The Cyprus Securities and Exchange Commission (CySEC) issued today its Policy Statement 03-19 on the imposition of national product intervention measures (NPIMs) in relation to the marketing, distribution and sale of binary options (available in English here). The Policy Statement follows from the decision of the European Securities Markets Association (ESMA) to temporary prohibit the marketing, distribution or sale of binary options to retail clients in July 2018 which was renewed since. As per our newsletter of 9 July 2019 (available here) ESMA has decided not to further renew these measures further, in effect as of 1 July 2019.
On 5 July 2019, CySEC also issued the CySEC Directive 87-08 (applicable as of 7 July 2019), by virtue the marketing, distribution and sale of binary options to retail clients is permanently prohibited from or in Cyprus, irrespective of whether these are traded over-the-counter (OTC) or on a trading venue, pursuant to article 42 of MiFIR.
Both the Policy Statement and the CySEC Directive 87-08 exclude from their scope of application:
- a binary option for which the lower of the two predetermined fixed amounts is at least equal to the total payment made by a retail client for the binary option, including any commissions, transaction fees and other related costs; and
- a binary option that meets cumulatively the following three (3) conditions:
- the term from issuance to maturity is at least ninety (90) calendar days; and
- a prospectus drawn up and approved in accordance with the Prospectus Directive (2003/71/EC) or in accordance with the Prospectus Regulation (EU 2017/1129) is available to the public; and
- the binary option does not expose the provider to market risk throughout the term of the binary option and the provider or any of its group entities do not make a profit or loss from the binary option, other than previously disclosed commissions, transaction fees or other related charges.
Our experienced Financial Services team can help you navigate the applicable regulatory framework in Cyprus and for any enquiry or assistance please contact Dimitris Papoutsis or your usual contact at Elias Neocleous & Co LLC.