Breaking Forex Industry News… Following our recent report that France’s financial regulator AMF has banned all advertising of Forex products, binary options and some CFDs, LeapRate has learned that Belgium’s regulator FSMA has taken the measure a step further and banned not just the advertising and marketing aspect, but also offering these products for sale to Belgian traders altogether.
Meaning, a total ban on leveraged financial products trading in Belgium for retail traders.
The ban includes products being offered by brokers regulated elsewhere in the EU (such as by the FCA in the UK or by CySEC in Cyprus), even when the licenses of those brokers is passported via MiFID to Belgium.
Both the French ad ban, and the Belgium advertising-and-trading ban, are apparently the result of increased complaints being made over the past year by retail traders in both countries to their respective country regulators. The complaints have centered on two main issues – aggressive marketing of leveraged products (especially by binary options brokers), and outright fraud, such as the inability of traders to withdraw money from their accounts at many brokers.
The Belgium ban comes into effect later this week, on August 18.
The ban is somewhat surprising, in that Belgium’s regulator is typically a follower, and not a leader, in financial market regulation. With a smaller country to regulate (Belgum has a population of about 11 million) and a much smaller budget and resource pool than larger financial regulators in Europe, the Belgian FSMA typically looks to decisions implemented by the FCA, the AMF, Germany’s BaFin and others in setting its own rules. However in the case of Forex it looks like the FSMA is taking a very aggressive lead role, possibly encouraged by the recent French Forex ad ban.
Some quotes were formally issued on the matter by Belgian authorities, as follows.
Minister for Employment, Economy and Consumer Affairs, Kris Peeters:
This Regulation contributes to better protection of consumers of financial products. Henceforth, it will be clear to everyone that binary options and other speculative derivatives have no place on the Belgian retail market.
Minister of Finance, Johan Van Overtveldt:
In recent years, we have seen a rise in the number of foreign offerors of products such as binary options that approach the Belgian market without having an authorization and /or a published prospectus. This Regulation will help combat such offers.
FSMA Chairman Jean-Paul Servais:
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.
More on the Forex, CFD and binary options trading ban can be seen on the FSMA’s website (in French). LeapRate will continue to cover this story as it develops.