Sponsored By
de | cn | ru

Market News

ESMA bans binary options, sets restrictions on CFDs for retail clients

The European Securities and Markets Authority (ESMA) announced three-month ban on the marketing, distribution or sale of binary options to retail investors and a set of restrictions on CFDs offered to the same type of clients.


The restrictions on CFDs include leverage limits on opening positions; a margin close out rule on a per account basis; a negative balance protection on a per account basis; preventing the use of incentives by a CFD provider; and a standardized risk warning.


To be more precise, the leverage limits on the opening of a position by a retail clients will range from 1:30 to 1:2, depending on the underlying asset:

- 30:1 for major currency pairs;

- 20:1 for non-major currency pairs, gold and major indices;

- 10:1 for commodities other than gold and non-major equity indices;

- 5:1 for individual equities and other reference values;

- 2:1 for cryptocurrencies.


The providers will be required to close out one or more retail client’s open CFD positions, when the required margin reaches or falls below 50%. Additionally, the forex and CFD brokers will be required to introduce negative balance protection on a per account basis in order to guarantee limit on retail client losses.


“The agreed measures ESMA is announcing today will guarantee greater investor protection across the EU by ensuring a common minimum level of protection for retail investors”, said ESMA’s chairperson Steven Maijoor. “The new measures on CFDs will for the first time ensure that investors cannot lose more money than they put in, restrict the use of leverage and incentives, and provide risk warning for investors. For binary options, the prohibition we are announcing is needed to protect investors due to the products’ characteristics.


“The combination of the promise of high returns, easy-to-trade digital platforms, in an environment of historical low interest rates has created an offer that appeals to retail investors. However, the inherent complexity of the products and their excessive leverage – in the case of CFDs – has resulted in significant losses for retail investors.


“A pan-EU approach is required given the cross-border nature of these products,  and ESMA’s intervention is the most appropriate and efficient tool to address this major investor protection issue.”  


As per the MiFIR, ESMA can only introduced temporary three-month measures, but before the period expires, the regulator will review the results and will consider a further extension for another three months.


The pan-European ESMA measures are similar to those introduced last year by the Cyprus Securities and Exchange Commission, UK’s Financial Conduct Authority and several other European regulators.

 

TAGS: esma  binary options  cfd  ban  restrictions 
Broker Country Regulation Platform Min Deposit Review
Cyprus, UK, Belize CySec, FCA, IFSC MT4, MT5, Web $5 Review Website
Cyprus, Australia CySec, ASIC MT4, Web,
Mobile app
$100 Review Website
UK, Cyprus, Hong Kong FCA, CySEC, SFC MT4, Web,
PrimeTrader
$100 Review Website
UK, Cyprus, Australia FCA, CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia FCA, ASIC MT4, Trading
Station,
NinjaTrader
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
Markets,
cTrader
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Cyprus, South Africa CySec, FSCA, FSC MT4, MT5, Web $5 Review Website
UK, Singapore, Australia FCA, MAS, ASIC MT4, AT Pro,
Advantage Web
£100 Review Website
Seychelles FinaCom MT4, Web $10 Review Website

More Forex Market News

MasterCard applies restrictive rules to unlicensed forex brokers and crypto providers

Oct 15 2018 14:08:59

  Credit card provider MasterCard applies restrictive rules to unregulated forex and binary options brokers, crypto providers and ICOs, online media Finance Magnets reported on Friday. Read more

CySEC warned against unauthorized investment firm Primus Trades

Oct 12 2018 13:41:55

The Cyprus Securities and Exchange Commission (CySEC) warned the public on Thursday that Primus Trades is not authorized to provide investment services and or to perform investment activities in the country.   Primus Trades operates via website primustrades. Read more

UK’s FCA blacklists Royal CFDs and DXT Markets

Oct 11 2018 14:40:05

  The Financial Conduct Authority (FCA) has blacklisted unregulated brokers Royal CFDs and DXT Markets earlier this week. Read more

UK’s FCA flagged KontoFx, WiseBanc, and Crypto Options Trader

Oct 04 2018 12:33:10

  The Financial Conduct Authority (FCA) keeps adding more and more unregulated brokers to its warning list. Some of the recently flagged ones are forex brokers KontoFx and WiseBanc, as well as crypto binary options broker Crypto Options Trader. Read more

ESMA’s ban on binary options officially extended

Oct 02 2018 13:11:05

  The European Securities and Markets Authority (ESMA) announced on Monday that it extends the restrictions imposed on binary options for another three-month period. Read more

CFTC and SEC clamp down on crypto CFD provider 1Broker

Oct 01 2018 13:27:38

  The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have both filed charges against 1Broker, a CFD provider focused on cryptocurrencies. According to both US agencies, the company operating 1Broker, 1pool Ltd. Read more

Google allows crypto adds for regulated exchanges

Sep 27 2018 16:54:27

Google reversed its total ban on all crypto adds, saying it will now allow “regulated” crypto currency exchanges to have adds in USA and Japan on the company's websites. Read more

Japanese exchange Zaif hacked, reportedly lost over $59 million

Sep 20 2018 11:58:03

  Japanese crypto exchange Zaif was hacked and lost over $59 million worth of cryptocurrencies, local media sources reported today.   According to the report, the hackers stole 5,966 Bitcoins, some Bitcoin Cash, and MonaCoin. Cryptocurrencies worth 4. Read more

CySEC withdraws CIF licenses of AnyOption and Gobaba FX

Sep 17 2018 07:27:45

  The Cyprus Securities and Exchange Commission (CySEC) announced previous week that it withdraws the Cyprus Investment Firm (CIF) licenses of the parent of AnyOption, Ouroboros Derivatives Trading Ltd., and of Gobaba FX Cy Ltd. Read more

UK's FCA warned against Prime Crypto and 4xpremium clone firm

Sep 14 2018 10:05:58

  UK’s Financial Conduct Authority (FCA) has added several investment companies to its warning list on Thursday. Among them are the forex broker 4xpremium -  a clone firm -  and unregulated crypto CFD provider PrimeCrypto. Read more

de | cn | ru