ESMA issues warning on sale of speculative products to retail investors

After warning on CFD trading, the European Securities and Markets Authority (ESMA) has issued a warning about the sale of contracts for differences (CFDs), binary options and other speculative products to retail investors who are unaware of the risks associated with these products, and also highlights the regulatory action taken in relation to several Cyprus-based investment firms.

The warning comes as ESMA and a number of national supervisors have observed an increase in the marketing of these products, often through aggressive practices, and at the same time, a rise in the number of complaints from retail investors who have suffered significant losses.

Steven Maijoor, ESMA

Steven Maijoor, ESMA

Steven Maijoor, ESMA Chair, said:

ESMA and national regulators still have serious concerns that firms are selling these products, which are inherently risky and speculative, to people who do not understand them.

These products are often advertised to the retail mass market via online platforms and sold without investment advice.

When these products are marketed and sold in an aggressive manner or when firms otherwise fail to comply with their regulatory obligations, this creates the conditions for retail investors to suffer significant detriment, including unexpected losses.

ESMA and national regulators are committed to working together to ensure investors receive proper protection across the EU.”

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