MFSA: forex, CFDs, binary options bring high risk of loss

MFSA: forex, CFDs, binary options bring high risk of loss

Do not invest more money than you can afford to lose.


The Malta Financial Services Authority (MFSA) joined the list of regulators expressing concern with the risk associated with trading in forex, CFDs and binary options.

In a message to the public and “namely to retail investors”, the MFSA “strongly advises investors and potential investors to exercise caution and be vigilant when seeking to invest in these speculative products”. The regulator also advises that potential investors make sure the service provider is duly authorized and to seek professional investment advice.

The MSFA reminds the public that the European Securities and Markets Authority (ESMA) has already warned that forex, CFDs and binary options are complex and highly speculative investment products, but the marketing of the brokers offering them is often misleading and the potential investors could fail to grasp the risk associated with them.

“These products are often advertised via online platforms and are sold without investment advice which has resulted in significant detriment and loss to retail investors”, the MFSA wrote. “Unauthorized and unregulated entities are also offering these products which is of particular concern as it significantly increases the risk for investors who may become victims of fraudulent scams.”

MFSA is one of many regulators who are either expressing their concern with spot forex, CFDs and binary options, or are taking more serious measures. Trading in such products is already a fact in Belgium, while their advertising is forbidden in France.

Recently Italy’s financial services regulator CONSOB also attacked those products, while the Netherlands AFM is seeking to ban theeir advertising.

In the end of 2016 UK’s FCA and Germany’s BaFIN announced their plans to set leverage caps and other restrictions on CFDs, while CySEC put similar measures in effect.

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