On the 16th of November 2020, the DFSA released Consultation Paper No.135 - Regulation of Retail OTC Leveraged Products (“CP135”). The proposals in CP135 are designed to provide an appropriate level of protection to Retail Clients to whom regulated firms offer facilities to trade in highly leveraged over-the-counter (“OTC”) derivative products and market such products. These products include contracts for differences (“CFDs”).
OTC Derivative Broker Forum
In response to the release of CP135, CCL formed the “OTC Derivative Broker Forum” (“the Forum”) which is made up of existing OTC Derivative DIFC Firms and OTC Derivative Firms considering establishing in the DIFC. Since its formation, the Forum has been considering and discussing the proposals outlined within CP135, with a view to providing a response to the DFSA. CCL’s role in the Forum was to administer meetings and act as its spokesperson and in doing so, document the Forum's response to CP135 which was subsequently submitted to the DFSA.
Responding to CP135
In forming a response to the DFSA proposals, the Forum took into consideration existing regulations and guidance, in relation to offering OTC Derivative Products to Retail Clients, issued by the UK’s Financial Conduct Authority (“FCA”), the Australian Securities and Investments Commission (“ASIC”), the ADGM’s Financial Services Regulatory Authority (“FSRA”) and the International Organization of Securities Commissions (“IOSCO”).
The Forum will continue to convene periodically in order to discuss regulatory updates, as well as share thoughts and opinions in best practices when discharging regulatory obligations.
If you are working for an OTC brokerage firm and would like to request a copy of the response to CP135, please complete your details below: