ESMA publishes notice on renewed and amended binary options ban

Maria Nikolova

The renewed ban, which does not apply to all types of binary options, comes into effect on October 2, 2018.

In line with a previous announcement, the European Securities and Markets Authority (ESMA) today said it had adopted a Decision under Article 40 of Regulation (EU) No 600/2014 to prohibit the marketing, distribution or sale of binary options to retail clients.

The European Union regulator has published a notice of the renewed ban, which is set to come into effect on October 2, 2018. The decision is based on the fact that a significant investor protection concern related to the offer of binary options to retail clients continues to exist.

Let’s recall that the renewed ban is also amended. It will not apply to all types of binary options.

The prohibition does not apply to:

(a) a binary option for which the lower of the two predetermined fixed amounts is at least equal to the total payment made by a retail client for the binary option, including any commission, transaction fees and other related costs;

(b) a binary option that meets the following conditions:

  • (i) the term from issuance to maturity is at least 90 calendar days;
  • (ii) a prospectus drawn up and approved in accordance with Directive 2003/71/EC is available to the public; and
  • (iii) the binary option does not expose the provider to market risk throughout the term of the binary option and the provider or any of its group entities do not make a profit or loss from the binary option, other than previously disclosed commission, transaction fees or other related charges.

Last week, ESMA also decided to extend the restrictions on the offering of CFDs to retail clients for further three months. The the restrictions will be renewed from November 1stfor a period of three months. The reason for the decision is that the EU regulator believes that the concerns around investor protection are still present. The restrictions include leverage caps, as well as a margin close out rule and negative balance protection.

Read this next

Executive Moves

Christine Kiener joins Saxo Markets UK as Head of Institutional Sales

“I have been very impressed by the strong track record, clear strategic pathway and ambition of the Saxo business. I am excited to start working with the team to further grow the institutional footprint which has been established in the UK.”

Industry News

CFTC charges Rathnakishore Giri with $12m Bitcoin ponzi scheme

“Identifying and policing fraud in these emerging markets may be difficult or delayed in light of the agency’s limited visibility in these markets”, said CFTC Commissioner Kristin Johnson.

Institutional FX

AbbeyCross raises $2.47m to develop FX market infrastructure for EM currencies

Many EM currencies are currently traded without full-price discovery, creating an unlimited compliance and regulatory risk.

Digital Assets

YouHodler enhances Multi HODL: faster rates and execution, lower fees

“We know some traders mentioned freezing issues when opening or closing a Multi HODL deal. Now, those problems are completely gone”.

Industry News

ASIC bans Funds United Pty director for six years

The six-year ban will prevent Ms. Hutchinson from controlling an entity that carries on a financial services business, and performing any function within the industry.

Inside View

Brave new world: Recruitment of fintech talent in the new UK immigration environment

In this article, solicitor Denise Osterwald outlines what UK businesses should do to attract top talent from abroad.

Digital Assets, Interviews

FX goes Crypto: Exclusive interview with BVNK’s Jonathan Cumberlidge

BVNK is the new name in the City of London. Co-founded by ex-TradFi Chris Harmse, Balfour Group founder Jesse Hamson-Struthers, and ex-TrueLayer George Davis, the firm provides a single platform to bridge fiat and crypto together. 

Digital Assets

AAX ranked world’s second largest spot exchange, only behind Binance

Crypto trading volumes experienced their first surge in activity since March as the majority of digital assets began their recovery from the recent grim price action, according to a new report by Cryptocompare.

Digital Assets

Bitpay teams up with Cardlytics to provide 15% cashback rewards

Crypto payment service provider Bitpay announced a partnership with Cardlytics Inc (NASDAQ:CDLX), which it says will offer more rewards for BitPay cardholders on its platform.

<