BaFin

Topic Consumer protection Guidance notice on the general administrative act of 8 May 2017 regarding contracts for difference (CFDs)

Reference number VBS 7-Wp 5465-2017/0003Date: 29.11.2017

Guidance notice on the implementation of the general administrative act of 8 May 2017 regarding contracts for difference (CFDs) pursuant to section 4b (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG)

With the general administrative act of 8 May 2017 issued pursuant to section 4b (1) of the WpHG (reference no.: VBS 7-Wp 5427-2016/0017), the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) restricted the marketing, distribution and sale of financial contracts for difference. New CFD contracts with an additional payments obligation may no longer be offered to retail clients since the implementation period expired on 10 August 2017.

Since then, BaFin has been reviewing CFD offers on the German market on an ongoing basis in order to assess their compliance with the aforementioned general administrative act. The guidelines below are intended to highlight those points which BaFin considers important for implementation of the provisions of the general administrative act.

  • The provisions of the contract play a decisive role in determining whether the provider is marketing, distributing or selling CFDs with or without an additional payments obligation. The supervisory requirements stipulated by the aforementioned general administrative act must therefore be implemented by the CFD providers in a manner that achieves legal certainty in the respective terms and conditions. They must do so by way of a contractual provision which expressly and unconditionally rules out the additional payments obligation for retail investors.


  • An additional payments obligation within the meaning of the aforementioned general administrative act describes an arrangement whereby, as a result of a CFD position being opened by the client with the provider, the client must pay a sum of money in excess of the funds available in their CFD account to the CFD provider. This also applies to payments requested by the provider before closing the position, for example within the context of margin calls.


  • Use of the term "additional payments obligation" in the terms and conditions is not decisive here. BaFin also considers the terms "deficit", "shortfall", "difference", "negative balance" or any paraphrase to be indicative of an additional payments obligation if they lead to a situation where a retail investor is obliged to settle a negative balance on their CFD account.

  • The applicable terms and conditions relevant for CFD trading should be made permanently available to retail investors on the website of the CFD provider.


  • If the CFD broker offers different CFD trading accounts, for example one for professional clients and one for retail clients, it must be readily identifiable for the retail client at all times which terms and conditions apply to their account.

  • Retail clients may only be offered CFD trading accounts without an additional payments obligation. It is therefore insufficient to offer the retail investor the option of a CFD trading account without an additional payments obligation.


  • The terms and conditions should be comprehensible and coherent. Contradictory clauses, for example on margin calls or other kinds of accounts, which could lay down an additional payments obligation, are to be avoided.


  • If the provider uses several sets of terms and conditions for their CFD trading accounts, e.g. general trading conditions and specific terms and conditions for CFD trading, consistency must be ensured.


  • Similarly, risk warnings and advertising materials used by CFD providers and which could also become part of the contract are to be adapted in accordance with the provisions of the aforementioned general administrative act with a view to legal certainty and coherence.


  • In addition, contractual arrangements which, on the basis of the trading behaviour of the retail client, provide for a netting of the retail client's claims against the CFD provider or other undertakings are not permitted if they go beyond the amount available in the client's trading account and, in this sense, may constitute an additional payments obligation when looked at from an economic point of view.


  • The contractual preclusion of the additional payments obligation must apply unconditionally and in every instance. It is not permitted to make the preclusion of the additional payments obligation dependent on conditions such as particular trading behaviour on the part of the retail clients (e.g. no preclusion in the event of "improper behaviour" by the client or in the event of the client having an "insufficient margin"), on the discretion of the CFD provider or on a particular market situation.


  • Even if the CFD provider offers certain precautions in the trading algorithm, such as a guaranteed stop-loss order for instance, the possibility of an additional payments obligation for the client must be expressly ruled out in the contract.

BaFin will examine the provisions of the general administrative act on an ongoing basis with due consideration of the above guidelines and, if necessary, enforce the provisions through administrative enforcement measures.

Pursuant to section 39 (2) no. 2b of the WpHG, an administrative offence is deemed to be committed by any party who, wilfully or negligently, fails to comply with an enforceable order under section 4b (1) of the WpHG.

If you have any questions on the implementation and scope of the general administrative act, Division VBS 7 is there to answer CFD providers' questions. Please e-mail vbs7@bafin.de.

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Please note:Ger­man ver­sion is bind­ing

This translation is furnished for information purposes only and may refer to an older version of the text. The original German text is binding in all respects.

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