Danish Regulator Permanently Bans Binary Options From July

Denmark’s financial watchdog said it would permanently ban the sale of binary options to retail customers and non-professional investors from July 2019 to protect them from large trading losses.

The move of Danish Financial Supervisory Authority (FSA) does not come as a surprise as the regulator has already imposed restrictions on the trading of binary options products in 2018 based on the European mega regulator’s rules.

The European Securities and Markets Authority (ESMA) also has in place curbs on contracts for difference (CFDs) across the European Union. Overall, it constituted ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term’s first use of its new intervention powers under MiFID II MiFID II MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina Read this Term rules, which came into effect in January 2018.

The decision also mirrors the UK financial watchdog’s move which has already rolled out a permanent ban on retail selling of binary options back in April, while similar measures are under way in other countries.

The ban covers loopholes in ESMA’s temporary prohibitions

These restrictions were supposed to be temporary, but an increasing number of European decided that the best way forward was rolling out a permanent ban, as binary options were seen merely gambling products dressed up as financial instruments.

In its statement, the FSA expressed concern about how these high-risk speculative products are offered to retail investors, potentially leading to significant losses.

The FSA said the prohibition would apply to brokers operation in and from Denmark, and thus goes further by including both local dealers and those operating under the European passport regime.

“The FSA shares ESMA's and other competent national authorities' concerns about the growing number of retail customers across the EU who buy binary options and consistently lose their money. The Danish FSA also considers that the risk for retail customers will be present in both Denmark and the rest of the EU, unless the competent national authorities exercise their power to impose a permanent ban to replace ESMA's temporary ban,” said the Danish watchdog.