BaFin to Implement Permanent Binary Options Measures

The regulator has put in prohibition measures to come into effect once ESMA’s expire.

After initially stating its intention to make the ban of binary options permanent in Germany towards the end of last year, the Federal Financial Supervisory Authority in Germany, more commonly referred to as BaFin, has yet again restated this intention.

This Monday, the German regulator announced that as of July 2, 2019, the marketing, distribution, and sale of binary options to retail clients would continue to remain prohibited in the country, if the European-wide measures are not renewed.

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The watchdog has set out its intentions in a general administrative act in response to the expiry of the European Securities and Markets Authority’s (ESMA) product intervention measures on July 1, 2019.

According to BaFin, binary options pose a lot of risks for investors: “As binary options typically are extremely short-term instruments, it is difficult for retail investors to accurately assess the risk-return profile. 

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“Moreover, binary option providers usually act as the direct counterparty to their clients’ trades. This places the provider’s interests in direct conflict with those of its investors.” 

As Finance Magnates reported, BaFin first announced that it was planning to adopt permanent binary options prohibition measures back at the end of November of last year.

European Regulators Implement Permanent Product Measures

The German regulator is not alone in its actions. Earlier today, the Financial Conduct Authority (FCA) confirmed the rules that it will use to regulate the retail trading industry, relating to contracts for difference (CFDs).

As expected, the British regulator is going to adopt leverage caps for CFDs, ranging from 2:1 to 30:1. These leverage restrictions are similar to those put in place by ESMA last August.

The Cyprus Securities and Exchange Commission (CySEC) is another notable regulator who announced that it would implement its own national measures. Although drawing inspiration from ESMA, the Cypriot regulator put its own twist on things by proposing three tiers of leverage.

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