The FCA said it was concerned that many retail investors buying "contract for difference" products did not understand them adequately.
It also noted that 82% of clients lost money on the products.
In the FTSE 250, shares in both CMC Markets and IG Group Holdings sank by more than 30%.
Meanwhile Israel-based Plus 500 saw its shares drop 35% after it said the FCA proposals would "have a material operational and financial impact" on its UK regulated subsidiary, which accounts for about 20% of the group's revenues.
The benchmark FTSE 100 index was up 13.86 points at 6,760.69.
Banking shares helped to lift the index, with shares in HSBC climbing 3.2% after Morgan Stanley upgraded its rating on the company to "equal-weight" from "underweight".
Shares in Drax Group jumped 15% after the power producer said it planned to buy energy supplier Opus Energy for Â£340m. Drax also announced it would buy four gas turbine projects.
On the currency markets, the pound edged up 0.1% against the dollar to $1.2737, and rose 0.5% against the euro to â‚¬1.1883.
Shares in financial spread betting firms have plunged by a third after the Financial Conduct Authority (FCA) proposed stricter rules for the sector.