Breaking: Netherlands to Introduce Ban on Binary Options and CFDs Advertising

Ten days ago, the finance minister of The Netherlands and Chairman of the Eurogroup Jeroen Dijsselbloem was answering questions in parliament. When asked about the latest developments regarding “toxic investment products”, he committed that his institution will coordinate with the Netherlands Authority for the Financial Markets (AFM) to ban such products.

We consider it very important to introduce an advertising ban on binary options

The AFM has clarified its stance on the details about what products it considers toxic. The regulator has been warning investors about binary options and the risks associated with high Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term on contracts for difference (CFDs), and the government appears to have focused in the same direction.

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The Chairman of the AFM Executive Board, Merel van Vroonhoven, stated: “We consider it very important to introduce an advertising ban on binary options and other toxic investment products.”

“Advertising for these investments entices consumers with the prospect of earning money fast, but it is actually the case that you can easily lose all of the money you have put in," he elaborated.

MiFID II in January 2018 Expected to Facilitate Further Action

After an investigation into the legal ways in which the Dutch financial regulator can prohibit the advertising of such risky products, the status of the industry in the country is unclear. While 'Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term' and 'foreign exchange trading' have not been explicitly mentioned, the high leverage that some companies are offering to their clients is certain to catch the attention of the regulators.

The AFM has highlighted in a statement that it is also expecting the new European regulations (MiFID II) to come into force in January 2018. According to the regulator, the provisions in the new regulatory framework will make the imposition of stricter requirements on high-risk investment products for consumers much easier.

Dutch authorities have committed to a detailed analysis of the CFDs market by the end of this year and are in close cooperation with other authorities across the continent that have been providing passporting services into the Netherlands.

European supervisors appear to be keen to prevent aggressive providers from entering the single market.