The Minister for State Batt O'Keeffe has told the Dáil that from November 1, Contracts for Difference (Cfds) will be regulated under the MiFID (Markets in Financial Instruments Directive) regime as they are classified as "financial instruments" under the legislation.
The Minister went on to say that from that date, financial spread contracts - for instance on specific shares, bonds or indices of shares - will become a regulated activity, and firms providing this service will have to be authorised.
CFDs are high-risk investment products where investors can bet on the future direction of a stock without having to actually buy the shares. They have to stump up only between 10% and 20% of the price, a move that can rapidly net spectacular gains, but equally will exaggerate losses should they arise.
CFDs were introduced to the Irish market in 2002 and recently accounted for about half of the trading activity on the Dublin exchange. But stock market volatility has seen that trade fall closer to 15%. Market volatility over past weeks has seen Irish investors lose substantial sums of money on CFDs.
