The Financial Supervisory Authority published an interpretation on 5 July 2018 on the marketing, distribution or sale of CFDs and binary options covered by ESMA‘s measures dated 27 March 2018. The measures are based on Article 40 of Regulation (EU) No 600/2014 (MiFIR) in light of the inherent risk and complexity of CFDs and binary options causing significant financial losses for retail investors. As of August 24 2018 ESMA has agreed to renew the prohibition and exclude a limited number of products from the scope of its measure. Further information on ESMA‘s measure is available on its website.
ESMA‘s measures prohibit the marketing, distribution or sale of binary options to retail investors (excluding a limited number of products) and restrict the marketing, distribution or sale of CFDs to retail investors. Restrictions for CFDs provide for leverage limits of positions, a margin close-out rule on a per account basis, a negative balance protection on a per account basis, a prohibition on benefits incentivising trading and a standardised risk warning.
The Financial Supervisory Authority would like to reiterate that the marketing, distribution or sale of CFDs and binary options (other than excluded from the scope) covered by ESMA‘s measure dated 27 March 2018 and renewed on 24 August 2018 is considered contrary to proper and sound business procedures and practices in securities trading according to Article 5 of Act No. 108/2007 on Securities Transactions.
Further information on ESMA´s measures are accessible on its website: https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors
Frequently asked questions on ESMA´s measures are accessible on its website: https://www.esma.europa.eu/sites/default/files/library/esma71-98-125_faq_esmas_product_intervention_measures.pdf