ESMA formally adopted new measures on the provision of contracts for differences (CFDs) and binary options to retail investors. The measures have been published in the Official Journal of the European Union and will start to apply from August 01, 2018 for CFDs and from July 02, 2018 for binary options. ESMA adopted these measures in the official languages of EU and they will remain in force for a period of three months from the date of application.
The measures on CFDs involve restriction on the marketing, distribution, or sale of CFDs to retail investors. This restriction consists of 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 firm-specific risk warning delivered in a standardized way. The measures on binary options involve prohibition of the marketing, distribution, or sale of binary options to retail investors. MiFIR gives ESMA the power to introduce temporary intervention measures on a three monthly basis. Before the end of the three months, ESMA will review the product intervention measures and consider the need to extend them for a further three months.
ESMA also published questions and answers (Q&A) on the temporary product intervention measures on the marketing, distribution, or sale of CFDs and binary options to retail clients, based on Article 40 of the Markets in Financial Instruments Regulation (MiFIR or Regulation (EU) No 600/2014). The Q&A provides answers to practical questions in relation to the existing contracts, payments, margin close-out protection, aggregate liability, monetary benefits, binary options, CFDs referencing futures, and guaranteed stop-loss orders. Additionally, EIOPA published a statement on consumer detriment resulting from policyholder exposure to CFDs and binary options. Considering the potential future risks to policyholders, EIOPA expects insurance undertakings to avoid as possible direct underlyings of insurance-based investment products, the instruments for which ESMA has issued a ban or restriction. In addition, ESMA published Q&A
- ESMA Press Release
- Regulation on CFDs
- Regulation on Binary Options
- Decisions in EU Languages
- ESMA Q&A
- EIOPA News Release
- EIOPA Statement (PDF)
Effective Date: August 01, 2018 (3 months for CFDs); July 02, 2018 (3 months for binary options)
Keywords: Europe, EU, Securities, Insurance, Temporary Intervention Measures, CFDs, Binary Options, Q&A, MiFIR, EIOPA, ESMA
APRA is consulting on the reporting standard for credit risk management (ARS 220.0).
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
ISDA launched the IBOR Fallbacks Supplement and the IBOR Fallbacks Protocol, with both becoming effective on January 25, 2021.
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
Ambassadors of EU member states agreed on the mandate of European Council on the Capital Markets Recovery Package, to support economic recovery from the COVID-19 crisis.