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AMF considers permanent CFD marketing ban in France

Sanmi Adeagbo | Mar. 25, 2019
AMF considers permanent CFD marketing ban in France

The Autorite des Marches Financiers (AMF) is preparing to take measures that will restrict the activities and marketing of CFDs and ban binary options in the country.

March 25, 2019. AtoZ Markets - The French financial regulators, AMF is seeking public consultations on how it could implement measures that will shorten the marketing activities of CFD and binary options products. This is the French local version of similar measures implemented by the European Securities and Markets Authority (ESMA). More than a year ago, the ESMA announced that it had agreed on measures to protect investors from similar entities. This was done after consultations, weeks earlier. The European authority, therefore, sanctioned restrictions on the offering of CFDs which include limits on leverages to 30:1 for major currencies, 20: 1 to non-major currency pairs, 10:1 for commodities, 5:1 for equities and 2:1 for cryptocurrencies. There were also restrictions on margin close balance (50%), CFD offerings incentives, negative balance protection and standardized risk warnings and disclaimers. The ESMA encouraged national regulators to implement product intervention and investor protection measures on a local level.

The AMF is walking through the same path but proposing a permanent ban on binary options while putting similar restrictions on CFDs. The financial watchdog proposes the following trading conditions to CFD products: 1:30 leverage, 50% stop out and negative balance protection. On marketing of CFD products, the regulator proposes to move against CFD providers from marketing their products to the general public. They will also be mandated to display risk warnings. The regulators expect feedback from industry experts and participants. The reason for this consultation is to have sets of rules that will enhance investors' protection similar to what UK's FCA and Bafin did late 2018. The public consultation is open until 15th April 2019. Participants are required to send their feedback to directiondelacommunication@amf-france.org

AMF chairman, Robert Ophele warned back in October 2018 that since the introduction of the new ESMA rules there have been problems emanating from the temporary nature of the intervention measures. He suggested that the duration of three months for measures renewal is too short. After these measures are introduced, affected brokers often find their ways through. Therefore, these regulatory moves by the French regulators are not unexpected. There is a need for endless renewals.

Need for unlimited renewals

After the EU regulators banned binary options provider in July 2012 and enforced restrictive measures on CFD providers, the European brokerage industry has experienced significant changes. Some brokers in order to beat the EU regulators have moved outside the region and found methods to target European clients. But subsequent measures taken by the financial authority has frustrated many of these brokers.

The ESMA has renewed its product intervention measures three times against binary options and twice on CFDs. The AMD is looking forward to banning binary options after years of controversies about the product and also put necessary restrictions on CFDs for retail clients. 

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