ESMA: CFDs Account for 35% of EU Retail Complex-Product Trades

Contracts for difference (CFDs) accounted for 35% of transactions in complex products by EU retail investors between 2022 and 2025, according to new analysis by the European Securities and Markets Authority (ESMA). The regulator found that more than 10 million EU retail investors traded derivatives or structured products during the four-year period.

These investors represented 2.6% of the EU's adult population and 18% of all active retail investors. The total includes people who bought or sold any derivative or structured product during the period, not CFD traders alone.

Almost all derivatives and structured products are classified as complex under the Markets in Financial Instruments Regulation. Most shares, bonds and UCITS products, including nearly all retail ETFs, are treated as non-complex.

Within complex products, turbo certificates represented 18% of transactions, followed by options at 13% and structured products at 8%. These percentages measure transaction numbers rather than notional trading volumes. Products held for longer periods, including some structured products, generally generate fewer transactions than instruments used for short-term trading.

ESMA found an upward trend in turbo-certificate transactions but no similar trend in CFDs. The regulator said some investors may be using turbos as substitutes for CFDs. The two instruments have similar pricing and risk-return profiles, although their legal and trading structures differ. CFDs are typically traded over the counter, while turbos are exchange-traded and contain a knock-out level that closes the position when the underlying asset reaches a specified price.

EU regulators introduced leverage limits, mandatory risk warnings and other restrictions for retail CFDs in 2018. Equivalent leverage limits for retail turbo certificates are currently in place only in the Netherlands. Germany has taken a different approach. BaFin decided to introduce CFD-style risk warnings, prohibit bonuses and require regular knowledge assessments for retail turbo clients. Those measures followed a BaFin study covering 543,000 German investors and approximately 113 million turbo transactions between 2019 and 2023. It found that 74.2% of traders lost money, with aggregate losses exceeding €3.4 billion.

ESMA also warned that certain derivatives marketed as perpetual futures or perpetual contracts are likely to fall within national CFD product-intervention measures when their characteristics match those of CFDs.