June 12, 2019, | AtoZMarkets - The Central Bank of Ireland became another national regulatory authority to impose a ban on binary options. The same initiative toward binary products and CFDs has already been taken in the UK, Holland, Denmark, and Germany.
Ireland bans binary options to protect clients
The Irish authority explained, that in order to ensure the retail traders ‘ protection,
it will be putting into law rules analogous to the product intervention measures introduced by the European Securities and Markets Authority in August 2018.
The authority emphasized that the ban on binary options and CFD’s restrictions will help to avoid large and unexpected trading losses.
Derville Rowland the head of financial conduct at the Central Bank of Ireland compared investing binary options to betting on a horse, hinting that in Ireland binary options activity has ended. Rowland outlined that the authority bans binary options, because “consider them a fundamentally flawed product, which has no place in the investment plans of retail investors.”
While speaking of CFD’s, the head of the Central Bank of Ireland stated, that “retail investors must be protected from excessive levels of leverage, which can result in unexpectedly high levels of losses and from the risk of losing more money than they put into their CFD account.”
The ESMA on binary options and CFDs
Last year, the European financial regulator 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.
By this period, ESMA has already prescribed product limits for contracts for difference (CFD), which are applied in the European Union.
By this moment there at least four national financial authorities which have already adopted the new ESMA product intervention measures.
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.
The UK Financial Conduct Authority (FCA) applied the same rule toward binary options in April 2019. Later, the Dutch Financial Markets Authority (AFM) followed its British colleagues' steps. In June 2019, the Danish Financial Supervisory Authority (FSA) 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.
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