June 10, 2019 | AtoZMarkets - The Danish Financial Supervisory Authority (FSA) following other European financial regulators’ example decided to impose a ban on binary options. The Danish regulator’s rule will come into force in July 2019 when all binary options offerings targeted to Danish customers will be outlawed.
Denmark bans binary options after Germany, UK, and Holland
It is worth to mention, that the Danish FSA has already put restrictions on the trading of binary options. The restrictions came after the rules set by the European Securities and Markets Authority (ESMA). Now, the ban on the binary options in Denmarks becomes permanent.
Previously, the UK Financial Conduct Authority (FCA) has applied the same rule toward binary options on the local market. In April 2019 the FCA confirmed the permanent ban on selling, marketing or distributing binary options to retail customers.
Sometime later, the Dutch Financial Markets Authority (AFM) following in the footsteps of its European colleagues, banned the promotion of certain risky financial investment products, including binary options.
The announcement was made via the official website of AFM. However, Germany was the first financial regulator who has taken the initiative of banning binary products after the ESMA latest regulations update. The German Federal Financial Supervisory Authority (BaFin) started a permanent ban on binary options in November 2018.
Denmark bans binary options following the ESMA new regulations
Last year, the ESMA published in the Official Journal of the European Union (OJ) the final measures toward CFD’s and binary options. According to the official announcement, the new rules would start to apply from 2 July 2018 for binary options and from 1 August 2018 for CFDs.
The European regulator made it clear, that it is committed to enforcing the strict regulatory framework in every EU country.
By this period, ESMA has already prescribed product limits for contracts for difference (CFD), which are applied in the European Union.
Steven Maijoor, Chairman of the European authority explained then, that the EU investors protection is the main reason behind ESMA’s initiative toward CFD’s and binary options restrictions. When ESMA’s announcement was released, Maijoor, stated, that the measures ESMA has taken were a significant step towards greater investor protection in the EU
He explained:
“The new measures on CFDs will, for the first time, ensure that investors cannot lose more money than they put in, restrict the use of leverage and incentives, and provide understandable risk warnings for investors.”
While speaking about the binary options measures, the ESMA Chairman concluded: “prohibition on the marketing, distribution or sale of binary options to retail investors addresses the significant investor protection concerns caused by the characteristics of this product.”
In May 2019 the European financial authority published another extension to its rules on promoting and marketing CFDs across the European Union. The same month the regulator approved Austria’s CFD’s and binary options permanent restrictions.
Please share your thoughts in the comment box below.