Austria’s FMA (Financial Market Authority) is the latest European regulator that is going to make ESMA’s product intervention measures permanent. The European Securities and Markets Authority gave two positive opinions this Monday to the Austrian financial watchdog’s newly proposed product intervention measures that deal with binary options and CFDs.
The Austrian FMA is confident that the restrictions for both types of products should be made permanent. The regulatory measures they have proposed for binary options and contracts for difference (CFDs) will broadly be the same as those issued by the ESMA, albeit with small adjustments.
FMA tweaks ESMA’s rules
The rules that were introduced last year by ESMA completely banned binary options and put heavy caps on the amount of leverage that was available to retail customers with regards to contracts for difference and foreign exchange (FX). The Austrian FMA said that they had informed ESMA that the new national measure regarding binary options was the same as ESMA’s national measure. However, the FMA did also say that the only difference between the two would be the Austrian FMA not expressly prohibiting market players from participating in circumvention activities.
The Austrian FMA proposed some small changes to the measures regarding CFDs which were to include “minor amendments to several of the risk warnings in ESMA’s measures,” along with including a definition of virtual currency. The third small change was, similar to the adjustment with binary options, not to expressly prohibit participating in circumvention activities.
Austria following other EU regulators
Austria’s financial watchdog is the latest in a long line of regulators that seek to implement ESMA’s temporary measures int heir own way and make them permanent. Regulators in France, Germany and the Netherlands have already done so, or are in the process of getting approval from ESMA.
France, in particular, does not want to keep relying on ESMA’s measures and will have their own detailed measures outlined by summer. Germany’s Federal Financial Supervisory Authority which is better known to market participants as BaFin simply stated that it would make ESMA’s measures permanent. In a press release, the regulator said that this measure would be taken with the intention that it would prevent attempts at evasion by providers from other EU countries.
Both the French and the German watchdogs have been deadset against the retail brokerage industry as a whole. The French regulator, in particular, has used harsh terminology when referring to retail brokerages and they have claimed that there are “six institutions, situated mainly in the European Union, have not respected [ESMA’s regulations]. This led the AMF to warn the regulators in these countries so that they make sure the regulations are adhered to.”
The English have put off introducing the regulations, with many thinking that Brexit has played a role in slowing down regulatory policymaking. However, with the Brexit talks pushed to October, the FCA has confirmed that its new regulations would be in line with ESMA’s measures and would apply from when ESMA’s measures expire.