EU Restrictions on Contracts for Difference Lifted in Wake of National Measures

The European Securities and Markets Authority has announced that it will not again renew its product intervention measure for Contracts for Differences. ESMA's product intervention powers under the Markets in Financial Instruments Regulation allow it to impose temporary prohibitions or restrictions on certain financial instruments, financial activities or practices to address a significant investor protection concern in the EU. ESMA's first restrictions on the marketing, distribution and sale of CfDs to retail clients applied from August 1, 2018 and was then extended every three months because ESMA did not consider that the consumer protection risk had been addressed. ESMA's view is that because most national regulators in EU member states have now adopted permanent measures, its own temporary restrictions do not need to be extended. The U.K. Financial Conduct Authority has imposed permanent restrictions on the sale, marketing and distribution of CfDs and CfD-like options to retail consumers. The rules will apply to all CfDs entered into from August 1, 2019, and to CfD-like options entered into from September 1, 2019.

ESMA's temporary restrictions will automatically cease from the end of the day on July 31, 2019. ESMA will continue to monitor the markets to assess whether any other action is necessary.

View ESMA's announcement.

View details of the first decision to restrict the sale of CfDs.

View details of ESMA's lifting of the ban of sale of binary options to retail clients.

View details of the FCA's restrictions on the sale of CfDs to retail clients.

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