New CySEC product intervention rules within two months

July 19, 2019, | AtoZ MarketsThe Financial Authority of Cyprus has revealed that according to the current product intervention rules brokers need to adhere to national product intervention measures applying in each EU country. The new CySEC product intervention rules are expected to be released by September. 

The new CySEC product intervention rules within ESMA regulatory framework

The Cyprus Securities and Exchange Commission (CySEC) on May 2019 revealed its proposal for CFDs and binary options restrictions, that reflects the rules introduced by ESMA.

As per the latest reports from the Cypriot authority, the decision on the content of the new CySEC product intervention measures is expected to be reached by the end of July. 

The industry experts have already assumed, that the regulatory landscape for EU brokers might become a bit more complicated than they have expected.

While the majority of the EU members, including Austria, Germany, Czech Republic, Holland, Denmark, and Luxemburg are continuing with the same rules, the new CySEC product intervention measures could be going into a different direction.

Namely, the Cypriot regulator wants to vary leverage caps for CFD trading depending on the type of retail investors and decided to introduce a new category for more experienced traders who may use 50:1 leverage.

The public believes, that in that case, some retail investors will see even harsher leverage restrictions than the ones introduced by ESMA, whereas others may see the restrictions relaxed.

CySEC will inform the ESMA and other national competent authorities in Europe of the final version of the national regulation after the decision has been taken.

After the pan-European regulator receives the new CySEC product intervention measures project, it will have to examine the new rules and issue an Opinion on the proportionality of the new regulations.

EU brokers might have to follow multiple Forex regulations 

It is worth to mention, that if any EU member has not yet adopted any product intervention measure, the broker operating in this country would need to apply the existing ESMA measures until the local regulator changes its position.

However, ESMA product intervention measures for CFD’s and binary options retailers will expire on August 1, 2019. The official publication of the new product intervention measures may take up to two months from now.

This might complicate the business for the brokers operating across the EU, as they would have to comply with the regulations of the respective national authority, depending on where the product is offered.

However, the CySEC highlights that all Cyprus Investment Firms must continue applying the content of the measures under the ESMA Decision on CFDs despite the deadline lapsing.

According to the recently published circular of the Cypriot regulator, any company which is not adhering to the above-mentioned rules would be violating European law.

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