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The French prohibit Forex and binary options

The French prohibit Forex and binary options

created Paweł Mosionek15 February 2017

Autorité des marchés financiers (AMF), or the French financial supervisory commission (equivalent to the Polish Financial Supervision Authority), issued new guidelines last month that clearly ended marketing activities of a certain type on the Internet by local Forex brokers, binary options, and even affiliate partners. Now, after the passing of the transition period, this ban began to be enforced.

"Yes" to CFDs. "No" to currencies and binaries

Over the past week, the regulator has contacted brokers as well as partner and marketing companies operating on the French market, requiring them to immediately remove advertisements, promotional materials and cease all other advertising activities that violate the new "Sapin 2" guidelines. It is worth noting that the above-mentioned prohibition covers only currency pairs and binary options. CFDs, or Contracts for Difference, can still be promoted. However, they must meet the conditions set out in Sapin 2.

This is not the end of the changes implemented by AMF. Brokers operating in France must introduce the so-called Guaranteed Stop Loss levels. Before concluding a transaction, the trader must enter the Stop Loss level, which cannot be increased, but only reduced after the position is opened. In addition, the condition of protection against the emergence of a negative balance (the so-called Negative Balance Protection).

Comment of Forex Club

The measures taken by the French regulator will primarily contribute to an increase in safety ... But only for customers. Negative Balance Protection is definitely something traders are looking for after Black Thursday on January 15th that will give them more comfort. Reducing the number of advertisements also means that people who are not ready for it due to the level of their knowledge and experience in investments will become interested in this difficult market. Unfortunately, there are also limitations. An incorrectly entered SL value will force the transaction to be closed and reopened, bypassing traders who do not necessarily want to use this type of orders or their strategy requires modification of this hedge in both directions.

The brokerage industry will definitely feel these changes. There are a number of opportunities for abuse by customers, e.g. in news-trading or trading for price gaps. There is a good chance that the guidelines will increase transaction costs (to make up for guaranteed SLs and protection against overdrafts) and a decrease in the quality of services offered. The lack of advertising is also a problem with reaching new customers, even those properly prepared.

The question then is: do brokers certainly earn it and what else will come up with AMF?

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About the Author
Paweł Mosionek
An active trader on the Forex market since 2006. Editor of the Forex Nawigator portal and editor-in-chief and co-creator of the website. Speaker at the "Focus on Forex" conference at the Warsaw School of Economics, "NetVision" at the Gdańsk University of Technology and "Financial Intelligence" at the University of Gdańsk. Twice winner of "Junior Trader" - investment game for students organized by DM XTB. Addicted to travel, motorbikes and parachuting.