The Cyprus Securities and Exchange Commission issued a circular for the CIFs as a CySEC France AMF CFDs ads ban reminder. What legal measures need to be taken by the CIFs?
14 April AtoZForex – The Cyprus Securities and Exchange Commission (CySEC) has been quite active in taking measures to improve the function of the financial markets.
Recently, we brought to the attention of our readers CySEC urging prospective assessments from the CIFs upon any Brexit implications. Following this, the CySEC Chair Demetra Kalogerou sent out a letter as a CySEC France AMF CFDs ads ban reminder.
CySEC France AMF CFDs ads ban reminder
The CySEC draws the attention of the CIFs that deal in CFDs, Binary Options, and Forex with French clients. Last year, the France's AMF has put an online advertising ban on these highly speculative products in the country. Moreover, the Sapin II framework includes this measure. The Cypriot watchdog’s circular is a reminder for the CIFs about the French law that prohibits the offering of speculative, complex, and risky products to the French clients.
Specifically as per the Autorité des Marchés Financiers (AMF) General Regulation, the investment firms dealing in the above highly speculative products where the leverage is greater than 1:20 should not offer their services directly or indirectly to the French retail clients. Moreover, the circular highlights the French legislation that does restricts any offerings that are noncompliant with the AMF’s regulation. Below you can read the circular C202 as a CySEC France AMF CFDs ads ban reminder.
Measures that the CIFs need to take
CySEC further stresses that the AMF regulation refrains the firms from addressing the retail clients by any electronic means or marketing communications. However, addressing the investors with the intention of providing investment services in the above three categories of financial derivatives is not permissible. More specifically, the AMF regulation prohibits the derivatives that fulfill one of the following characteristics:
- The maximum risk is not known at the time the contract is entered into;
- The risk of loss is higher than the amount initially invested;
- The risk of loss in comparison to the potential advantages is not reasonably understood with regard to the particular nature of derivative.
Moreover, the CySEC advises the firms that fall under its jurisdiction to consult with their legal advisers. The CIFs should consult them regarding the necessary legal measures to be taken to ensure compliance with AMF’s legislation.
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