ESMA extends its “endless” ban on binary options

February 19, 2019, | AtoZ Markets –  According to the recent report of the European Securities and Markets Agency, published on the organization’s official website, ESMA agreed to renew the binary options ban from April 2, 2019, under the same conditions as the previous extension decision, which began to be applied on January 2, 2019.

ESMA dealing with binary options in brief

Binary options enable traders to benefit from price fluctuations in multiple global markets and bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.

In summer 2018 it was announced that the European Securities and Markets Agency agreed to renew the ban on the sale, distribution or sale of binary options to retail customers, valid from July 2, 2018, for another three months.

Later in November the European Securities and Markets Authority (ESMA) announced in its official statement, that they will renew their ban on binary options for another three months. The updated ban was supposed to come into effect as soon as the current one ends on January 2, 2019, to complete a period of three months as it was decided in the previous ban decision. ESMA did not indicate in its new notice any change pertinent to the position of the contracts-for-differences (CFDs) trading, with regard to binary options.

New extension comes in power from April 2019

According to the latest ESMA report the European financial authority carefully considered the need to expand the current intervention on the binary options. The financial regulator states in its note that it believes that there is still a serious investor protection issue associated with offering binary options to retail clients. Therefore, ESMA agreed to renew the measure on April 2, 2019, under the same conditions as the previous extension decision, which began to be applied on January 2, 2019. Differently from the European financial watchdog German Federal Financial Supervisory Authority (BaFin) on November 30 started a permanent ban on binary options. The German financial regulator after their announcement gave brokers and clients time until the 20th of December 2018, to comment on the proposed measures in writing.

ESMA update was agreed by the European financial authority Observer Board on February 14, 2019. In the close future ESMA plans to take measures to translate the binary options prohibition update into official languages of the EU in the upcoming weeks, after which it will publish an official notification on its website. Later updated regulations will be published in the official journal of the EU and will begin to apply from April 2, 2019, for a period of three months.

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