For some years now, EU financial authorities have been looking into the sale of complex and risky products to retail investors. The starting point was the ESMA Decision on the temporary prohibition of the marketing, distribution and sale of binary options dated 22 May 2018 (1), which was then followed, on the same date, by a further ESMA Decision to temporarily restrict sales of contracts for difference (CFDs) (2). 

Reflecting ESMA’s Decisions, and consistent with other EU regulators, the Spanish regulator, the National Securities Market Commission (CNMV) issued a Resolution in relation to CFDs on 27 June 2019 (3). However, the CNMV has considered that the issues associated with CFDs, i.e. aggressive marketing to retail investors and the lack of leverage restrictions which typically leads to investor losses, had not been fully addressed by that resolution. As a result, it has approved a new set of measures in a resolution on 11 July 2023 (4) (the “Resolution”), which now also covers leveraged products, as well as imposing certain marketing measures to CFDs. The Resolution came into force on 11 August 2023.

In this post, we analyse the impact of the Resolution on leveraged products, a distinct development given ESMA, including in the above Decisions, has not yet focused on such products.

For the purposes of the Resolution, any instrument that meets any of the following two conditions would qualify as a “leveraged product”, namely that: (i)  the maximum risk for the investor is unknown when entering into the transaction; or (ii) the risk of loss could be greater than the amount initially contributed by the investor. Qualifying leveraged products will be subject to a number of measures under the Resolution as set out below.

Entities authorised to provide investment services in Spain, i.e. investment firms and credit institutions domiciled in Spain or those acting on a freedom to provide services (FPS) or freedom of establishment (FOE) passport, that market, sell or distribute leveraged products to retail investors must: 

  1. require the investor to pay an initial margin which would be at least: (i) the amount required by the trading venue if the instrument is traded or (ii) a percentage of the notional value that varies depending on the underlying asset (this is the so-called “initial margin protection”); and
  2. close the investor’s position when the sum of the funds and the net unrealised gains of the instruments of the operating account associated to those instruments falls below half the initial margin provided in (a) and not before such threshold is reached (this is the so-called “margin close-out protection”).

While the Resolution has imposed additional restrictions on the marketing of CFDs, those have not been extended to qualifying leveraged products. So, for the moment, marketing of such products is still possible. However, these measures will require retail clients to increase the initial margin (to the amount required in the initial margin protection referred to above) and so will restrict, indirectly, such clients’ access to leveraged products.


[1] European Securities and Markets Authority Decision (EU) 2018/795 of 22 May 2018 to temporarily prohibit the marketing, distribution or sale of binary options to retail clients in the Union in accordance with Article 40 of Regulation (EU) No 600/2014 of the European Parliament and of the Council.

[2] European Securities and Markets Authority Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union in accordance with Article 40 of Regulation (EU) No 600/2014 of the European Parliament and of the Council.

[3] Spanish CNMV Resolution of 27 June 2019 on product intervention measures for binary options and financial contracts for differences.

[4] Spanish CNMV Resolution of 11 July 2023 on product intervention measures relating to contracts for differences and other leveraged products.