1. European
  2. ESMA - European Securities and Markets Authority
  3. Questions and Answers
  4. 2017
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  1. Questions and Answers - Relating to the provision of CFDs and other speculative products to retail investors under MiFID (ESMA35-36-794) [April 2016 and updated March 2017]
  2. Section 10: Passporting and the cross-border provision of services by investment firms offering CFDs and other speculative products to retail clients outside the home Member State without the establishment of a branch or tied agent
  3. Question 6 [last update 31 March 2017]: An online business model is often used by investment firms to offer financial contracts for difference (CFDs) and other speculative products in other jurisdictions under Article 31 of MiFID, without branches. Where an investment firm is adopting this type of online business model and offering information to clients and potential clients in multiple languages, what factors should the home competent authority take into account to ensure the firm complies with its MiFID requirements relating to information provided to clients or potential clients?
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Version date: 8 April 2016 - onwards

Question 6 [last update 31 March 2017]: An online business model is often used by investment firms to offer financial contracts for difference (CFDs) and other speculative products in other jurisdictions under Article 31 of MiFID, without branches. Where an investment firm is adopting this type of online business model and offering information to clients and potential clients in multiple languages, what factors should the home competent authority take into account to ensure the firm complies with its MiFID requirements relating to information provided to clients or potential clients?

Answer 6

1. Although speculative products such as CFDs, binary options and rolling spot forex are complex products and it may be difficult for a majority of retail investors to understand the risks involved, these products are widely advertised to the retail mass market, often via online platforms. National Competent Authorities (NCAs) should therefore pay particular attention to the information and marketing communications issued by firms offering these products, to ensure that information provided to clients and potential clients is fair, clear and not misleading, and that marketing communications are clearly identifiable as such.

2. Home competent authorities are responsible for the supervision of information and marketing communications provided by firms authorised in their Member State, including when such information is provided on a cross-border basis in other Member States without a branch. Methods that home competent authorities should make use of to monitor information and ma

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