XTB Navigates Spain’s New CFD Ad Ban

XTB, the largest Polish retail trading company, has announced that it will continue its operations in Spain despite new restrictions on marketing activities related to Contracts for Difference (CFDs) imposed by the Spanish National Securities Market Commission (CNMV). The broker’s decision comes after a thorough analysis of the CNMV’s interpretative guidance on CFD advertising and other leveraged products. While the company has no plans to exit the Spanish market, it acknowledges that these changes could have potentially negative consequences.

The CNMV’s new guidelines prohibit advertising CFDs and similar business practices within Spain, irrespective of the client’s residence. However, trading itself is still permitted as long as it is initiated solely by the investor. This means that retail investors who are already clients can continue trading CFDs, and new accounts can be opened provided all regulatory obligations are met. The interpretation also bans promotional information about CFDs on websites, as well as sponsorships and brand advertising aimed at indirectly or directly promoting CFDs.

Let’s Talk Numbers

According to XTB, the Spanish market accounted for approximately 11.3% of the company’s consolidated group revenues in 2023, amounting to around PLN 180 million ($46 million) out of its total revenue of PLN 1,588.2 million. Despite the significant contribution from Spain, XTB stated that it had not conducted extensive CFD-related advertising activities in Spain for over two years. This historical context provides some cushion against the immediate impact of the newly enforced advertising ban.

XTB’s Head of Growth, Julio, emphasized the importance of transparency throughout this process, noting that the company will disclose the results upon completion of their internal assessments. He reiterated that while the CNMV’s restrictions might affect the acquisition of new clients in the medium to long term, it is currently challenging to precisely quantify this impact.

The new regulations will not just affect XTB but the entire industry, including other popular retail brokers offering CFDs like CMC Markets and Plus500. These firms must also adapt their strategies to comply with the CNMV’s stringent guidelines.

Despite the restrictions, XTB remains committed to the Spanish market. The company has decided to implement marketing restrictions compliant with the new guidelines immediately. However, the uncertainty brought by these measures has not comforted investors, as reflected in XTB’s share price. On the Warsaw Stock Exchange, XTB’s shares plunged by 7% on the day of the announcement, testing the level of PLN 67.20, although they remain close to their historical high of PLN 76.