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France’s financial markets regulator AMF must define the types of electronic advertisements and types of investments in forex and CFDs to be encompassed by the advertising ban in France introduced by Article 28 of the Sapin II bill, passed by the country’s National Assembly earlier this month.
According to the article in question, the ban is on “all promotional (advertising) communication from investment services providers to unprofessional clients regarding investment services for financial contracts which are not traded on a regulated market or through a multilateral trading system and whose maximum risk is unknown at the time of purchase, or for which the risk of loss is higher than the size of the initial investment or when the potential risks are not clearly understood in the context of eventual corresponding benefits.” The AMF, as part of its mission to protect savings, will describe in detail the exact types of electronic advertising and instruments covered by the ban.
As it becomes clear, the Article 28 does not provide detailed definitions on the types of advertising and instruments, but according to a French doctor of law, Charlie Bobillier, quoted by the site Zonebourse.com, the new ordinance will be enacted shortly.
It concerns predominantly advertising on the internet: banners, video, pop-up windows, etc., but also includes direct e-mailing, TV and radio advertising. According to Bobillier, the AMF has already said that the main entries on its instrument list are binary options and contracts for direct or indirect investments in forex and CFDs with a “leverage greater than 5”.
The advertising ban includes all providers of such investment services registered and regulated in other EU countries and the European Economic Area (Iceland, Norway and Liechtenstein).
The administrative fines will be of up to €100 000 and can be imposed to all parties “involved in any way in the creation or distribution of advertising on risky financial contracts”, such as advertisers and broadcasters.
Additionally to the electronic advertising ban, the law prohibits “patronage and sponsorship”, including of sports by providers of the investment services on AMF’s list.
The first reports on the proposed ban of advertising of binary options and certain forex and CFD instruments appeared this summer with the tabling of the Sapin II bill in France’s parliament following AMF’s call on banning advertising and scrutiny on football sponsorships.
Since then Belgium has banned “distribution” of forex and binary options in the country, while Netherlands and Germany are considering similar measures.