ESMA’s restrictions for CFDs and binaries to remain in force in the UK after exit day, FCA says

Maria Nikolova

UK firms are required to comply with ESMA’s measures until they expire in April 2019.

The UK Financial Conduct Authority (FCA) has just posted a statement on its website concerning the application of the European Securities and Markets Authority’s (ESMA) temporary intervention measures prohibiting binary options and restricting contract for difference products (CFDs) sold to retail clients.

The FCA explains that these measures will become part of UK domestic law on exit day as part of the EU (Withdrawal) Act. UK firms are required to comply with ESMA’s measures until they expire in April 2019.

The regulator continues to prepare for a range of scenarios for the UK’s withdrawal from the EU. This includes one in which the UK leaves the EU on March 29, 2019 without a withdrawal agreement and implementation period having been ratified between the UK Government and the EU.

ESMA’s decision notices that renew the temporary restriction on the marketing, distribution or sale of CFDs to retail clients and the temporary prohibition on the marketing, distribution or sale of binary options to retail clients will form part of UK law if EU law ceases to apply in the UK on March 29, 2019.

Firms are therefore required to comply with ESMA’s decision notices until they expire on April 1, 2019 for binary options, and April 30, 2019 for CFDs. The FCA’s supervision of firms in this sector will continue to focus on compliance with ESMA’s temporary product intervention measures.

The FCA published two Consultation Papers (CPs) in December 2018 to make ESMA’s temporary product intervention measures permanent in the UK. The FCA’s proposed interventions are the same in substance as ESMA’s, although the UK regulator is also proposing to apply its rules to closely substitutable products.

The FCA plans to make its decision on final rules so that it is able to publish a Policy Statement and any final Handbook rules in March 2019 for binary options, and April 2019 for CFDs and CFD-like options. The FCA anticipates its finalised rules to apply very shortly after publication to coincide with the dates that ESMA’s restrictions expire.

If, for any reason, the FCA is unable to finalise its domestic approach prior to ESMA’s existing interventions ceasing to have effect in the UK, it will consider adopting temporary product intervention measures to replicate ESMA’s. This will ensure no loss of protections for UK consumers in a period between ESMA’s existing interventions ceasing to have effect in the UK, and finalising its domestic approach.

Read this next


Investors transfers $424 million out of bitcoin funds in six weeks

Despite bitcoin’s decent surge last week, which took the primary cryptocurrency up 70% from the year’s low, digital asset investment products saw outflows for the 6th consecutive week.

Digital Assets

OKX has $9 billion in ‘clean assets’, shows latest proof of reserves

OKX, formerly known as OKEx, has released its fifth proof-of-reserves report amid increasing demand of crypto investors asking for transparency from exchanges they trade with.

Digital Assets

Circle seeks France license to launch Euro stablecoin

Circle, the issuer of the second-largest stablecoin by market capitalization, is seeking to get a dual registration in France as it aims to on-shore its flagship product for the European market – EUROC – a reserve-backed stablecoin.

Digital Assets Among Minority of Successful Companies to Renew Coveted Estonian License has successfully renewed its virtual currency service license from Estonia’s FIU for the third year in a row, despite regulatory changes that have made it harder for virtual asset providers to meet the required standards.

Inside View, Institutional FX

Time for brokers to add options trading as volumes explode on high volatility

“Usually, adding options to the typical CFDs and equities offering leads to fragmentation of the platform technology as many brokers will need additional back-end and front-end components, and that could be an important barrier for them. Apart from that, legal hassle and costs associated with proper licensing of market data could be a barrier at first. We are seeing this trend among market data vendors and exchanges to make it easier and more affordable.”

Metaverse Gaming NFT

GCEX’s DeFi education and prime brokerage offering available in DubaiVerse

“We are excited to be part of the developments of The Sandbox and to join other top players in the region, including our regulator, Dubai’s Virtual Asset Regulatory Authority (VARA), as part of the DubaiVerse. This is a great opportunity to bridge the gap between Web3 early adopters and GCEX clients, building a community around Web3 and digital assets.”

Digital Assets

Circle wants Fed to back USDC stablecoin after “very serious stress test” with collapse of SVB

The collapse of Silicon Valley Bank allegedly proves Circle’s point that there is a need for its USDC stablecoin to be backed by the U.S. Federal Reserve with its U.S. dollars held at the Fed.

Digital Assets

Google searches for and exploded by 300% amid FTX collapse

“The findings emphasize the importance of staying on top of market trends and being able to pivot strategies quickly and also offer valuable insights into the current state of the market and the behavior of traders, providing investors with valuable information to make informed decisions about their investments.”

Institutional FX

iS Prime reports £35m turnover, £16.2 million pre-tax profits, £37 cash balances

“We have plans in place to evolve the business over the next year, driving further growth for both iS Prime and for our clients.”