CFD measures were taken in place, half of the active and experienced domestic traders in Poland moved their brokerage account to a non-EU country, showed the research made by the Chamber. This was not an unexpected situation, it is really hard to adapt to every change, especially if there is no ground prepared for that.
Consequently, in the first months of intervention, Poland saw a significant decline in the turnover of domestic investment companies, with the authority’s members reporting to the PFSA Office that CFD trading almost halved, fell up to 50% in the first months of ESMA’s intervention.
“To protect customers and increase confidence in the market and Polish brokerage houses, the Chamber decided to implement a uniform standard of verification of retail customer experience among its members. We want other entities offering Polish clients services on the CFD market to also comply with the Chamber’s standards, so that the retail client has the best protection,” added President Markiewicz.
Not all of the changes have the desired outcome, especially at the beginning of the process. Brokers and Chamber will have to do a really big job and there is a lot of works ahead. Though taking into consideration the security issues everyone is facing right now, and a daily increasing number of entities offering similar services, the competition is definitely very high and the case of “survival of the fittest” works the best. Poland has outlined the fittest features and so now the time is the factor, which will define efficiency of implemented changes.