The rules will echo ESMA’s temporary measures, however the FCA will extend the CFD restriction to capture closely substitutable products (such as turbo certificates).
By Rob Moulton, David Berman, Charlotte Collins, and Gabriel Lakeman
The FCA has launched two consultations on:
Banning the sale, marketing, and distribution of binary options to retail consumers (CP18/37)- Restricting the sale, marketing, and distribution of contracts for difference (CFDs) and similar products to retail customers (CP18/38 and Annex)
These measures are largely the same as ESMA’s temporary product intervention measures in relation to CFDs and binary options, which were first announced in March 2018 (see Latham’s related blog post for more detail). The ESMA measures, which apply for a maximum of three months at a time, but can be extended by ESMA, have already been renewed twice. At the time ESMA’s measures were first announced, the FCA stated that it expected to consult on whether to apply them in the UK on a permanent basis.
The European Securities and Markets Authority (ESMA) has announced the first use of its new product intervention powers under MiFID II. ESMA had announced before MiFID II came into force that it would introduce such measures, and had launched a brief call for evidence on its specific proposals on 18 January 2018. Despite receiving almost 18,500 responses to the proposals (many of which were presumably objections from the industry), ESMA has pressed ahead regardless, suggesting that the consultation was a mere formality.