Companies accept the inevitable as UK regulator finally takes action – but why has it taken so long?
Read the spread betting firms’ responses to the Financial Conduct Authority’s proposed clampdown and you’ll notice an absence of outrage. The firms didn’t squeal that a heavy-handed regulator is treading on ground it doesn’t understand. They didn’t protest that their clients are all financial sophisticates who have a deep appreciation of the perils that can lurk within leveraged products like contracts for difference.
Instead, there was acceptance that cooperation was the only credible stance to adopt, even when the FCA had just caused share prices across the sector to crash by more than a third. The spread betting firms knew this moment was coming. Sooner or later, even a half-awake regulator was bound to notice that it was a bad idea to allow retail customers to risk their wealth by playing at being old-style proprietary traders at an investment bank.
Related: What is financial spread betting and why do most people lose at it?