Important note
Target market definition is an important tool that helps CFD and currency providers tailor their offerings to the needs and knowledge of their target audience. Careful target market definition can help ensure that offerings are transparent and appropriate and that the target audience is protected from unnecessary risk. CFD and currency providers should ensure that their offerings comply with regulatory requirements and that they take appropriate measures to protect the negative target market.

Target market definition

The following is a general description of the target market for contracts for difference and currencies and an explanation of the negative target market:
Preamble:

Target market definition is an important part of European financial market regulation, enshrined in the MiFID II Directive. The target market definition helps providers of financial instruments to identify the target groups for their products and to ensure that their offerings are suitable for these groups.

1. target market
The target market for contracts for difference (CFDs) and currencies primarily includes active traders and investors who have a high level of experience and knowledge of financial markets. This target group is able to understand and appropriately assess the risk of CFDs and currencies.

In addition, CFDs and currencies may be suitable for investors who have a high risk tolerance and are willing to accept losses in order to potentially achieve higher profits. This target group has sufficient liquidity to absorb losses and is able to cope with unforeseen market events.

2. negative target market

The negative target market for CFDs and currencies includes individuals who, due to their age, income or financial knowledge, are unable to adequately understand and evaluate the risks of these financial instruments. In particular, this group includes inexperienced investors who may enter trading CFDs and currencies as a result of marketing campaigns or recommendations.

It is important that providers of CFDs and currencies ensure that their offerings are not directed at this negative target market and that they take appropriate measures to protect this market. This includes, for example, the use of warnings and limiting leverage to an appropriate level.

3. other aspects of target market definition

The following aspects should also be considered when defining the target market for contracts for difference and currencies: Investment Objectives: Providers of CFDs and currencies should ensure that their offerings meet the investment objectives of their target audience. This includes, for example, a focus on short-term speculation or long-term investment. Financial situation: It is important that providers of CFDs and currencies take into account the financial situation of their target group. This includes taking into account income, assets and liquidity. Experience and knowledge: CFDs and currencies providers should ensure that their offerings are suitable for the experience and knowledge of their target audience. This includes, for example, taking into account trading experience, knowledge of financial markets and risk assessment skills. Needs and expectations: CFD and currency providers should ensure that their offerings are appropriate for the needs and expectations of their target audience. This includes, for example, consideration of investment objectives, risk tolerance, and the need for flexible trading options.

4. legal basis

Target market definition is an important aspect of financial instruments regulation, ensuring that offers are adapted to the needs and knowledge of the target group. The legal basis for this is the MiFID II Directive, which was issued by the European Union. The MiFID II Directive requires providers of financial instruments to take appropriate measures to ensure that their offerings are adapted to the needs and knowledge of their target group.

As of April 2023