Questions and Answers - European Securities and Markets Authority

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Questions and Answers Relating to the provision of CFDs and other speculative products to retail investors under MiFID

25 July 2016 | ESMA/2016/1165

Date: 12 July 2016 ESMA/2016/1165

ESMA • CS 60747 – 103 rue de Grenelle • 75345 Paris Cedex 07 • France • Tel. +33 (0) 1 58 36 43 21 • www.esma.europa.eu

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Table of Contents 1

Background .................................................................................................................... 4 MiFID and MiFID II ............................................................................................................. 4 The provision of CFDs and other speculative products to retail investors........................... 4

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Purpose.......................................................................................................................... 5

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Status ............................................................................................................................. 6

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Questions and answers .................................................................................................. 6

Section 1: Authorisation of firms offering CFDs and other speculative products to retail investors .............................................................................................................................. 7 Question 1 ......................................................................................................................... 8 Question 2 ........................................................................................................................15 Section 2: Conflicts of interest arising from business models that may be adopted by firms offering speculative products to retail investors ...................................................18 Question 1 ........................................................................................................................19 Question 2 ........................................................................................................................22 Question 3 ........................................................................................................................24 ***New*** Section 3: Information provided to clients and potential clients about the functioning of CFDs and other speculative products, including marketing communications .................................................................................................................28 ***New*** Question 1 ........................................................................................................29 ***New*** Question 2 ........................................................................................................35 ***New*** Question 3 ........................................................................................................37 ***New*** Section 4: The assessment of appropriateness when offering CFDs or other speculative products to retail investors ...........................................................................39 ***New*** Question 1 ........................................................................................................40 ***New*** Question 2 ........................................................................................................44 ***New*** Question 3 ........................................................................................................45 ***New*** Question 4 ........................................................................................................46 ***New*** Section 5: Factors for NCAs to take into account when considering commercial arrangements between two authorised firms that result in the offer of CFDs or other speculative products to retail clients .................................................................49 ***New*** Question 1. ...............................................................