The regulatory picture for EU brokers is about to become a touch more complex, starting from August 1. As the pan-European product intervention rules applied by the ESMA lapse on that date, brokers will have to get informed and apply separate rulesets for every different member country.
While the majority of EU members are continuing with the same measures, Cyprus and Poland could be going into a different direction, namely introducing a new category for more experienced traders who may use 50:1 leverage.
After the CySEC launched its consultation paper at the end of May, it is expecting to announce the final decision on the national product intervention measures by the end of July. After its decision, the regulator will inform the ESMA and other National Competent Authorities in Europe about the final version of the national regulation.
As the pan-European financial regulator receives the CySEC’s submission, it will have to conduct its examination and issue an opinion on the proportionality of the intended national product intervention measures.
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In the intervening period, the ESMA’s decision to temporarily restrict contracts for differences in the European Union and the renewals of that decision will lapse on August 1. The CySEC highlights that all Cyprus Investment Firms must continue applying the content of the measures under the ESMA Decision on CFDs despite the deadline lapsing.
The official publication of the new measures may take up to two months from now, which leads to sometime in the middle of September. In the meantime, brokers operating across the EU would have to apply the product intervention measures of the respective national regulator, depending on where the product is offered.
CIFs should also comply with the marketing, distributing or selling of CFDs in the territory of the respective EU member state. If the country hasn’t yet adopted its national rules, the broker would need to apply the existing ESMA measures until the local regulator changes its position.
According to the CySEC’s circular published today, any company which is not adhering to the above-mentioned rules would be violating European law.
“CySEC will not hesitate to use the supervisory and enforcement powers at its disposal to uphold compliance with the above,” the Cypriot regulator outlines.