Sources: French regulator looking at banning all derivatives advertising

Sources close to the matter say that France is looking at banning the advertising of all derivative products

France has long been a target market for some of the less credible companies marketing their products to French customers from outside the country by buying leads and employing French speaking sales people to extract deposits for binary options and retail FX trading, usually representing companies that do not have any form of regulation, and that use a closed system in which the FX brokerage is the counterparty and trades against the customer.

In April this year, FinanceFeeds reported that the Israeli Police had begun collaborating with the  Autorité des Marchés Financiers, the French financial services regulator, placing 15 directors of FX firms under criminal investigation. Since then AMF has taken steps toward the prohibition of all binary options firms from advertising to French customers.

Given that the French prosecutor said that the investigations ongoing regard to 50 cases, 500 victims, and a total sum of €105 million, then the average scam must have been worth €210,000. French economic analysts estimate that the volume ranges from €100,000 and €500,000 for each victim.

Sources with credible information on this matter have explained to FinanceFeeds this week that France’s authorities are going one step further than outlawing binary options advertising and picking off a few nefarious operators of unregulated bucket shops, but are apparently in the process of outlawing 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.

Although our sources consider that this will encompass all asset classes that are widely traded on an over the counter basis, some sources that spoke to FinanceFeeds believe that such legislation, if it goes ahead, will exclude covered warrants but will include everything else.

One particular source, a very experienced and knowledgeable senior industry figure in Europe, explained to FinanceFeeds today “Everyone, from the established names to bucket shops will be subject to this ban. It is currently hard to know whether it covers every method of sales, as it may apply to online advertising only, however regarding the potential exclusion of warrants,although the pricing is horrifically obscure, Societe Generale owns the market in France.”

Opinions across the industry vary on the rationale behind any such proposed legislation, some believing that this is a step toward putting an end to the targeting of French customers by unregulated firms that make their money from pocketing client deposits, whilst others believe that it may be a method of protecting Societe Generale (owned by the French government) and ensuring it maintains its market share in covered warrants and prevents any overseas firms gaining access to the market.

 

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