German Regulator Seeks to Ban Retail Futures Trading

EMSAC Looks to Reduce Trading Halts

Retail clients in Germany should be protected against losing all of their assets in highly volatile market situations when trading in futures. The Federal Financial Supervisory Authority (BaFin) is therefore planning to restrict the marketing, distribution and sale of futures with additional payments obligations. Retail clients will no longer be able to trade in these products. Contracts for difference (CFDs) with additional payments obligations were banned in 2017.

In BaFin’s view, retail clients that trade in financial products involving an obligation to make additional payments are exposed to substantial risk. In highly volatile market situations, these products can result in unlimited losses. If the capital invested is not enough to offset losses, investors must use their other assets. Retail clients can lose significantly more than their invested capital; in the past, some investors have been required to make six-figure additional payments.

After banning CFDs with additional payments obligations for retail clients, BaFin has noted that compa-nies are increasingly marketing futures with additional payments obligations to retail clients. In addition, an increasing number of mini and micro futures products with additional payments obligations are currently coming onto the market. Owing to their small contract size and corresponding low entry threshold, these products are aimed specifically at retail clients. With its product intervention measure, BaFin aims to ensure that, in future, the losses incurred by retail clients trading in futures contracts will be limited to the amount invested, as in the case of CFDs.

BaFin can restrict or prohibit the marketing, distribution and sale of financial instruments in order to protect investors (Article 42 of the Markets in Financial Instruments Regulation – MiFIR). BaFin today published the draft of its product intervention measures. Comments on the measure may be submitted up to 17 March 2022.


Futures are unconditional contracts, traded on a futures exchange, which oblige the contracting parties to sell (short position) or buy (long position) a certain amount of an underlying asset at a price and time specified upon conclusion of the contract. Both the buyer and seller must meet their obligations to receive and pay for the underlying, or to deliver the underlying asset. In the case of long futures positions, potential losses are limited to the contract value, whereas in the case of short positions, there is no limit to the losses the investor may incur. Retail clients can only trade in futures via investment firms and cannot trade directly on a futures exchange.

Source: BaFin

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