European Securities and Markets Authority Issues Call for Evidence on Product Intervention Measures
09/30/2019The European Securities and Markets Authority has issued a call for evidence on the impact of its product intervention powers prohibiting the marketing, distribution and sale of binary options to retail clients and imposing restrictions upon contracts for difference that were marketed, distributed or sold to retail clients. ESMA is seeking feedback from all interested stakeholders, in particular investment firms and banks providing investment services (particularly those that provide CfDs or binary options captured by the product intervention measures) and consumer groups and investors. Responses should be submitted by November 4, 2019.
Under the Markets in Financial Instruments Regulation, ESMA was granted powers to prohibit or restrict the marketing, distribution or sale of financial instruments or types of financial activity. The temporary restrictions it imposed between July 2018 to July 2019 were renewed on three occasions (most recently in April this year) but expired on July 1, 2019 for binary options and on July 31, 2019 for CfDs. Most national regulators have introduced permanent national product intervention measures to address the investor protection concerns around such financial instruments. ESMA's paper includes a summary of those measures that highlights where national measures are different from ESMA's measures, such as the U.K. Financial Conduct Authority's extension of the restrictions for CfDs to CfD-like products. ESMA’s call for evidence seeks to determine the practical effects of its measures because the European Commission has asked it to report on its experience of using the powers. ESMA confirms that at this stage, no national regulators have used their product intervention powers for products other than binary options and CfDs. The U.K. FCA is additionally consulting on banning the sale to retail clients of derivatives referencing crypto-assets.
View ESMA's Call for Evidence.
View details of ESMA's April 2019 extension of product intervention measures.
View details of the FCA's proposed ban on the sale to retail clients of derivatives referencing crypto-assets.
View details of the lifting of EU restrictions on CfDs.
View details of the lifting of restrictions on binary options.
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