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FCA Statement on ESMA’s CFD & Binary Options Measures ahead of Brexit

27th February 2019

FCA Statement on ESMA’s CFD & Binary Options Measures ahead of Brexit

As we have written about previously, the European Securities and Markets Authority (ESMA) have had temporary intervention measures in place since August last year, prohibiting binary options and restricting contracts for difference products (CFDs) being sold to retail clients.

The UK Regulator have now issued a statement that these temporary measures will become part of UK domestic law on the day the UK leaves the EU, as part of the EU (Withdrawal) Act. Until such time, UK firms are required to comply with ESMA’s measures until they expire in April (Binary options on 1st April 2019 and CFDs on 30th April 2019).

In the regulator’s statement, the FCA informs that they are continuing to prepare for a range of scenarios for the UK’s withdrawal from the European Union, which includes if the UK were to leave the EU on 29 March without a withdrawal agreement and implementation period having been ratified between the EU and the UK Government.

If for any reason there is a period when ESMA’s measures have ceased to have effect in the UK and before UK permanent measures take effect, then the FCA have said “we will consider adopting temporary product intervention measures to replicate ESMA’s. This will ensure no loss of protections for UK consumers in a period between ESMA’s existing interventions ceasing to have effect in the UK, and finalising our domestic approach.”

In December, the FCA published Consultation Papers that proposed to make ESMA’s temporary product intervention measures for both Binary Options and CFDs permanent in the UK. The proposed measures for the UK are essentially the same in substance as ESMA’s, although the FCA are additionally also proposing to also apply these rules to closely substitutable products. The consultation (CP18/38) regarding extending the measures for CFDs to other complex derivatives and closely substitutable products closes in just over a week’s time on 7 March 2019 and the regulator is anticipating that a Policy Statement and final Handbook rules for CFDs and CFD-like options will be ready for publishing in April.

For the avoidance of doubt, remember that reference to CFDs by the regulator include financial spread bets and rolling spot forex products.

To have your say on the regulator’s proposals for product measures against closely substitutable products, remember there’s only just over a week left before the deadline of 7th March 2019.

Related reading:

• Tough Rules for CFD & Spread Betters Continue
• Reminder for CFD & Spread Bet Firms on Financial Promotions
• ESMA Renews Restrictions of CFDs & Binary Options
• CP18/38 FCA Proposes Permanent Restriction Rules for Retail CFDs
• ESMA’s CFD Product Intervention Measures Apply from today
• CFDs & Binary Options: Product Intervention Measures Agreed by ESMA

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