ESMA seeks feedback on effects of CFD restrictions and binary options ban

Maria Nikolova

National regulators have reported that, both for binary options and for CFDs, there has been an increase in the number of clients treated as professional clients on request.

The European Securities and Markets Authority (ESMA) is seeking feedback from market participants, consumers and their associations on the effects of the restrictions of the offering of CFDs to retail clients and the ban on binary options.

The temporary product intervention measures of ESMA started to apply on July 2, 2018 for binary options and August 1, 2018 for CFDs. Following three consecutive renewals, these temporary measures expired on July 1, 2019 for binary options and July 31, 2019 for CFDs.

At this moment the large majority of National Competent Authorities (NCAs) in the EU have taken national product intervention measures in order to address, in a permanent way, the investor protection concerns arising from these products.

The European Commission has asked ESMA to report on its experience with the new product intervention powers, including the practical effects of the measures. ESMA now launches a call for evidence inviting market participants, consumers and their associations to share any information on the effects of the measures.

ESMA notes that it has thus far obtained information from national regulators over the effects of the product intervention measures.

With regard to binary options, there were no new authorisations of firms offering binary options to retail clients and the regulators reported limited non-compliance in relation to the prohibition to market, distribute or sell binary options to retail clients.

Concerning CFDs, the national competent authorities reported an overall drop in the number of CFD retail client accounts, trading volume and total retail client equity in comparison with the reporting period a year earlier (when the CFD measures were not in place). The share of profitable retail client accounts remained broadly stable, and the average costs incurred by retail clients while trading CFDs were significantly lower in the periods after the introduction of the ESMA measures.

Average costs in respect of active retail accounts containing CFDs on cryptocurrencies marked a significant decrease in comparison to others, though such accounts continued to incur higher costs than accounts with no cryptocurrency exposure.

Finally, the national regulators reported a sustained decrease in the number of automatic close-outs, the number of times accounts went into negative equity and the size of negative equity balances.

The national competent authorities reported that, both for binary options and for CFDs, there has been a growth in the number of clients treated as professional clients on request. For binary options, this number was relatively small in comparison to the number of retail clients before the ESMA prohibition of providers of binary options.

The opinions should be submitted by November 4, 2019. ESMA will consider the responses to this call for evidence when drafting its response to the European Commission.

Read this next

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

<