The EU markets watchdog ESMA will ‘ban’ the marketing, distribution and sale of binary options to retail investors, it was announced on Tuesday.
“ESMA, along with National Competent Authorities (NCAs), concluded that there exists a significant investor protection concern in relation to binary options offered to retail investors,” it said in a statement.
“This is due to their complexity and lack of transparency.”
Binary options are traditionally high-risk products but have been marketed to inexperienced investors for some time. ESMA said it had been “concerned” about how these inherently high-risk speculative products were being offered and marketed, often through targeted advertising online.
Shares in spread-betting companies plunged on the news, with IG Group (LON:IGG) currently trading down 3.43 percent and CMC Markets (LON:CMCX) down 3.14 percent at 1041GMT.
UK Investor Magazine investigated the binary options industry back in 2016, warning readers to be careful with firms offering these investments. Read the article here.
