Ten days ago, the finance minister of The Netherlands and Chairman of the Eurogroup Jeroen Dijsselbloem was answering questions in parliament. When asked about the latest developments regarding “toxic investment products”, he committed that his institution will coordinate with the Netherlands Authority for the Financial Markets (AFM) to ban such products.
We consider it very important to introduce an advertising ban on binary options
The AFM has clarified its stance on the details about what products it considers toxic. The regulator has been warning investors about binary options and the risks associated with high leverage on contracts for difference (CFDs), and the government appears to have focused in the same direction.
The Chairman of the AFM Executive Board, Merel van Vroonhoven, stated: “We consider it very important to introduce an advertising ban on binary options and other toxic investment products.”
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“Advertising for these investments entices consumers with the prospect of earning money fast, but it is actually the case that you can easily lose all of the money you have put in,” he elaborated.
MiFID II in January 2018 Expected to Facilitate Further Action
After an investigation into the legal ways in which the Dutch financial regulator can prohibit the advertising of such risky products, the status of the industry in the country is unclear. While ‘forex’ and ‘foreign exchange trading’ have not been explicitly mentioned, the high leverage that some companies are offering to their clients is certain to catch the attention of the regulators.
The AFM has highlighted in a statement that it is also expecting the new European regulations (MiFID II) to come into force in January 2018. According to the regulator, the provisions in the new regulatory framework will make the imposition of stricter requirements on high-risk investment products for consumers much easier.
Dutch authorities have committed to a detailed analysis of the CFDs market by the end of this year and are in close cooperation with other authorities across the continent that have been providing passporting services into the Netherlands.
European supervisors appear to be keen to prevent aggressive providers from entering the single market.