The Cyprus Securities and Exchange Commission (CySEC) has issued an announcement to Cyprus Investment Firms (CIFs), warning against the provision of a litany of products including contracts for difference (CFDs), binary options, and foreign exchange (FX) within France, according to a CySEC circular.
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Last year, France’s financial regulatory watchdog Autorité des Marchés Financiers (AMF) introduced a ban on the online advertisement of forex and binary options products in the country. The move was largely expected after Finance Magnates warned about the prospect in May 2016.
French law prohibits the offering of binary options contracts, whether directly or indirectly related to FX, and some CFDs where the leverage is greater than 1:20. As such, CySEC is reiterating the stipulations of French legislation that do not allow any offerings that do not comply with the AMF’s regulation.
This includes a refrain from addressing or soliciting clients via electronic means or marketing communications or providing investment services on financial derivatives that pertain to any of the aforementioned asset classes. Moreover, all of the following characteristics of offerings are prohibited by French law:
- The maximum risk is unknown at the time the contract is entered into
- The risk of loss is greater than the amount initially invested
- The risk of loss compared to the potential advantages is not reasonably understood with regard to the particular nature of derivative