ESMA announced today that it will renew the restriction on the marketing, distribution or sale of contracts for difference (CFDs) to retail clients for a further 3 months.

ESMA's restriction on the marketing, distribution or sale of CFDs to retail clients came into effect on 1 August 2018 for 3 months. This was an exercise of ESMA's new product intervention powers under the Markets in Financial Instruments Regulation. For further information, read our client briefing: CFDs and Retail Clients: 3-month restriction on marketing, distribution and sale will take effect in the coming months.

ESMA has now decided to renew the restriction for a further 3 months. The key restrictions (as outlined in our earlier briefing) are expected to remain broadly the same, with one change relating to risk warnings.

As some CFD providers gave feedback to ESMA that they experienced difficulties using the risk warning due to limits imposed by third party marketing providers on the number of characters used, ESMA has agreed to provide for the following, reduced-character, risk warning: "[insert percentage per provider]% of retail CFD accounts lose money". That warning can be used only if the standard terms of the third party marketing provider do not enable the full or abbreviated risk warning to be used, and the advertisement must hyperlink a webpage of the CFD provider which contains the full risk warning.

The renewed restriction is expected to be published in the Official Journal shortly, and will take effect from 1 November 2018.

Separately, as mentioned in our earlier briefing, ESMA also prohibited the marketing, distribution or sale of binary options to retail clients for a 3-month period (2 July 2018-2 October 2018). In August, ESMA announced that it would also renew that prohibition, subject to certain exceptions.