Shares in spreadbetting firms have tumbled in early trading on the news that the City watchdog is planning to tighten rules around contract for difference (CFD) products.
By mid-afternoon, IG Group's stock had dropped 39 per cent, while shares in CMC Markets were down 35 per cent, and Plus500 had fallen 27 per cent.
The Financial Conduct Authority (FCA) announced today that it wants to make changes to the way CFDs like spread bets and rolling spot foreign exchange products are bought.
The regulator said CFDs are complex financial instruments offered to customers who may not really know what they're buying into, and has proposed a number of measures, including standardised risk warnings and mandatory disclosure of profit-loss ratios on client accounts by all providers.
The FCA also wants to prevent providers from enticing new customers with "any form of trading or account opening bonuses or benefits" used to promote CFD products.
Christopher Woolard, the FCA's executive director or strategy and competition, said: "We have serious concerns that an increasing number of retail clients are trading in CFD products without an adequate understanding of the risks involved, and as a result can incur rapid, large and unexpected losses.
"We are introducing stricter rules for CFD products to ensure the sector addresses the shortcomings identified, and that firms make sure that retail clients are aware of the high risks involved in trading these complex products."
Read the spreadbetters' responses here.