When answering Parliamentary questions on September 16, 2016, Netherlands’ Minister of Finance Dijsselbloem has announced that he will start working together with the Netherlands Authority for the Financial Markets (AFM) on an advertising ban in the Netherlands for toxic investment products for consumers. The AFM has been warning consumers for some time about binary options and the leverage effect of Contracts for Difference (CFDs).
France AMF has already banned advertising on Forex products, binary options and some CFDs, followed by a complete ban on all leveraged Forex, CFD and binary options trading in Belgium.
Merel van Vroonhoven, chair of the AFM Executive Board, commented:
We consider it very important to introduce an advertising ban on binary options and other toxic investment products. Advertising for these investments entices consumers with the prospect of earning money fast, but it is actually the case that you can easily lose all of the money you have put in.”
In accordance with the advice issued by the AFM to the Minister, it is being assessed how the advertising ban could be structured and to which investment products it should apply.
The AFM considers it a step in the right direction to protect consumers against the marketing of providers of toxic investments. It often involves financial instruments with a large leverage as a result of which the investor could sustain considerable losses, such as the case with CfDs. Moreover, new European regulations (MiFID II) are expected in January 2018, which will make it possible to impose stricter requirements on high-risk investment products for consumers.
In the Netherlands, these types of high-risk investments are mainly offered by foreign parties. The advertising ban will also apply to providers who operate in the Netherlands on the basis of a European passport. The AFM works together with other European supervisors to prevent aggressive providers from entering the European market. The AFM has since started a further analysis of the Dutch market for CfDs, which is expected to be completed by the end of this year.
More on the AFM’s plans can be seen here.