ESMA extends the ban on binary options for another 3 months

The European supervisory authority, ESMA, announced an extension of the ban on binary instruments to retail clients in the European Union for another 3 months. The new ban will apply from 2 October 2018 year.

The ban is maintained but ...

An initial temporary ban was approved in March and took effect on July 2, and lasts until October 1. Now, ESMA has announced that it will use the option to extend it for (at least) another three months, until January 1, 2019. According to the regulations, the regulator must inform about the decision to extend the guidelines at least one month before the end date. This time he did it after a little over 1,5 months.

However, ESMA has stated that certain types of longer binary options will be exempt from this ban. The published document states that the regulator agrees to introduce binary options to the offers that meet all three of the following conditions simultaneously:

1. the time from conclude to maturity is at least ninety (90) calendar days;
2. the prospectus drawn up and approved in accordance with the Prospectus Directive (2003 / 71 / EC) is publicly available;
3. the binary option does not expose the provider to market risk for the entire binary option period, and the supplier or any of its group entities do not make a gain or loss from the binary option, other than the previously disclosed commissions, transaction fees or other related fees.

However, it was emphasized that ESMA will continue to control these products during the prohibition period, so it is not excluded that they will be completely banned again, add further conditions to be met or eliminate them.

There is no surprise (?)

Is the extension of the ban a surprise? Probably not. This decision may badly affect the situation with financial leverage and other guidelines introduced for the Forex market, which came into force on August 1 and are (initially) effective until the end of October this year. At the moment, however, there is no official information regarding these issues.

The introduction of certain exceptions to the options, however, raises some hopes - if not to remove the restrictions, then even to loosen them to a greater or lesser extent. ESMA has time to publish the information by the end of September this year at the latest.

The official ESMA message