ESMA agrees with UK, Dutch and Polish restrictions on CFDs, binaries

Maria Nikolova

The pan-EU regulator finds that the proposed measures are justified and proportionate.

MiFID II implementation likely to be set back even further

As FinanceFeeds has reported, a number of European countries have acted to implement investor protection measures analogical to those introduced by the European Securities and Markets Authority (ESMA) with regards to the offering of CFDs and binary options to retail clients.

Among the goals of such measures is to protect investors at a national level, once the temporary measures introduced by ESMA expire and the EU regulator stops renewing them.

Earlier today, ESMA published its positive opinion on the national product intervention measures introduced by three countries – Poland, the UK and the Netherlands.

ESMA’s opinion finds that the proposed measures are justified and proportionate and that it is necessary for national regulators to take product intervention measures that are at least as stringent as ESMA’s measures.

ESMA’s has issued opinions on national product intervention measures from:

  • Authority for the Financial Markets of the Netherlands (AFM) – Opinion on the proposed product intervention measure relating to binary options;
  • Authority for the Financial Markets of the Netherlands (AFM) – Opinion on the proposed product intervention measures relating to contracts for differences;
  • Komisja Nadzoru Finansowego of Poland (KNF) – Opinion on the proposed product intervention measure relating to binary options; and
  • Financial Conduct Authority of the United Kingdom (FCA) – Opinion on the proposed product intervention measure relating to binary options.

The UK ban on binary options comes into effect today. Importantly, it is also applying to so-called ‘securitised binary options’ that were excluded from ESMA’s prohibition. Securitised binary options are not currently sold in or from the UK. The FCA thinks these products pose the same risks for investors and so is extending the scope of the prohibition to prevent a market developing for these products.

The FCA estimates the permanent ban on binary options could save retail consumers up to £17 million per year, and may reduce the risk of fraud by unauthorised entities claiming to offer these products.

In its opinion about the UK measures, ESMA says it has assessed the relevance of the FCA’s supervisory experience, in particular the likelihood of circumvention of the exclusion by UK product providers, as well as the particular position of UK clients which historically traded binary options as gambling products and have experienced significant losses. ESMA considers that the specificities of the national market together with the inherent complexity of the product justifies a stricter treatment in the national measure.

Read this next

Retail FX

Financial Commission adds FX broker Bold Prime to membership roster

The Financial Commission today announced that it has added Bold Prime to its member roster, which is made up of online brokerages operating in FX, derivatives and cryptocurrency markets.

Digital Assets

Despite crypto winter, Cake DeFi paid out $58 million in Q2 rewards

According to its latest ‘Transparency Report,’ Cake DeFi continued its growth trajectory in the three months through June 2022, even as the entire crypto industry experienced macro challenges this quarter.

Retail FX

SimpleFX Review: Cryptos, Spreads, Pros & Cons

SimpleFX combines years of Forex and cryptocurrency experience with a focus on offering resources to retail traders. 

Retail FX

Ironbeam becomes CME clearing member and launches MT5

“The direct clearing aspect along with our low-latency proprietary trading tools and technology solutions make Ironbeam the ideal trading destination.”

Institutional FX

Top 0.07%: oneZero makes it to Inc. 5000 of fastest growing companies in America

oneZero started out by serving the foreign exchange trading community, developing and executing technology that could scale with the growth of the FX market.

Industry News

CFTC wins case against broker for secretly taking other side of client orders in block trades

“As we said at the outset of this case, the illegal use of inside or confidential information undermines confidence in markets and will not be tolerated.”


BankiFi raises $4.8m to bring embedded banking platform to North America

“Our mission is to make all aspects of cash management and payments easier for SMBs everywhere, and this investment is another huge step to making that a reality.”

Executive Moves

Shieldpay hires ex-Payoneer Chris Andrews as Head of Sales

“We’ll be expanding our position in existing markets and accelerating growth into new verticals, whilst building on our direct and indirect channels.”

Digital Assets secures preliminary approval to operate in Canada, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.