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ESMA stops renewing binary options ban

Maria Nikolova

The decision is explained via the national prohibitions implemented by most national competent authorities.

In a move that has been expected for a while, the European Securities and Markets Authority (ESMA), the EU securities markets’ regulator, today announces it will not renew the temporary prohibition of the marketing, distribution or sale of binary options to retail clients in the European Union (EU).

The halt has been indicated by several national competent authorities (NCAs), such as BaFin, which has earlier today commented that it will maintain the national ban on binary options as ESMA will not renew the temporary measures.

Further, ESMA has been lately issuing a raft of positive opinions regarding the ban on binary options introduced by many NCAs. The latest regulators to get such a positive opinion include Cyprus, to mention one (important) example.

ESMA has taken product intervention measures regarding binary options, imposing a temporary prohibition on their marketing, distribution or sale, in Decisions (EU) 2018/795, (EU) 2018/1466, (EU) 2018/2064 and (EU) 2019/509. If the temporary prohibition is not renewed again, the currently applicable measure in ESMA Decision (EU) 2019/509 will automatically expire at the end of the day on July 1, 2019.

As most national competent authorities (NCAs) have taken permanent national product intervention measures relating to binary options that are at least as stringent as ESMA’s measure, ESMA will not renew its temporary prohibition, the regulator said.

ESMA will continue to monitor activities in relation to these and other related speculative products to determine whether any other EU-wide measures may be needed.

The FinanceFeeds team is curious to see how ESMA would treat its product intervention measures given that these restrictions have triggered a rather controversial reaction. Moreover, CySEC has dared to question ESMA’s approach to determining an investor as a retail one. Let’s recall that the Cypriot regulator has offered various leverage caps for various types of retail investors. Perhaps ESMA really needs to consider refining its approach regarding the regulation of CFD trading.

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