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Product intervention

Based on MiFID II, the AFM has the possibility to take product intervention measures. With these we can prohibit or restrict the development or sale of products. These powers apply to financial instruments and structured deposits. In addition, we also have the authority to prohibit or restrict financial activities and practices.

Authorithy

The AFM may use this authority:

  • if there is significant cause for concern about investor protection
  • if the orderly functioning and integrity of financial markets or commodity markets or the stability of the financial system or part thereof is threatened in at least one member state
  • if a derivative has a negative effect on the price formation mechanism in the underlying market.

The AFM may only use these interventions if:

  • there are no other existing rules to tackle these threats
  • it would not be better to use supervision or enforcement to deal with these threats
  • the intervention measure is proportionate and takes into account the nature of the threat, the level of knowledge of the investors or participants concerned and the anticipated effect.

Contracts for Differences (CFDs)

CFDs are complex products that are not suitable for all investors. The AFM has therefore stipulated restrictions for the sale of CFDs. These measures are designed to reduce the risk of CFDs for investors.

Investment companies must:

  • set a maximum leverage for a CFD
  • terminate loss-making positions in a timely manner
  • protect investors from residual debt
  • issue standardised risk warnings, including the percentage of losing investors; the risk warning must be provided in the same language  as that in which the information is expressed.

The may not offer bonuses or other incentives to coax people to trade in CFDs.

The restrictions apply to the investment company offering CFDs both in or from the Netherlands. The restrictions apply for an indefinite period.

Binary options

Binary options are high-risk products, which almost always lead to losses in the long term. Therefore, there is a ban on selling binary options in or from the Netherlands to retail investors.

Turbos

Turbos are complex products that are not suitable for all investors. The AFM has therefore stipulated restrictions for the sale of turbos. These measures are designed to reduce the risk of turbos for investors. Investment firms must:

  • set a maximum leverage for a turbo
  • issue standardised risk warnings, including the percentage of losing investors (the risk warning must be provided in the same language as that in which the information is expressed)
  • not offer bonuses or other incentives to coax people to trade in turbos

The restrictions apply to turbos offered in the Netherlands, regardless of the Member State in which the provider is located. The restrictions do not apply turbos offered from The Netherlands in another Member State.

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