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Circular C271 (ESMA Product intervention Decision on CFDs and Binary Options.)

Further to the ESMA’s product intervention decision on CFDs and Binary Options, which was communicated by CySEC via an announcement dated 28.03.18, CySEC wishes to inform CIFs that the measures on CFDs and Binary Options have been published in the Official Journal of the European Union (OJ) on 01.01.18. The measures specified in ESMA PRESS RELEASE (Q & A also available) will apply:

  1. From 01.08.18 onwards and for a temporary period of three 3-months – restriction on CFDs in respect of retail clients
  2. From 02.07.18 onwards and for a temporary period of three 3-months – prohibition on binary options in respect of retail clients

Further to a number of queries received by CySEC on whether the ESMA product intervention measures would also apply in relation to services offered to third country residents, CySEC has escalated the issue to ESMA who 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.

This position is in line with the European Commission’s guidance (EC’s Guidance) on the territorial scope of the MiFID I regime. Specifically according to Question 47.2 and the respective answer of the EC’s Guidance:

Question:            “Do MiFID rules apply to customers who are not resident in the EEA?”.

Answer:               “Yes. MiFID does not distinguish the obligations of firms to their clients according to the location of the client.”.

CySEC also wishes to remind CIFs of the content of Circular C268 and to urges them to ensure that they will fully comply with the ESMA product intervention decision.

We remain at your disposal for any further clarifications required.

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