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#1 07-02-2020 13:42:34

johnedward
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From: Paris - France
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ESMA asks EU Commission advice on implementation of CFD rules

ESMA asks EU Commission advice on the implementation of transborder CFD restrictions


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The ESMA has asked for clarification on the implementation of rules on products upon companies operating on a cross-border basis when different Member States take intervention measures on overlapping products.

The ESMA has published its final report on intervention requirements for products under the MiFIR directive.

The temporary intervention measures on ESMA (European Financial Markets Authority) products began to apply on 1 July 2018 for binary options and on 31 July 2018 for CFDs. After several consecutive renewals, these temporary measures expired on 30 June 2019 for binary options and on 1 August 2019 for CFDs. Almost all of the relevant national authorities in the EU have now taken national product intervention measures to permanently address trader protection concerns related to these products.

In its final report, ESMA provides advice to the European Commission and also requests clarification on certain issues. These questions include the interaction of national intervention measures on products.

Article 42 (1) of MiFIR states that a competent authority may prohibit or restrict the marketing, distribution or sale of a product in or from that Member State. The reference to "in or from" could suggest that a national authority has the possibility of taking intervention measures on products which apply only in that Member State (and not from), and vice-versa.

In this context, the ESMA has published an updated FAQ which provide general guidance on national product intervention measures which a broker should apply in the case of cross-border supply of trading services when the measures considered 'apply both "in" and "from" the relevant Member States.

ESMA requests the opinion of the EU Commission on this issue. In particular, ESMA says that it would appreciate it if the EU Commission further clarified the application of intervention measures on products when several Member States take intervention measures on overlapping products. This becomes particularly relevant when the content of national intervention measures on products differs.

With regard to the other issues, ESMA warns that the short-term nature of the measures can be problematic. For intervention measures on products taken to respond to a significant problem of trader protection, given the obligation to analyse the relevant product for the taking of the initial measure, it is unlikely that the circumstances would have sufficiently changed with regard to this product so that the problem is no longer significant after a period of several months, says the ESMA.

The regulatory authority declares that it would welcome the introduction of a legal mechanism aimed at consolidating pan-EU intervention measures on products and making them permanent (for example by a EU Commission legal act consolidating temporary measures after a given period). Furthermore, if the EU is unable to consolidate the temporary measures, the regulator would welcome a further extension of the temporary nature of intervention powers for products to a year and a half.

Regarding the possibility that the regulator implements intervention measures on products in other areas, ESMA declares that it is aware that certain NCAs (national competent authority) are consulting on possible intervention measures on products concerning certain instruments related to cryptocurrencies. ESMA will continue to monitor the markets and exercise its coordinating role with regard to the measures proposed by the NCAs.

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