Poland-based Retail FX and CFDs broker XTB (WSE:XTB) has released an update on its plans for the Spanish market, given the new strict regulations covering CFDs trading and the trading of CFD trading products in Spain introduced last year by the Spanish financial regulator CNMV.
Spain accounted for more than 11% of XTB’s revenue in 2023, one of the Company’s most important geographies after its own home market in Poland.
XTB said that the analysis carried out by the Company showed that according to the interpretative criteria issued by the CNMV:
a) Decision of the CNMV prohibits the advertising of CFDs and other business practices in Spain, regardless of the customer’s place of residence, but not the transaction itself. The sale of CFDs is permitted, provided that it is done at the sole initiative of the investor. Therefore, the CNMV decision does not entail changes in the way retail investors can trade CFDs through intermediaries (i.e. brokers) of which they are already clients, nor does it prevent them from opening new accounts for trading CFDs, provided that the entities comply with all regulatory obligations.
b) Investment companies that offer CFDs are Placing advertising information is prohibited on their website about this type of product.
c) The CNMV decision prohibits all activities related to event or organization sponsorship and brand advertising, if their purpose or effect is the direct or indirect advertising of CFDs, unless it is demonstrated that such sponsorship or brand advertising is not intended to offer such products or services. In addition to the intention to limit the indirect and general advertising of CFD trading using the entity’s brand or name through sportswear, this prohibition means that the entity cannot also advertise certain products other than CFDs if the advertising effect is similar .
According to XTB, the above means that in practice Entities offering CFDs are not allowed to advertise their activities in the Spanish market to any extentwhile the decision of the CNMV does not prohibit investing in CFDs, provided that this is done at the sole initiative of the investor.
In view of the above, XTB said it has decided it intends to continue operating in the Spanish market. Marketing restrictions in this market will be introduced immediately as directed and steps will be taken to optimize business costs.
In the opinion of XTB’s Board of Directors, the changes have a negative impact in the medium and long term on the number of customers the company acquires in the Spanish market and, consequently, the level of revenue generated from this market, although in this when the board is unable to accurately and reliably quantify this impact.
At the same time, the Company points out that for more than two years XTB has not carried out significant advertising activities related to CFDs in Spain, and XTB Capital Group’s revenue generated in the Spanish market in 2023 amounted to approximately 11.3% of the consolidated revenue of the whole of XTB Capital Group.