Starting August 18 Belgium will say good-bye to all Binary Options products, derivative contracts, CFDs as Belgium bans Forex within its borders. Does this mean no more retail electronic trading in Belgium?
15 August, AtoZForex – The Belgian authorities has passed the legislation due to which all leveraged OTC derivatives, all binary options, CFDs will be banned. The legislation will be set into force in 3 days – 18th August of 2016 is the day when Belgium bans Forex.
Belgium bans Forex: reasons
The Belgian authorities considers aforementioned services and the sales method by which they are distributed to be highly risky and not very connected to the real economy. It also emphasized that they demonstrate a disdain for high-pressure sales. The new legislation will restrict the distribution of those specific financial services among Belgian retail customers. Certain distribution restriction practices will also be implemented.
The regulation was drawn by the Financial Services and Markets Authority (FSMA) and has been approved by royal decree on July the 21st. The FSMA considers aforementioned products that are marketed very aggressively to be extremely risky. They also involve transactions over a very short period without any connection to the real economy.
This overall should not sound too foreign. In the recent past French and Belgian traders have been subject to massive advertisement and aggressive sales by a number of Israel and Cyprus based Binary Options brokers. Given the ease of passporting and umbrella licensing provided to new Binary Options “brokers” it appears that MIFID itself is under threat at the moment.
Indeed, during the weekend the Israeli Regulator appeared to comment that Binary Options industry is a threat to Israel.
Earlier CySEC president Demetra Kalogerou commented that 24Options ban in France was also due to marketing message. Hence, unless native regulators take a decisive action it seems like Binary Options aggressive sales will put the future of the complete Online trading industry including the retail FX and CFDs market under question.
Main elements of the ban
The FSMA Regulation consists of two parts. The first element is a ban on distribution of a few specific types of derivative contracts to clients through the electronic trading platforms. These include all leveraged spot FX, CFDs, and binary options products. The second element is a ban on aggressive distribution practices like cold calling through external call centers, inappropriate forms of remuneration, fictitious bonuses and etc.
As Belgium bans Forex, The Minister for Employment, the Economy and Consumer Affairs, Kris Peeters stated during his speech in the Belgian Parliament:
“This Regulation contributes to a better protection of consumers of financial products. Henceforth, it will be clear to everyone that binary options and other speculative derivatives have no place on the Belgian retail market.”
Johan Van Overtveld, The Minister of Finance, commented on the matter:
“In recent years, we have seen a rise in the number of foreign offerers of products such as binary options that approach the Belgian market without having an authorization and /or a published prospectus. This Regulation will help combat such offers.”
According to the Jean-Paul Servais, chairman of the FSMA, the regulator along with other supervisory authorities has repeatedly issued warnings about the risks associated with aforementioned products. However, the FSMA continues to receive complaints about those products and services. Therefore the watchdog proposed to create a framework which will regulate the distribution of OTC derivatives and will prohibit certain types of these products.
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