Binary Options Ban Renewed By ESMA
Any brokers still hoping for a repeal of the product intervention measures, introduced earlier this year, that prohibit the sale of binary options, will have had those dreams crushed this week.
The European Securities and Markets Authority (ESMA), the regulator responsible for implementing the rules, announced on Friday that it will be renewing the ban on binary options for another three months.
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That three month period will come into effect as soon the current ban, which will also last for a total of three months, comes to an end on January 2nd.
In a statement released on Friday, ESMA said that:
“ESMA has carefully considered the need to extend the intervention measure currently in effect. It considers that a significant investor protection concern related to the offer of binary options to retail clients continues to exist.”
That decision was reached, according to the regulator, after a meeting of the regulator’s Board of Supervisors on Wednesday.
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ESMA – no love for binary options
It was always going to be the case that the regulator continued its prohibition of binary options trading.
As with leverage caps, amongst other restrictions, on contracts-for-differences (CFDs) trading, ESMA has given no indication that its position has changed with regard to binary options.
Some brokers may have been dreaming of a total rescinding of the ban after the last renewal announcement bank in August. When that was released, the regulator said that long-term investments, which it defined as over 90 days, were not a threat to retail investors.
Most brokers, however, aren’t interested in such products. Their focus has almost entirely been on swift, instant-reward trading that, in most cases, is designed to screw over the client.
And those sorts of products are unlikely to be available to brokers again in the near future.
Unless it puts permanent policy in place, something that it may do in the next couple of years, ESMA is able to continually renew the ban on binary options and that, almost certainly, is exactly what the regulator will do.
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