French Financial Watchdog Plans to Make ESMA Measures Permanent
The Autorité des marchés financiers (AMF), the main financial regulator of France, released on Tuesday its annual report. Besides the income and expenses figures, the watchdog didn’t forget to refer to the retail trading industry on several occasions. Thus, two entire sections, titled “Protection Against Unsuitable and Toxic Products” and “French Savers Are the Target of Cyber Criminals,” are discussing the retail trading space in detail. The main point is that AMF plans to adopt the changes of the European Securities and Markets Authority (ESMA) related to the contracts for difference (CFD) on a permanent basis.
AMF Continues With Tough Stance
The French regulator didn’t use a soft tone when describing CFDs, Forex products, and binary options aimed at retail traders. Thus, the AMF repeatedly used the “toxic products” term. It intends to extend the ESMA rules and make them national measures starting from this summer.
Moreover, the French financial watchdog pointed the finger at six institutions, situated mainly in the European Union (EU), which ignored ESMA’s rules. It warned the regulators in these countries, though it didn’t mention who these institutions are and what country do they operate in.
The AMF said in the report that it intended to prohibit online advertising of products that paused high risks, such as Forex pairs, CFDs, and binary options. This will represent a major breakthrough for consumer protection, preventing retail investors from losing more than they invest.
Fraudsters Moving From Forex to Cryptocurrencies
Interestingly, the French regulator noted that the scammers moved from Forex and CFDs to cryptocurrencies and initial coin offerings (ICOs).
According to the AMF, the year 2018 was marked by the growth of digital assets and an increased number of scams related to this type of investment. The fraud migrated massively from Forex, CFD, binary options or investment diamonds. To reach a wider audience, the regulator has developed new modes of communication to warn retail investors.
As per AMF’s 2016 report, the regulator received 3,768 requests from retail traders that were associated with Forex and binary options scams. During the same period, only 18 such requests were related to cryptocurrencies. The situation changed dramatically last year, with only 968 complains coming from the Forex and binary options space, against 2600 demands pointing to cryptocurrencies.
The AMF noted the cybersecurity problems around the mentioned investment products aimed at retail investors. The report said:
The rapid and large-scale adoption of these offerings and their impact has led to questions about phishing techniques deployed by networks of clearly structured, organized and agile individuals.
The regulator concluded:
Banners on the internet attract users to web pages advertising information on the latest trends in investments but, in reality, their only intention is to collect the personal data of [retail traders].
The AMF calls for closer cooperation to supervise retail investment products within the EU and encourages other countries to embrace the ESMA rules.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.