France Commences Enforcement of New Advertisement Restrictions
The French Autorite des Marches Financiers (AMF) announced this week that it has started enforcing the new Sapin II regulations, which call for a ban on electronic advertisement and marketing by companies that offer binary options and Contracts-for-Difference (CFDs). The law, which was approved early in January, enacts a broad range of changes to the country’s financial systems, also includes strong language regarding the use of electronic media for marketing by binary options, forex and CFD brokers.
According to reports, the AMF has already started actively enforcing the regulations, and has already sent several requests to different websites and brokers to take down existing marketing campaigns. Additionally, the AMF has also created new regulations and requirements for brokers who wish to operate in the country. The action is a further sign that binary options’ image problem has deteriorated significantly, as regulators across the European Union ratchet up the fight against the industry.
AMF Locks Down Electronic Marketing
The AMF took its first official steps to curb the electronic marketing of binary options and forex within French borders this week as it began enforcement of the newly passed Sapin II guidelines, which create new regulations for providing financial services in the country. The new laws are aimed at protecting consumers from an industry that regulators in France and across Europe have come to view as dangerous and many times predatory.
Over the past week, the AMF has begun sending requests to brokers and affiliate marketers instructing them to remove all electronic advertising materials from their sites and any online locations that are driving French traffic to their sites. While the specifics are still being actively worked out, Sapin II regulations include any binary options or forex brokers. It is important to note, however, that while advertisements and marketing are banned, these companies can continue to sell their services to traders in the country—assuming they are properly regulated.
The new regulations also nail down who is permitted to advertise electronically. For now, both binary options and forex brokers are completely banned from any electronic marketing, while CFD providers are still able to do so, provided they maintain compliance with new regulations.
In addition to the ban, the new law also outlines some new restrictions on brokers to protect customers. For one, the AMF will require all brokers who are offering binary options and CFDs to include guaranteed stop loss positions for customers, as well as negative balance protections to ensure that customers cannot inadvertently lose massive sums of money. Moreover, clients will be required to introduce a stop-loss position before engaging in any trade, and must be unable to change the position once a trade has been initiated.
Sunset for Binary Options in France?
Although the new law does not outright ban binary options from the country, it does raise some serious questions for the industry in France. For one, binary options might be forced out simply by necessity. While many customers seek out binary options, the industry relies on marketing and advertising to direct traffic to their sites, and especially electronic media such as browser ads, e-mail campaigns, and other similar strategies. Without it, the long-term profitability issue might drive brokers to find friendlier shores and leave the country without a presence of regulated brokers.
Furthermore, the new policies signify what is increasingly becoming the new status quo in the region. Several other European nations have already started drafting or even implementing similar laws. With the tide rapidly turning against the industry, observers can only wonder if the sun has set on binary options across Europe.