Further information:. ESMA on guidance cross-border investment services. Please Note: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions. Source and credit: Compliancy Services. ESMA consults on potential CFD and binary options measures to protect retail investors ESMA have stated that it is reviewing the potential use of its product intervention powers under Article 40 of MiFIR to address investor protection concerns posed by the marketing, distribution and sale of Contracts for Differences CFDs and binary options to Retail Investors, including rolling spot forex.

ESMA is currently assessing the following restrictions: Leverage Limits on the opening of a position by a Retail Client, ranging from to to reflect the historical price behaviour of different classes of underlying assets.

In particular: I. for CFDs in major currency pairs comprising two of the following, US Dollar, Euro, Japanese Yen, Pound Sterling, Canadian Dollar or Swiss Franc , a limit of is being considered II. for CFDs in gold a limit of is being considered; iv for CFDs in commodities other than gold IV. for CFDs in commodities other than gold, and for CFDs in minor equity indices, a limit of is being considered V. pdf Contact us here Other articles CFD Providers and Distributors.

ESMA third-country trading venues. Share Linkedin. The European Securities and Markets Authority ESMA has published a call for evidence on potential product intervention measures relating to the provision of contracts for differences CFDs , including rolling spot forex, and binary options to retail investors.

ESMA published a statement on 15 December explaining that it was considering the possible use of its product intervention powers under Article 40 of MiFIR to address investor protection concerns posed by the marketing, distribution and sale of CFDs and binary options to retail investors. Leverage limits on the opening of a position by a retail client. These would range from to to reflect the historical price behaviour of different classes of underlying assets;.

A margin close out rule on a position by position basis. Negative balance protection on a per account basis. This would provide an overall guaranteed limit on retail client losses;.

A restriction on the incentivisation of trading provided by a CFD provider; and. A standardised risk warning by CFD providers. This would include an indication of the range of losses on retail investor accounts. The potential measure under consideration is a prohibition on the marketing, distribution or sale of binary options to retail investors.

ESMA consults on potential CFD and binary options measures to protect retail investors 18 January It is now seeking evidence from stakeholders on the impact of the following proposed measures: Contracts for Difference The specific potential measures under consideration are: i. These would range from to to reflect the historical price behaviour of different classes of underlying assets; ii.

This would provide an overall guaranteed limit on retail client losses; iv.

The European Securities and Markets Authority ESMA has today issued a warning about the sale of contracts for differences CFDs , binary options and other speculative products to retail investors who are unaware of the risks associated with these products, and also highlights the regulatory action taken in relation to several Cyprus-based investment firms. The warning comes as ESMA and a number of national supervisors have observed an increase in the marketing of these products, often through aggressive practices, and at the same time, a rise in the number of complaints from retail investors who have suffered significant losses.

When these products are marketed and sold in an aggressive manner or when firms otherwise fail to comply with their regulatory obligations, this creates the conditions for retail investors to suffer significant detriment, including unexpected losses.

Since mid, ESMA has coordinated a group of national regulators focused on issues relating to a number of Cyprus-based investment firms that sell CFDs and binary options throughout Europe. The Cyprus Securities and Exchange Commission CySEC has imposed fines on, or reached settlement agreements with, eight firms - Depaho, Reliantco, IronFX Global, WGM Services, Pegase Capital, Rodeler, Banc de Binary and Ouroboros Derivatives Trading - totalling EUR 2,, It has also suspended the license of Pegase Capital.

ESMA is also promoting common supervisory approaches in relation to the sale of speculative products to retail investors so that the same standards are applied across the EU. It has recently published an updated Questions and Answers document , which clarifies how rules relating to these products should be implemented. The latest update provides guidance on the information to be provided to clients and potential clients about speculative products, and the appropriateness assessment required when firms offer these products to retail clients.

ESMA issues warning on sale of speculative products to retail investors 25 July pdf ON THE SAME TOPIC. ESMA consults on rules for passporting for investment firms 17 November ESMA issues an opinion on Product Intervention Measure on Futures taken by Germany 26 October ACER and ESMA enhance cooperation to strengthen oversight of energy and energy derivative markets 18 October ESMA announces strategic priorities for the next five years 10 October ESMA reminds firms of the impact of inflation in the context of investment services to retail clients 27 September ESMA publishes final guidelines on MiFID II suitability requirements 23 September ESMA finds NCAs' scrutiny and approval of prospectuses satisfactory 21 July ESMA and EBA publish guidelines to harmonise the supervisory review and evaluation process of investment firms 21 July ESMA proposes key risk indicators for retail investors 20 July ESMA identifies data reporting services providers to be supervised directly 12 July

As lots of traders will be aware; there are a large number of brokers who look to target inexperienced traders who open an account, lose their investment and then move on to the next firm, pushing the average loss figures up significantly. Contracts for Differences from 1 August - a restriction on the marketing, distribution or sale of CFDs to retail investors. Copyright ForexNewsNow. ESMA proposes key risk indicators for retail investors 20 July Likes Followers Subscribers Followers Friends Followers Subscribe. Binary Options - a prohibition on the marketing, distribution or sale of binary options to retail investors; and. Source and credit: Compliancy Services.

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