FCA update on CFD products and CP16/40

On 29 June 2017, the European Securities and Markets Authority (ESMA) issued a public statement in respect of the work being undertaken in relation to the sale of contracts for differences (CFDs), binary options and other speculative products to retail investors. 

ESMA confirmed its concerns that these products continue to pose a high risks to consumers. ESMA also confirmed that its previous publications addressed to EU Regulators and investors, as well as measures already taken in Member States on leverage limits and marketing restrictions, may not be sufficient to reduce the risks and increase consumer protection.

As a result, ESMA is now considering further initiatives including the use of its product intervention powers under Article 40 of MiFIR, and the application of product governance requirements and new conduct rules under MiFID II.

Following this statement, the FCA has confirmed that they will wait for the outcome of ESMA’s discussions before making final conduct rules for UK firms providing CFDs or binary options to retail clients, and in any case no later than the first half of 2018.

The FCA will continue to engage with ESMA in order to support higher investor protection in the UK, and will conduct further policy work in light of the responses received to CP16/40. This work will focus on appropriateness tests, and may include a further request of information from CFD firms over the coming months.

For further information, or to discuss any of the points raised in this article in more detail, please contact the Regulatory Consulting team here.


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