The AMF is requiring all brokers that are willing to operate in the country to provide a guaranteed stop loss on client positions and a negative balance protection. Before opening a position, clients will have to introduce their stop loss. After the order is executed, clients will not be able to change the stop loss to a wider level. Therefore clients will be able to lose only less than originally anticipated on every position.
The decision is a follow up to the adoption of the Sapin 2 law at the end of last year. After a period of consultation with industry participants and clients of retail brokers, the general rulebook of the AMF has been updated.
It seems that IG dictated its law to the French regulator. It’s really distressing.
How can a regulator promote Market Maker’s at this point ?
An honest broker who routes orders from his customers to the market is unable to guarantee the stops of his customers. While it’s easy for a market maker who handles everything in his b-book.
Same for protection against negative balances.