Dutch Regulator to Make ESMA’s CFD Rules Permanent

It marks the first time the AFM has used product intervention powers handed to it by MiFID II

Following in the footsteps of several other European regulators, the Dutch Financial Markets Authority (AFM) said on Thursday that it plans to make European regulations governing contracts for difference (CFDs) and binary options permanent.

Currently, the rules, which were Introduced by the European Securities and Markets Authority (ESMA) last August, must be renewed by the pan-European regulator every three months.

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As a result, some regulators have decided to make them permanent. In December of last year, the UK’s Financial Conduct Authority said it was likely to do so. That was followed by similar announcements from BaFin in Germany and, last month, the French Autorité des Marchés Financiers.

Now the Dutch AFM has joined those three regulators by saying that it too will make ESMA’s regulations permanent.

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“As of 19 April 2019 the marketing, distribution or sale of binary options to retail investors in and from the Netherlands is prohibited,” said the regulator in a statement. “The marketing, distribution or sale of CFDs to retail investors in and from the Netherlands is restricted.”

Going nowhere

Most of our readers will be familiar with the composition of ESMA’s product intervention measures and thus the new Dutch regulations too.

As the AFM’s statement indicates, they put a total ban on the sale of binary options. They also place leverage caps, marketing restrictions and a ban on introductory bonuses on CFD brokers.

The AFM’s decision to make the ban permanent is also an interesting one as it marks the first time the Dutch regulator has used the product intervention powers handed to it by MiFID II and MiFIR – two pieces of European Union regulation that were introduced at the start of last year.

It’s also an indication of what many in the retail trading industry were expecting to happen but hoped wouldn’t, namely that the ‘temporary’ product intervention measures introduced by ESMA last year are going to be around for the foreseeable future.

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