Although most traders have already heard of this announcement from the Federal Financial Supervisory Authority, also known as BaFin, the regulator has decided to reiterate its decision on the permanent ban of binary options.
The German financial landscape is under direct “control” from the European Securities and Markets Authority and therefore had to comply with the existing rules of restraining binary options services as well as limit the promotion of CFD related products.
The ESMA regulations deadline was July 1st, 2019, therefore BaFin was forced to come out with official announcements detailing their continuation of the ban on these products.
It was nothing new for the traders as everybody expects any EU-based regulator to ban binary options and limit CFD leverage and trader benefits.
However, BaFin has not specified until when binary options will remain under a ban, the only information we have is that the regulations begin effective July 2nd, 2019.
BaFin really doesn’t like binary options
It’s hard to accuse BaFin or any other financial regulator in disliking binary options. The very nature of the trading options puts the service provider directly against the trader, therefore causing a conflict of interest.
At that moment, the company has much more say in the chances of their traders making the right choice, therefore there’s always a large risk of these “brokerages” manipulating their power.
This has been a cause of many bankruptcies in the past until ESMA finally caught a whiff of the situation and placed a temporary ban.
ESMA is not a direct governor of the financial landscape of the EU, therefore it can only make suggestions for the region. However, it seems like the values of ESMA and pretty much any European financial regulator are quite similar as institutions from the UK, France, Austria, and various others have introduced permanent versions of past ESMA restrictions.
One of the most impactful jurisdictions to renew the restrictions was Cyprus as it acts as a safe haven for Forex and CFD brokerages in the European Union.