The Cyprus Securities and Exchange Commission (CySEC) has announced that the upcoming product intervention measures on contracts-for-differences (CFDs) and binary options will be applied to clients outside of the European Union (EU). Demetra Kalogerou, Chairwoman of , confirmed the news today in response to questions surrounding the issue from Cypriot firms.
The product intervention measures were announced in March by the European Securities and Markets Authority (ESMA). Aimed at protecting retail investors, they prohibit the sale of binary options and place severe restrictions on contracts-for-differences.
The new regulations, which were made possible by the (MiFIR), will apply to binary options from the 2nd of July 2018 and to CFDs on the 1st of August 2018. The measures will only last for three months at which point ESMA will decide whether or not to renew them for another three months.
While some companies have already started gearing up for the changes, others had hoped that they would only apply to clients within the EU’s jurisdiction. Unfortunately for this latter group, CySEC has confirmed that the ‘business as usual’ approach is not going to wash with ESMA.
In her statement today, Kalogerou stated: “ESMA…have confirmed that the application of the product intervention powers under Article 40 of MiFIR are not limited to clients who are based within the EEA. ESMA explained that the MiFID II/MiFIR regime does not discriminate on the basis of the location of clients, but rather it applies to services provided by investment firms which are authorized in the EEA.”
Kalogerou’s announcement will come as more bad news for an industry already in panic mode. ESMA’s new rules mean that many are not just rethinking their business strategy but are exiting the market altogether. For those remaining, this will send more alarm bells ringing as businesses struggle to adhere to the new regulation and remain operational.