The European Securities and Markets Authority (ESMA) has issued an opinion on a product intervention measure on futures with additional payment obligations taken by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

ESMA’s opinion concludes that the proposed measure is justified and proportionate.

In the opinion ESMA encourages NCAs to monitor futures with additional payment obligations in their respective markets to assess whether similar risks for retail investors as those identified by BaFin could arise there.

BaFin unveiled its plans for an intervention in the futures market in February 2022.

The regulator argues that retail clients should be protected against losing all of their assets in highly volatile market situations when trading in futures. BaFin is therefore planning to restrict the marketing, distribution and sale of futures with additional payments obligations. Retail clients will no longer be able to trade in these products.

Contracts for difference (CFDs) with additional payments obligations were banned in Germany in 2017.

NCAs may take product intervention measures in accordance with Article 42 of Regulation (EU) No 600/2014. At least one month before a measure is intended to take effect, an NCA must notify all other NCAs and ESMA of the details of its proposed measure and the related evidence, unless there is an exceptional case where it is necessary to take urgent action.

In accordance with Article 43 of Regulation (EU) No 600/2014, ESMA performs a facilitation and coordination role in relation to such product intervention measures taken by NCAs. After receiving notification from an NCA of its proposed measure, ESMA must adopt an opinion on whether the proposed measure is justified and proportionate. If ESMA considers that the taking of a measure by other NCAs is necessary, it must state this in its opinion.