ESMA mulls ban on sale of binary options to retail investors

first_img Facebook LinkedIn Twitter The European Securities and Markets Authority (ESMA) on Thursday issued a consultation paper that proposes possible probation curbs on the marketing, distribution, and sale of binary options and contracts for differences (CFDs) to retail clients.The measures aim to address risks to investor protection arising from these sorts of products, the paper says. Stock exchange board with abstract background alexmit/123RF Australian court finds against binary options firm Related news Share this article and your comments with peers on social media Keywords Binary options According to the paper, regulators have found that between 74% and 89% of clients that trade in these products lose money.In particular, the paper proposesan outright ban on binary optionsa series of measures targeting CFDs, including the introduction of leverage limits, a new margin close out rule, and limits on retail client losses;a restriction on trading incentives; anda standardized risk warning.“The inherent risk and complexity of these products, the marketing, distribution and sale through on-line channels and the associated aggressive marketing techniques used by a number of firms have led to significant investor protection concerns,” the paper says.ESMA is seeking feedback from investors, firms and others, on its proposals by Feb. 5.Canadian securities regulators in 2017 banned the sale of binary options to retail investors.Read: Binary options ban takes effect OSC sanctions binary options enabler Aussies join binary options ban James Langton last_img read more