On December 7, the UK Financial Conduct Authority (FCA) published a consultation paper on product intervention measures for retail binary options.
The FCA is proposing to prohibit the sale, marketing and distribution of binary options in or from the UK to retail consumers by creating new rules in its Conduct of Business sourcebook (COBS).
The FCA has expressed significant concerns regarding investor protection from the sale of binary options to UK retail consumers. The FCA has justified these concerns based on evidence of aggressive and/or misleading marketing of these products, their inherent complexity and lack of transparency, and the level (and speed) of retail consumer losses experienced when trading binary options.
The consultation closes to comments on February 7, 2019. The FCA will aim to publish a policy statement by March 2019. In the meantime, the FCA reminds firms that they need to continue to comply with similar intervention measures made by the European Securities and Markets Authority (ESMA), for as long as ESMA’s decision notice in relation to such measures is in force in the UK.
The FCA’s consultation paper is available here.