Ireland Central Bank Tender

The Central Bank announced that it will ban the sale of binary options to retail investors and restrict the sale of contracts for difference CFDs to retail investors.This will be the first time that the Central Bank uses its product intervention powers introduced in 2018 which allow it to prohibit or restrict the sale of certain products.These interventions reflect the Central Bankss significant concerns relating to the sale of CFDs and binary options to retail investors and will take effect immediately after the European Securities and Markets Authority ESMA intervention measures lapse.The binary options measure will prohibit the marketing distribution or sale of binary options to retail investors. The CFD measure will restrict the marketing distribution or sale of CFDs to retail investors. This restriction consists of limits on leverage a margin close requirement a requirement that retail investors cannot lose more money than they put into their CFD account a prohibition on the use of incentives by a CFD provider and a standardised risk warning.On 27 March 2018 the Central Bank issued a warning to investors on CFDs and binary options. EU competent authorities had undertaken reviews over previous years which revealed that between 74 and 87 of retail clients incurred losses when investing in binary options. On CFDs a Central Bank inspection published in 2015 found that 75 of retail CFD clients made a loss of which the average loss was 6900. A follow-up review of a sample of the largest CFD providers in Ireland in 2017 found that in the two-year period up to 31 December 2016 74 of retail clients lost money with an average loss of 2700. Based on this supervisory work the Central Bank consulted in 2017 on specific proposals to protect consumers in relation to CFDs CP 107.The Central Bank has worked closely with ESMA on this investor protection issue. In 2018 ESMA imposed temporary product intervention measures in relation to the sale of CFDs and binary options to retail investors measures for which the Central Bank had advocated. Once these temporary measures expire the Central Banks national product intervention measures will immediately take effect in order to ensure ongoing protection of retail investors.Director General Financial Conduct Derville Rowland said The use of our new national product intervention powers demonstrates our continuing commitment to act decisively and robustly to address investor protection concerns. The Central Bank is banning the sale of binary options to retail investors as we consider them a fundamentally flawed product which have no place in the investment plans of retail investors. They are no more an investment than betting on a horse.Based on our ongoing work on CFDs at a domestic and EU level we have concluded that retail investors must be protected from excessive levels of leverage which can result in unexpectedly high levels of losses and from the risk of losing more money than they put into their CFD account. We also want to stop firms using incentives to entice retail investors to trade in these short term speculative products.