IG Group officially responds to French FX and CFD advertising ban

“Overall, the company does not believe these restrictions will have a material negative impact on its business in France in the short term and could ultimately enhance the Company’s future competitive position in the country.” – IG Group

In August last year, the Autorité des marchés financiers (AMF) in France, took the approach of seeking to outlaw all derivatives advertising altogether.

This means a blanket national ban on all OTC asset classes being advertised across any media by any company from any nation.

The “Sapin II” bill on transparency, as it is termed by the regulator, was instigated in order to, according to the French authoriites, assist in the fight against corruption and the modernisation of the economy.

As a result of this, AMF stated at the time that it will impose a ban on the advertising of certain highly speculative and risky financial contracts to private individuals by electronic means.

In order to finalise the regulatory framework, the Autorité des Marchés Financiers (AMF) launched a consultation which ran until 30 September 2016, on the introduction into its General Regulation of the categories of contracts targeted by the ban, which has been set in force today.

Article 28 of the “Sapin II” bill will introduce a mechanism to prohibit all forms of marketing communications addressed directly or indirectly by investment service providers, via electronic means (e-mail, online advertising banners, radio, TV, etc.), to individuals, regarding financial instruments that are particularly difficult to understand and potentially very risky. The text will enter into force after it is voted on by Parliament and enacted into law.

The law stipulates that the categories of contracts targeted by the ban are to be defined in the AMF’s General Regulation.

The AMF proposes adding a heading to Book I of its General Regulation entitled “Supervisory measure on marketing communications concerning financial contracts”. It shall be worded as follows:

Under Article L. 533-12-8 of the French Monetary and Financial Code, marketing communications regarding binary option contracts or contracts that promote a direct or indirect investment in the FX market, or CFDs which have a leverage greater than 5:1.

Today, IG Group, one of the most prominent and longest established electronic trading companies in the world, released its official position with regard to this ruling.

IG Group’s official position on this matter states that “Following the passing of the Sapin 2 law at the end of 2016, the general rulebook of the AMF has now been adopted.”

“The AMF has confirmed certain restrictions on electronic marketing of CFDs to retail clients in France. The key marketing restrictions do not impact the accounts that IG now offers to new clients in France, because IG’s accounts provide a limited loss-by-position guarantee as required, and therefore also a guarantee of no negative balance. The AMF will also ban all electronic marketing involving FX and Binaries.”

“As anticipated, the restrictions have no impact on the current client base. Overall, the company does not believe these restrictions will have a material negative impact on its business in France in the short term and could ultimately enhance the Company’s future competitive position in the country.”

“IG believes the AMF’s approach will provide substantial protection for consumers and greatly improve standards in the sector. IG supports robust and proportionate regulatory oversight of the CFD sector in all the markets in which it operates. The Company has operated and will continue to operate to the highest standards in the industry” concluded the company.

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