European Union: Finance and Banking

When a Forex or CFD broker's written agreement states "execution-only" service, but account managers regularly recommend specific trades, position sizes, and additional deposits, does the contractual label reflect reality? This analysis examines the critical distinction between genuine execution-only services and situations where firms may be providing investment advice without proper regulatory safeguards, and why the actual communications between broker and client can matter more than the written terms.

This does not mean that every recommendation to provide additional margin or every attempt to recover a losing position constitutes misconduct. Forex and CFD trading is inherently risky, and additional margin may sometimes have a legitimate trading purpose.

The European Union's Sixth Capital Requirements Directive introduces a groundbreaking EU-wide framework requiring third-country credit institutions to establish authorised branches when providing core banking services within the EU. This new regime, effective January 2027, replaces the previous patchwork of national rules with harmonised supervisory standards, though several exemptions and transitional protections apply to existing arrangements.