The latest update provides guidance on the information to be provided to clients and potential clients about speculative products, and the appropriateness assessment required when firms offer these products to retail clients.

ESMA issues warning on sale of speculative products to retail investors 25 July pdf ON THE SAME TOPIC. ESMA consults on rules for passporting for investment firms 17 November ESMA issues an opinion on Product Intervention Measure on Futures taken by Germany 26 October ACER and ESMA enhance cooperation to strengthen oversight of energy and energy derivative markets 18 October ESMA announces strategic priorities for the next five years 10 October ESMA reminds firms of the impact of inflation in the context of investment services to retail clients 27 September ESMA publishes final guidelines on MiFID II suitability requirements 23 September ESMA finds NCAs' scrutiny and approval of prospectuses satisfactory 21 July The potential measure under consideration is a prohibition on the marketing, distribution or sale of binary options to retail investors.

ESMA consults on potential CFD and binary options measures to protect retail investors 18 January It is now seeking evidence from stakeholders on the impact of the following proposed measures: Contracts for Difference The specific potential measures under consideration are: i. These would range from to to reflect the historical price behaviour of different classes of underlying assets; ii. This would provide an overall guaranteed limit on retail client losses; iv.

A restriction on the incentivisation of trading provided by a CFD provider; and v. ESMA is also considering whether CFDs in cryptocurrencies should be addressed in the measures. Binary Options The potential measure under consideration is a prohibition on the marketing, distribution or sale of binary options to retail investors. Next Steps The submission period for responses will close at pdf ON THE SAME TOPIC. ESMA consults on rules for passporting for investment firms 17 November ESMA issues an opinion on Product Intervention Measure on Futures taken by Germany 26 October ACER and ESMA enhance cooperation to strengthen oversight of energy and energy derivative markets 18 October ESMA announces strategic priorities for the next five years 10 October

The European Securities and Markets Authority ESMA has agreed on measures on the provision of contracts for differences CFDs and binary options to retail investors in the European Union EU. Binary Options - a prohibition on the marketing, distribution or sale of binary options to retail investors; and. Contracts for Differences - a restriction on the marketing, distribution or sale of CFDs to retail investors.

This restriction consists of: leverage limits on opening positions; a margin close out rule on a per account basis; a negative balance protection on a per account basis; preventing the use of incentives by a CFD provider; and a firm specific risk warning delivered in a standardised way.

In accordance with MiFIR, ESMA can only introduce temporary intervention measures on a three monthly basis. Before the end of the three months, ESMA will consider the need to extend the intervention measures for a further three months.

ESMA, along with National Competent Authorities NCAs , concluded that there exists a significant investor protection concern in relation to CFDs and binary options offered to retail investors. This is due to their complexity and lack of transparency; the particular features of CFDs — excessive leverage — and binary options - structural expected negative return and embedded conflict of interest between providers and their clients; the disparity between the expected return and the risk of loss; and issues related to their marketing and distribution.

The new measures on CFDs will for the first time ensure that investors cannot lose more money than they put in, restrict the use of leverage and incentives, and provide a risk warning for investors. However, the inherent complexity of the products and their excessive leverage — in the case of CFDs — has resulted in significant losses for retail investors.

The product intervention measures ESMA has agreed under Article 40 of the Markets in Financial Instruments Regulation include:. Leverage limits on the opening of a position by a retail client from to , which vary according to the volatility of the underlying:. A margin close out rule on a per account basis. Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses;.

ESMA intends to adopt these measures in the official languages of the EU in the coming weeks, following which ESMA will publish an official notice on its website.

The measures will then be published in the Official Journal of the EU OJ and will start to apply one month, for binary options, and two months, for CFDs, after their publication in the OJ. Translated versions: BG CS DA DE EL ES ET FI FR HR HU IT LT LV MT NL PL PT RO SK SL SV.

Frequently Asked Questions. ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors 27 March The agreed measures include: 1. Binary Options - a prohibition on the marketing, distribution or sale of binary options to retail investors; and 2. Significant Investor Protection Concern ESMA, along with National Competent Authorities NCAs , concluded that there exists a significant investor protection concern in relation to CFDs and binary options offered to retail investors.

Leverage limits on the opening of a position by a retail client from to , which vary according to the volatility of the underlying: · for major currency pairs; · for non-major currency pairs, gold and major indices; · for commodities other than gold and non-major equity indices; · for individual equities and other reference values; · for cryptocurrencies; 2.

This will provide an overall guaranteed limit on retail client losses; 4. A restriction on the incentives offered to trade CFDs; and 5. Next steps ESMA intends to adopt these measures in the official languages of the EU in the coming weeks, following which ESMA will publish an official notice on its website. Translated versions: BG CS DA DE EL ES ET FI FR HR HU IT LT LV MT NL PL PT RO SK SL SV Frequently Asked Questions.

pdf ON THE SAME TOPIC. ESMA consults on rules for passporting for investment firms 17 November ESMA issues an opinion on Product Intervention Measure on Futures taken by Germany 26 October ACER and ESMA enhance cooperation to strengthen oversight of energy and energy derivative markets 18 October ESMA announces strategic priorities for the next five years 10 October ESMA reminds firms of the impact of inflation in the context of investment services to retail clients 27 September ESMA publishes final guidelines on MiFID II suitability requirements 23 September ESMA finds NCAs' scrutiny and approval of prospectuses satisfactory 21 July ESMA and EBA publish guidelines to harmonise the supervisory review and evaluation process of investment firms 21 July ESMA proposes key risk indicators for retail investors 20 July ESMA identifies data reporting services providers to be supervised directly 12 July

Negative balance protection on a per account basis. ACER and ESMA enhance cooperation to strengthen oversight of energy and energy derivative markets 18 October Why Forex Traders Might Care About Tech Stocks. Orbex however, targets a different type of clientele. ESMA consults on rules for passporting for investment firms 17 November

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