Shearman & Sterling LLP | Financial Regulatory Developments Focus | UK Financial Conduct Authority on Onshoring the EU Temporary Product Intervention Measures
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  • UK Financial Conduct Authority on Onshoring the EU Temporary Product Intervention Measures
    02/22/2019
    The U.K. Financial Conduct Authority has published a statement on onshoring of the European Securities and Markets Authority's temporary product intervention measures on retail contracts for difference and binary options products.

    In June 2018, ESMA issued decision notices prohibiting the marketing, distribution or sale of binary options to retail clients and restricting the marketing, distribution or sale of CFDs to retail clients. These decisions have been renewed by ESMA and are currently due to expire on April 1, 2019 for binary options and April 30, 2019 for CFDs. Under the European Union (Withdrawal) Act 2018, the decisions will become part of U.K. domestic law on March 29, 2019, if the U.K. leaves the EU on that date without a ratified Withdrawal Agreement.

    The FCA has published two consultation papers (on December 7, 2018) on its proposals to make ESMA's temporary product intervention measures permanent in the U.K. The FCA's proposed interventions are the same in substance as ESMA's, although it is also proposing to apply its rules to closely substitutable products and on extending these measures to exchange-traded derivatives. The consultations closed on February 7, 2019. The FCA states that it is continuing to consider the consultation feedback and intends to publish a Policy Statement and any final Handbook rules in March 2019 for binary options, and April 2019 for CFDs and CFD-like options. The FCA expects its finalized rules to apply very shortly after publication to coincide with the dates that ESMA's restrictions expire. The FCA confirms that, if it does not bring in its final rules before ESMA's measures cease to have effect in the U.K., it will consider adopting similar temporary intervention measures to ensure that consumers remain protected.

    View the FCA's statement.

    View details of the FCA's December consultations.

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