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Update: As we reviewed the original French version of FSMA’s communiqué, we found out that that the exact wording is “interdiction de commercialisation auprès du public”, which in fact means ban on public marketing (of derivatives). However, in the English version of the document the text says “ban on distribution” (of derivatives).
In a communiqué on its website, the Belgium Financial Services and Markets Authority (FSMA) announced that its Regulation on distribution of ‘over-the-counter’ (OTC) derivatives has been approved. As a result, distribution of Forex, CFDs, and Binary options among Belgian retail clients is banned from 18 August 2016.
According to the lawmakers, these products are extremely risky, often involving transactions over a very short period and without any connection to the real economy.
The Regulation applies to unlisted OTC derivatives only. It does not apply to derivatives that are admitted to trading on a regulated market or on a multilateral trading facility.
The new regulatory framework also involves a ban on a number of aggressive or inappropriate distribution techniques (such as cold calling via external call centers, inappropriate forms of remuneration, fictitious gifts or bonuses, etc.), often used when distributing OTC derivatives to clients.
Jean-Paul Servais, the Chairman of the FSMA, commented: ‘The FSMA has repeatedly issued warnings about the risks associated with these products. Other supervisory authorities and ESMA have done likewise. Yet the FSMA continues to receive complaints about these products. Therefore, it proposed establishing a framework regulating the distribution of OTC derivatives and to prohibit the distribution of certain types of these products.’
The news on the Belgium OTC derivatives ban comes shortly after the French regulator AMF announced that it is considering a ban on advertising of “highly speculative and risky financial contracts“ to the general public in France.
Earlier in July the European Securities and Markets Authority (ESMA) published a document warning of the risks of trading in CFDs, binaries and other speculative financial instruments, such as rolling spot forex.