Risk warning
Definition
Risk warning: A plain statement, placed where it cannot be missed, that a financial product can lose the reader money — for leveraged products, often in a form set by a regulator.
What it means
A risk warning tells the reader, before they act, that they can lose money. For contracts for difference (CFDs) the form has been set by regulators: the measures ESMA agreed in March 2018 included a standardised risk warning that states the percentage of losses on the CFD provider's retail investor accounts1.
The obligation falls first on the broker, which publishes its own figure. An IB's page reaches the reader before the broker's does, so the warning belongs there too — on the page itself, near the offer and again in the footer, rather than behind a link.
Example
Gravity's own pages carry this line: Trading leveraged products carries a high risk of losing your capital. A broker's CFD warning adds its own current percentage of retail accounts that lose money.
Why it matters to an IB
Where the warning sits and what it says are part of whether a page is fair. Use the wording and figure your broker supplies, and check the rules where you and your audience are — see evidence before claims.
Sources
- ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors — European Securities and Markets Authority
