FCA consults on changes regarding post-Brexit rules for CFDs and binary options

Maria Nikolova

The changes in relation to rules covering binary options and CFDs reflect the assumption that UK firms will lose passporting rights after exit day.

The UK Financial Conduct Authority (FCA) has earlier today published its latest Quarterly Consultation Paper which outlines a set of proposed amendments to the Handbook. Some of the proposed changes are related to the UK’s withdrawal from the European Union, as the UK regulator has to fix deficiencies in any affected Handbook provisions.

The list of proposed changes in this Consultation Paper concerns, inter alia, Conduct of Business Sourcebook (COBS) 22.4 and 22.5. That is, the rules that ban the offering of binary options in the UK and that impose restrictions on the retail marketing, distribution and sale of contracts for differences (CFDs) and similar speculative investments.

In particular, the proposals represent consequential changes in relation to binary options and CFDs to reflect the assumption that UK firms will lose passporting rights after exit day. Additionally, the rules will not apply to EEA firms unless they have temporary permission, are in the financial services contracts regime as a supervised run-off firm or are a contractual run-off firm.

This means that the rules will not apply to EEA firms which are operating in the UK outside of those regimes. For instance, the rules will not apply to an EEA firm operating in the UK through the Overseas Persons Exclusion.

As a result of the changes, EEA firms operating outside the temporary regimes will be treated in the same way as third country firms.

The rules will automatically apply to temporary permission firms, supervised run-off firms and contractual run-off firms.

Let’s recall that, in July this year, the European Securities and Markets Authority (ESMA) published its opinion with regard to the product intervention measures proposed by the FCA. ESMA said the national measures outlined by the FCA are justified and proportionate except for:

  • (i) the FCA’s proposal not to apply the national restrictions to CFD-like option providers authorised in other Member States other than through a UK branch or tied agent in respect of the sale or distribution of those products to UK retail clients; and
  • (ii) the FCA’s proposal to apply a 30:1 leverage limit for CFDs referencing certain government bonds, instead of the 5:1 leverage limit in ESMA’s measures.

Read this next

Retail FX

Cerus Markets launches MT5 with exclusive Crypto vs TradFi offering

“The introduction of MT5 is a significant milestone for Cerus Markets and our valued clients. We are constantly seeking ways to enrich our platform and empower our traders with more advanced tools and opportunities. MT5 aligns perfectly with our mission to bridge the gap between cryptocurrency and traditional financial markets.”


Ouinex taps Netdania to build institutional-grade crypto trading platform

Ouinex intends to always bring the best of TradFi electronic trading infrastructure to Web3 including innovative universal cross-margining capabilities so that users can trade TradeFi instruments by using their crypto holdings as margin.

Retail FX

BDSwiss Elevates Traders’ Experience with Advanced Trading Tools

In the fast-paced world of financial markets, having access to advanced trading tools and educational resources is crucial for traders aiming to stay ahead of the curve.

Market News

Gold & Silver rally, made in China

Gold prices correlate with the US bond market, and the US Dollar influences the Gold/Silver ratio. Chinese market premiums for Gold and Silver suggest continued uptrends. Inflation-adjusted peaks indicate current prices are not overly expensive, implying potential for further gains.

Market News

Japan’s Monetary Policy and FX Intervention: Key Takeaways from the G20 Meeting

At the G20, BoJ President Kanda and Finance Minister Suzuki emphasized stable exchange rates and cautious FX intervention, signaling imminent action. Softer US inflation data and potential BoJ rate hikes are impacting USD/JPY


Top 3 Cryptos of 2024: BlockDAG’s $1 Prediction, Immutable’s Remarkable Price Increase, and Solana’s Promising Future

Explore pivotal changes in the cryptocurrency market through our analysis of Solana, Immutable, and BlockDAG. Explore how BlockDAG raised $34.7M in its presale with advanced technologies.


UK bank Kroo bans crypto transactions, warns account closure

London-based digital bank Kroo has imposed a ban on cryptocurrency transactions, another blow for crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎


MoonPay onboards Gucci, Puma, and Mastercard to Web3 Tools

Blockchain payments infrastructure firm MoonPay has unveiled a new platform to simplify the Web3 experience for brands and consumers. The platform, dubbed Web3 Tools, helps brands provide a less complex Web3 journey.


BlockDAG’s Keynote Video Drives $34.7M in Presales, Gaining Traction Among Solana (SOL) Investors and Litecoin Enthusiasts

Discover BlockDAG’s leadership in cryptocurrency, attracting Solana (SOL) investors and Litecoin enthusiasts with its strong growth prospects and groundbreaking mining technology.