ESMA approves Austrian CFDs restrictions

May 13, 2019 | AtoZ Markets – The European financial regulator ESMA has recently issued two positive opinions on proposed product intervention measures taken by the Financial Market Authority (FMA) of Austria. The announcement says, that the European Security and Market Authority finds the FMA’s proposed measures related to the offering of binary options and CFDs justified and proportionate.

ESMA’s considers proposed national product intervention measures as justified

The European regulator has issued the following opinions on proposed national product intervention measures:

  • Finanzmarktaufsicht of Austria (FMA) – Opinion on the proposed product intervention measure relating to binary options.
  • Finanzmarktaufsicht of Austria (FMA) – Opinion on the proposed product intervention measure relating to contracts for differences.

As per EU authority’s announcement, it is necessary for National competent authorities (NCA’s) of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.

Finanzmarktaufsicht of Austria proposals on binary options and CFDs

The FMA national binary options measure consists of a permanent ban on selling, distributing or selling binary options to retail customers in Austria or from Austria. The national measures proposed by the Austrian regulator regarding CFDs consist of a permanent restriction on the marketing, distribution or sale of CFDs to retail clients in or from Austria.

The Austrian financial watchdog assured the ESMA that both national measures are the same as the ESMA measure at the national level. The difference that the FMA national measure related to binary options will not directly prohibit participation in circumvention actions. As per CFDs national measure, the Austrian authority stated that the regulations would include :

  • include minor amendments to several of the risk warnings in ESMA’s measures;
  • a definition of virtual currencies;
  • not expressly prohibit participating in circumvention activities.

According to the FMA, both national measures are expected to come into force on May 30, 2019. The Austrian authority has assured ESMA that it will ensure through its supervisory and enforcement activity that the national measures are correctly applied.

ESMA agrees with the UK, Dutch and Polish restrictions on CFDs and binary options

ESMA  has already issued positive opinions regarding the national product intervention measures introduced by Poland, the UK, and the Netherlands.

In April 2019, the European financial authority issued opinions on national product intervention measures from:

  • Authority for the Financial Markets of the Netherlands (AFM) – Opinion on the proposed product intervention measures relating to contracts for differences;
  • Komisja Nadzoru Finansowego of Poland (KNF) – Opinion on the proposed product intervention measure relating to binary options; and
  • Financial Conduct Authority of the United Kingdom (FCA) – Opinion on the proposed product intervention measure relating to binary options. The FCA ban on binary options applies to firms that operate in the United Kingdom and has come into force since April 2. As the UK regulator explained in its official statement, the step was taken upon thorough consultation on the decision for consumer protection purposes.

In accordance with Article 42 of Regulation (EU) No 600/2014 National competent authorities like the FCA in the UK or FMA in Austria, may take product intervention measures.

An authority must notify the European Market regulator and other NCA’s of the details of its proposed measure and the related evidence unless there is an exceptional case where it is necessary to take urgent action. After receiving notification of the proposed measure, ESMA must adopt an opinion on whether the proposed measure is justified and proportionate.

If ESMA considers that the taking of a measure by other NCAs is necessary, it must state this in its opinion. All previously issued opinions of ESMA on proposed national product intervention measures are published on its website.

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