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Polish regulator sets rules for CFD trading after EU restrictions expire

The Polish Financial Supervision Authority decided to put forward requirements regarding the offering of contracts for difference to retail customers, after the EU-wide temporary restrictions expired July 31.

The FSA maintained leverage limits included in the European Securities and Markets Authority's 2018 decision limiting the marketing, distribution or sale of contracts for difference, or CFDs, to retail clients, but also introduced a new category of "experienced clients" who will be able to trade with higher leverage in case of CFDs on gold, certain equity indexes and currency pairs.

Experienced clients will have to meet a number of requirements and prove their trading experience, as well as knowledge of the derivatives market, supported by training or various professional certificates.

The providers of CFD products, including banks, investment firms and other financial institutions, will be required to adhere to initial margin and close-out rules to protect retail clients from incurring excessive losses. They will also not be allowed to offer retail clients financial and nonfinancial bonuses to encourage investments into CFDs, and will have to include risk warnings in their advertising and other CFD-related materials.

The FSA plans to will carry out an assessment of the effects of the CFD retail restrictions no later than 12 months from their entry into force and will adjust the requirements if necessary, the regulator said.