web analytics

AMF Look To Ban Online Advertisement For Forex Brokerages

Autorité des Marchés FinanciersBrokerage firms in France could possibly see a reduction in their forex and Binary option transactions if the French regulator Autorité des Marchés Financiers (AMF) has its way. The regulator has sent a letter to French President Francois Hollande and the country’s parliament recommending a ban on online advertising for forex and binary options brokerages.

AMF is asking the government to adopt the Sapin 2 bill which seeks to target financial fraud and would include a ban on advertising of high-risk investment products such as forex.

According to AMF’s latest annual report, French residents have lost close to €4 billion to fraudulent forex and binary options brokerages over the past six years. In 2015, forex and binary option ads accounted for around 35 percent of the total number of ads for financial investments.

The passage of the Sapin 2 bill has stalled for a long time now but according to AMF it is likely to be passed in 2016. However questions remain over its proper implementation after its approval. AMF would have to maintain an extensive blacklist of brokerage firms and also look to ban affiliates who advertise these products on behalf of these brokerages.

Efforts taken by French regulatory authorities so far have not helped in reducing these forex and binary advertising malpractices as shown by the number of complaints that French residents have made during the past few years. These complaints have been steadily rising since 2011. There were a total of 1,293 complaints reported in 2014 and a total of 1,617 complaints recorded in 2015 which showed a sharp rise of 25 percent.

The AMF is among the most active regulators in the European Union (EU). A survey conducted in 2014 by the AMF established that 9 out of 10 customers have experienced losses in their retail trading operations over a period of 4 years, prompting it to initiate a massive public campaign to educate the public of the risks associated with trading.

In fact the actions taken by the regulator has motivated the European Securities Markets Authority (ESMA) to ask other national regulators to look into malpractices by financial companies. The latest AMF report is likely to put additional pressure on the development of a common framework for regulation of brokers across the EU, which is one of the critical goals of ESMA.

Having a common framework will help in improved regulation across the region since currently the rules and regulations differ significantly between countries. The AMF is also seeking to work with ESMA to issue a similar ban on online advertising for high risk products across Europe.

Related Articles

Citibank Agrees To Pay $100m Fine For LIBOR Rate Manipulation

Citibank, one of the world's largest banks has finally agreed to pay a hefty $100 million fine that will be

Forex Trading Boosted Due To Spread Betting Model Popularity

Financial markets across the globe have changed quite rapidly in recent years. The main reason for this is the development

US Non-Farm Payrolls Data Misses Estimates

The Non-farm payrolls (NFP) data was released yesterday. However, the US dollar did not move much. It has been the