June 13, 2019, | AtoZMarkets - After the Central Bank of Ireland issued a permanent binary options ban and restricting CFD’s, the European Securities and Market Authority (ESMA) has approved five additional proposals on product intervention measures taken by other national regulators in Europe.
Estonia, Slovak, and the Czech Republic issue permanent binary options ban
In a recent couple of months, at least three national financial regulators have proposed their product intervention measures, which similar to the ESMA rules introduced in August 2018. According to the latest reports, the pan-European regulator approved five proposals, issued by the national regulators, including :
- The Česká Národní Banka of the Czech Republic (CNB)– Opinion on the intervention proposal related to permanent binary options ban;
- The Finantsinspektsioon of Estonia (FSA) – Opinion on the intervention proposal related to binary options;
- The Finantsinspektsioon of Estonia (FSA) – Opinion on the proposed product intervention measures relating to CFD’s;
- The Národná Banka Slovenska (NBS)- Opinion on the proposed product intervention measure relating to binary options;
- The Národná Banka Slovenska (NBS) – Opinion on the proposed product intervention measures relating to CFD’s.
The ESMA’s approval of the aforementioned rules means that sale and marketing of the binary options to the clients in or out of the aforementioned regulators’ jurisdiction become an outlaw.
In addition, the new regulations also bring leverage caps and marketing restrictions for CFD brokers. The experts assume, that firms are likely to be capped at 30:1 on major currency pairs, 20:1 for exotics and 2:1 for cryptocurrencies. Moreover, the companies will be forbidden from offering welcome bonuses to their clients. Risk warnings will also be mandatory on any information the firms' release that is intended for clients.
Binary options ban in the EU becomes widespread
Recently, the Central Bank of Ireland imposed a ban on binary options and confirmed CFD’s restrictions across the country. The same initiative toward binary products and CFDs has already been taken in the UK, Holland, Denmark, and Germany. The Irish financial authority emphasized that the ban on binary options and CFD’s restrictions will protect retail traders from large and unexpected trading losses. The German, UK, Denmark and Dutch regulators, obviously were following the same purpose when approved permanent binary options ban in their regions.
In each aforementioned case, the pan-European regulator noted, that permanent binary options ban and CFD’s restrictions were “justifiable and proportionate.”
ESMA concluded that it expects that all national regulatory authorities will apply the same strict product intervention measures following its European colleagues' example.
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