IG Group (LON:IGG), one of UK’s and Europe’s largest forex brokers, said the introduction of the set of restrictions on forex and binary options brokers in France will not impact its activities.
We remind you that last November France’s National Assembly passed the Sapin II law, which, among other things, contains a ban on the advertising in electronic media of “highly speculative and risky financial contracts“, i.e. binary options and CFDs with leverage greater than 1:5. It was expected that the ban, carrying fines of up to €100 000, would come into effect some time in January 2017, at the latest. Following the vote, France’s financial markets regulator AMF was due to fine tune the ban and clarify the regulations.
Apparently it has done so and the AMF has accepted the general rulebook has been adopted. The ban has not come into effect yet, but those brokers willing to operate in France, must provide guaranteed stop loss on client positions and a negative balance protections. Before opening a position, clients must set a stop loss, which cannot be changed after the position is opened.
“Overall, the Company does not believe these restrictions will have a material negative impact on its business in France in the short term and could ultimately enhance the Company’s future competitive position in the country,” IG said and added that believes the AMF’s approach will provide substantial protection for consumers and greatly improve standards in the sector.
France’s AMF was among the first national regulators that woke up to the fact that more often than not forex and binary options brokers were abusing the existing rules, or their lack thereof, and the majority of their clients were losing a lot of money. The French regulator raised the issue in the summer and proposed tighter rules, but its example was followed by the Cyprus Securities and Exchange Commission, Germany’s BaFin, UK’s FCA, as well as the regulators in Belgium and Netherlands.