Dutch regulator AFM will ban Binary Options and CFDs advertisement?


After the Europol Binary Options summit last month Dutch regulator AFM will ban Binary Options and CFDs advertisement. The latest press release of the AFM has revealed that the regulator has launched a consultation upon the case. Western Europe is as if in war against Binary options industry.

21 February, AtoZForex Following a series of bans on the Binary Options advertisement, the Netherlands decided to take initiative. The Dutch Autoriteit Financiële Markten (AFM) has launched a consultation to restrict the promotion of a number of risky financial products.

The Dutch regulator started this initiative back in 2016, advising the Dutch ministry of Finance to announce the advertising ban on binary options, CFDs and a number of other risky financial instruments.

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Consultation kicks off: Dutch regulator AFM will ban Binary Options?

The Netherlands is officially joining forces with the global regulators in their fight against fraudulent activities of some of the Binary Options providers. The Dutch regulator has informed the public that it commenced the consultation period within the sector. Allowing market participants to provide their comments. The end date of the consultation is set on the 3rd of April 2017.

Moreover, the Dutch AMF reports that the advertisement ban will cover a number of financial instruments that are directed towards the retail investor. In oppose to the French AMF, which has targeted only retail brokers, the Dutch regulator decided to add the products from commercial banks to the list. The Dutch AFM listed the following products for the advertising ban:

  • Binary Options
  • Warrants
  • Coco's
  • CFDs with a possibility of residual debt
  • CFDs with a leverage of 10 or higher
  • Turbocharger products with a leverage of 10 or higher
  • Futures with a leverage of 10 or higher

Dutch AFM requires Negative Balance Protection

Additionally, the Dutch AFM will ban the promotion for the CFDs providers. That do not provide the negative balance protection for the clients. Specifically, the firms will keep the right to offer their products only if they assure the maximum downside for their customers.

As per the remarks of Merel van Vroonhoven, the President of the AFM, the low-interest rates environment has triggered the demand and supply of the higher risk products across the region. She has added:

“We are dealing with parties that offer these products from abroad. Our priority is to protect consumers against products that result in large losses or involve high costs. With the advertising ban, we have an important tool in the hands in the fight against toxic products.”

Will the advertisement ban help the industry?

Yet, the key question is about the actual enforcement of the advertising bans. The promotions may be forbidden for regulated brokers across the Netherlands and France. Yet, the activity of unregulated brokers might even increase. The Dutch Minister of Finance, Jeroen Dijsselbloem, has expressed his concerns last year.

The Dutch authorities have stressed that the reason for such measures is the warnings from the European financial regulators. The latter have been calling for national regulators to take action in relation to the risky products. Let's not forget the recent EuroPol binary options summit in Amsterdam.

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