The Polish Financial Supervision Authority (KNF) has finedWarsaw-based brokerage XTB SA PLN 20 million for violating MiFID II rules andinvestor protection regulations. The decision, issued on March 30, 2026,follows findings that XTB failed to properly assess client knowledge, definetarget groups, and disclose trading risks related to Contracts for Difference(CFDs).Singapore Summit: Meet the largest APAC brokers you know (and those you still don't!)Misleading Information and Conflict of InterestAccording to the KNF, between January 2022 and September2023, XTB used client questionnaires that did not accurately evaluateexperience with complex financial products. The firm also treated experience insimple instruments as sufficient for trading high-risk CFDs, which could exposeinexperienced clients to heavy losses.The regulator also found that XTB provided incomplete ormisleading information about CFD risks, preventing clients from making informedinvestment decisions.In a Monday notice, translated to English, the regulator accused the broker of “failureto identify the target group in an appropriate and proportionate manner, takinginto account the nature of the financial instrument and its complexity. Thecompany determined the adequacy of risky and complex instruments, such as CFDs,based on clients' knowledge and experience in the field of simple instruments.”Keep reading: XTB Profit Drops 24% as Gold Rally Fails to Offset Soaring Marketing SpendAdditionally, its use of a “HOT list” of promotedinstruments may have created a conflict of interest, as those instruments oftencarried wider spreads and generated higher income for the firm.The KNF said the case shows the importance of strictcompliance in marketing and selling complex financial instruments. It addedthat up to 80% of retail clients trading CFDs lose money, underscoring the needfor accurate risk assessment and clear disclosures.Risk Warnings and Strict Suitability ChecksAlthough Poland allows CFD trading, it subjects it to someof the most restrictive retail rules in Europe, reflecting EU‑levelconcerns about heavy losses on leveraged products. Under the KNF’s 2019 product‑intervention decision, whichmirrors ESMA’s framework, retail traders facetight leverage caps, mandatory margin close‑out levels and negative balanceprotection, alongside a ban on monetary and non‑monetary incentives tied to CFDtrading. Firms must also display prominent, standardized riskwarnings that spell out the share of retail clients who lose money on CFDs,making loss rates a visible part of the sales pitch rather than fine print.On top of those product constraints, KNF layers MiFID IIconduct‑of‑businessrules that treat CFDs as high‑risk instruments requiring closescrutiny of who they are sold to and how. Brokers have to carry outappropriateness and suitability checks, define and respect target markets forcomplex products and ensure that marketing and risk disclosures are clear, fairand not misleading, especially around leverage and the probability of rapidlosses.This article was written by Jared Kirui at www.financemagnates.com.