Binary options, CFDs: the AMF informs retail investors and market professionals of the decision on measures to prohibit or restrict taken at the European Union level
In order to protect retail investors, the European Securities and Markets Authority (ESMA) has agreed to implement product intervention provisions of the new framework for financial markets instruments (MIFIR). In France, these measures will apply in addition to the provisions of the Sapin II law.
At its Supervisory Board of the 23 March, ESMA has agreed on measures regarding the provision of contracts for difference (CFDs) and binary options to retail investors in the European Union.
The agreed measures include a prohibition on the marketing, distribution or sale of binary options to retail investors.
In the case of Contracts for Difference, ESMA has agreed a restriction on the marketing, distribution or sale of CFDs to retail investors. This restriction consists of:
- leverage limits including a specific limit for cryptocurrencies CFDs;
- a margin close out rule on a per-account basis;
- a negative balance protection on a per-account basis;
- prevention of the use of incentives by a CFD provider;
- and a risk warning delivered on authorised CFDs.
ESMA intends to adopt these measures in the official languages of the EU in the coming weeks, following which ESMA will publish an official notice on its website. The measures will then be published in the Official Journal of the EU (OJ) and will apply respectively one month, for binary options, and two months, for CFDs, after their publication in the OJ. In accordance with MiFIR, ESMA can only introduce temporary intervention measures on a three monthly basis. Prior to the end of the three month period, ESMA will consider the need to extend the intervention measures for a further three months.
For several years, the AMF has focused its attention on exposing the danger posed to retail investors by these highly speculative products. Therefore, the French regulator welcomes ESMA's initiative. In France, the measures agreed by ESMA will apply in addition to the ban of electronic advertising for certain toxic financial products provided by the Sapin II Law, which came in force in January 2017.
About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected, providing investors with adequate information and supervising the orderly operation of markets. Visit our website www.amf-france.org.
AMF Communication Directorate - Caroline Richard - tel: +33 (0)1 5345 6039 or +33 (0)1 5345 6028
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Head of publications: The Executive Director of AMF Communication Directorate. Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02