Supervision release 3 April 2018 – 21/2018

ESMA to prohibit binary options and restrict CFDs to protect retail investors

The European Securities and Markets Authority (ESMA) has decided on product intervention measures concerning the marketing, distribution and sale of binary options and contracts for differences (CFDs) to retail investors in Europe.

The marketing, distribution and sale of binary options to retail investors will be prohibited entirely. The prohibition will start to apply one month after the publication of the final ESMA decision in the Official Journal of the European Union (OJ).

The marketing, distribution and sale of CFDs to retail investors will be restricted. This restriction consists of leverage limits on opening positions; a margin close out rule on a per account basis; a negative balance protection on a per account basis; a prohibition on benefits incentivising trading; and standardised firm-specific risk warnings. The restriction will start to apply two months after the publication of the final ESMA decision in the Official Journal of the European Union (OJ).

ESMA's product intervention measures are valid for three months at a time. Before the end of that period, ESMA will consider an extension of the measures for a further three months. National competent authorities may also impose more permanent prohibitions and restrictions at the level of individual member states subject to the conditions under the Markets in Financial Instruments Regulation (EU) No 600/2014. The FIN-FSA supports the measures taken by ESMA and will assess the need for domestic measures separately.

For further information, please contact

Jyrki Manninen, Senior Policy Advisor, tel. +358 9 183 5205 or jyrki.manninen(at)fiva.fi
Anu Ranta, Market Supervisor, tel. +358 9 183 5395 or anu.ranta(at)fiva.fi

The corresponding Finnish-language press/news release was published on 28 March 2018