2. What is prohibited under the Regulation?

The Regulation consists of two elements. The first element is a ban on distribution to consumers via electronic trading platforms of:

  • binary options;
  • derivative contracts whose maturity is less than one hour;
  • derivative contracts with leverage, such as contracts for difference (CFDs) and rolling spot forex contracts.

The second element is a ban on a number of aggressive or inappropriate distribution techniques ('cold calling' via external call centres, inappropriate forms of remuneration, fictitious gifts or bonuses, etc.) used when distributing OTC derivatives to consumers.

The Regulation applies only to what are known as OTC instruments. It therefore does not apply to the distribution of instruments traded on a regulated market or on a multilateral trading facility operated by a market operator. These two types of market infrastructure allow buy and sell intentions to come together and are thus multilateral in nature. The FSMA considers that this multilateral element, as well as the settlement systems associated with it, in itself represents a guarantee to the consumer. For this reason, it does not seem advisable at this stage to extend the prohibition to those types of instruments.