ESMA to Renew CFD Product Intervention Measures
- The renewal will go live in May, meaning the measures will have been in place for a year
In what is likely to be the least surprising news you read all day, the European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) announced on Wednesday that it is going to be renewing its product intervention measures on contracts for difference (CFDs).
Introduced last August, these rules put caps on the amount of Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term brokers can offer retail clients when they trade in CFDs. They also prohibit certain sales and marketing practices.
The rules are not permanent, lasting only three months. But ESMA can simply renew them at the end of each of those three month periods.
And that, thus far, is exactly what the pan-European regulator has done. This new renewal will go live at the beginning of May, taking us through to the end of August and will mean that the product intervention measures have been in place for twelve months.
“ESMA has carefully considered the need to extend the intervention measures currently in effect,” said the regulator in a statement. “ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.”
Temporary now, permanent later
Though it has continued to extend the product intervention measures, the regulator may not need to do so in the future.
Since it introduced the regulations back in August of last year, a number of local regulators have issued statements implying that they are likely to put the rules into law.
In December, for instance, the UK’s Financial Conduct Authority issued a statement saying that it was planning on making the rules permanent. The British regulator also proposed a total ban on binary options and turbo certificates.
Days later, BaFin, a German regulator, said that it was going to do the same. In a statement issued at the time, BaFin said that it wanted to bring Germany’s laws in line with ESMA’s product intervention measures.
In what is likely to be the least surprising news you read all day, the European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) announced on Wednesday that it is going to be renewing its product intervention measures on contracts for difference (CFDs).
Introduced last August, these rules put caps on the amount of Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term brokers can offer retail clients when they trade in CFDs. They also prohibit certain sales and marketing practices.
The rules are not permanent, lasting only three months. But ESMA can simply renew them at the end of each of those three month periods.
And that, thus far, is exactly what the pan-European regulator has done. This new renewal will go live at the beginning of May, taking us through to the end of August and will mean that the product intervention measures have been in place for twelve months.
“ESMA has carefully considered the need to extend the intervention measures currently in effect,” said the regulator in a statement. “ESMA considers that a significant investor protection concern related to the offer of CFDs to retail clients continues to exist.”
Temporary now, permanent later
Though it has continued to extend the product intervention measures, the regulator may not need to do so in the future.
Since it introduced the regulations back in August of last year, a number of local regulators have issued statements implying that they are likely to put the rules into law.
In December, for instance, the UK’s Financial Conduct Authority issued a statement saying that it was planning on making the rules permanent. The British regulator also proposed a total ban on binary options and turbo certificates.
Days later, BaFin, a German regulator, said that it was going to do the same. In a statement issued at the time, BaFin said that it wanted to bring Germany’s laws in line with ESMA’s product intervention measures.