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ESMA to prohibit options and restrict CFDs

ESMA to prohibit options and restrict CFDs

The ESMA has recently issued a press release confirming its decision to prohibit binary and digital options and impose restrictions on CFDs. You may recall ESMA’s original proposals being made back in December, when IQ Optoion had mentioned that such changes in regulations were to be expected. While options will be banned altogether, CFDs will face the following restrictions:

  • Leverage limits on opening positions (30:1 for major currency pairs; 20:1 for non-major currency pairs, gold and major indices; 10:1 for commodities other than gold and non-major equity indices; 5:1 for individual equities and other reference values; 2:1 for cryptocurrencies)
  • A margin close out rule on a per account basis
  • Negative balance protection on a per account basis
  • Restriction on the incentives offered to trade CFDs
  • Standardised risk warningThe new measures will be published in the Official Journal of the EU once they are adopted in the languages of the EU. The options ban will take effect one month later and the restrictions for CFDs will start to apply two months after the publication in the OJ. Overall, this should give you about two months to promote options in regulated countries before the new rules are implemented.

As a substitute for forbidden trading instruments, IQ Option is planning to launch a new product that can be advertised to European clients. What’s more, you will be able to use Facebook and AdWords to promote this particular solution, which could give you a substantial advantage, especially in the light of the upcoming Google’s restrictions (covering ads for CFDs, forex, options and cryptocurrencies) and Facebook’s ban (of ads for binary options and cryptocurrencies) that’s already in place.