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
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.
ECB finalized guidance on the way it expects banks to prudently manage and transparently disclose climate and other environmental risks under the current prudential rules.
BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.
BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.
APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.
EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.
The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.
FSB published a progress report on the implementation of reforms to major interest rate benchmarks, including the London Inter-bank Offered Rate (LIBOR) benchmark.