ESMA issues positive assessment of CFD restrictions planned by Slovenia

Maria Nikolova

The fact that the proposed restrictions will come into effect two months after the expiry of ESMA’s measures regarding CFDs seems not to bother the pan-EU watchdog.

MiFID II implementation likely to be set back even further

The European Securities and Markets Authority (ESMA) has earlier today issued a positive opinion regarding the proposed permanent ban on the offering of binary options and restrictions on the offering of CFDs to retail investors in Slovenia.

This is barely surprising as ATVP – Slovenia’s Securities Market Agency, has informed ESMA that the national measures are the same as ESMA’s measures.

Importantly, the national measures are expected to take effect on October 1, 2019, whereas ESMA’s measures were not renewed and expired at the end of the day on July 31, 2019. The delay, however, does not seem to raise the concern of the Slovenian regulator and ESMA.

ATVP informed ESMA that it considers that the risk of unrestricted CFDs being offered again to retail clients during that time period would be very limited, also considering the size of the Slovenian market and the national measures of other Member States. Furthermore, the ATVP is not aware of any activity of CFD providers authorised in Slovenia providing their services in the Union and will closely monitor the market during that time period.

ESMA says that, with regard to the planned date for the national measures to take effect, it has taken into account the reasons provided by the ATVP on the very limited risk that unrestricted CFDs could be offered to retail clients before that date as well as the capacity of the ATVP to adequately monitor the market during that period and act as necessary.

ESMA is satisfied that the national measures are justified and proportionate.

ESMA has been critical of the CFD restriction measures proposed by some national regulators. Thus, for instance, ESMA has slammed Poland’s KNF because the Polish product intervention measures with regard to CFDs envisaged lower margin requirements for more experienced traders. ESMA stated that it does not consider that lowering margin requirements for experienced clients is appropriate. Nevertheless, Poland implemented the planned measures regardless of the stance of the pan-EU watchdog.

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