France’s Financial Markets Authority (AMF) has announced the imposition of a EUR 300,000 fine on Polish broker X-Trade Brokers Dom Maklerski for breaches of its professional obligations due to the activities of its French branch.
During the period between November 2013 and February 2020, X-Trade Brokers Dom Maklerski offered to its clients, through its branch in France (XTB France), to engage in trading in contracts for difference (CFD).
The Commission identified three series of breaches against XTB.
It first considered that by distributing certain commercial banners, XTB France had disregarded the prohibition on sending to clients likely to be non-professionals promotional communications relating to the provision of investment services in CFDs. The regulator also found that several Google ads disseminated by XTB did not contain a visible, clear and precise mention of the risks of a capital loss inherent in CFDs.
In addition, the Authority found XTB France’s knowledge and customer experience questionnaire to be incomplete and considered that the calculation algorithm associated with this questionnaire did not make it possible to determine whether the customer or potential customer had the level of experience and knowledge required to understand the risks inherent in the product or service offered.
It also considered that the branch had circumvented the restrictive measures taken by the European Securities and Markets Authority (ESMA) for the marketing, distribution or sale of CFDs to non-professional clients by incorrectly changing client categorization.
Finally, the regulator noted that XTB France, in contradiction with its general conditions, had not informed its customers of the occurrence of a technical incident on the platform used, an incident which nevertheless constituted a serious difficulty liable to influence the proper execution of orders. It also considered that the branch was not always able to ensure itself of the proper execution of orders in the absence of complaints from its clients.
On the other hand, the regulator rejected changes about allegedly insufficient font size of the warning messages in the commercial banners as well as the complaint concerning the drafting inadequacies of the general conditions of the brokerage service.
This decision can be appealed.