On 2 April 2019, the European Securities and Markets Authority (ESMA) published an opinion on the product intervention measure relating to binary options proposed by the FCA.

Our blog on the FCA ban on the sale of binary options to retail clients can be found here.

National competent authorities (NCAs) may take product intervention measures in accordance with Article 42 of MiFIR. At least one month before a measure is intended to take effect, an NCA must notify all other NCAs and ESMA of the details of its proposed measure and the related evidence, unless there is an exceptional case where it is necessary to take urgent action.

In accordance with Article 43 of MiFIR, ESMA performs a facilitation and coordination role in relation to such product intervention measures taken by NCAs. In particular, after receiving notification from an NCA of its proposed measure, ESMA must adopt an opinion on whether it is justified and proportionate. If ESMA considers that the taking of a measure by other NCAs is necessary, it must state this in its opinion.

The FCA has notified ESMA that its national measure is the same as ESMA’s measure, with the difference that it will also apply to the binary options referred to in Article 1(3)(b) of ESMA’s measure (so called securitised binary options).

Having considered the matter, ESMA’s opinion concludes that the FCA’s national measure is justified and proportionate.

ESMA’s opinion also concludes that it is necessary for NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measure.