The French financial markets regulator, the Autorité des Marchés Financiers (AMF) has decided to use all the resources that it has at its disposal in order to discourage private investors from trading in forex, binary options and complex financial instruments, because all these are highly risky products.
The AMF decided to shift gear and take more urgent action, because it has noticed a very sharp in complaints concerning these trading services. From the mere 64 complaints it had received in 2011, the number rose to 1293 in 2014, the majority concerning binary options trading. At the same time, the AMF as also alarmed because the results of a survey it had carried out for forex and CFDs investors from 2009 to 2012, revealed that a whopping 89% of all clients had suffered financial losses which were at times very considerable.
Therefore, besides clearly advising savers against investing in Forex or binary options through its warnings and educational actions, the AMF is also taking every opportunity available to it to limit the actions of trading companies offering such products. In September 2014, it received permission to block several websites operating without approval from the judge of the Paris Court of First Instance, with the support of the public prosecutor, while it tries regularly to update its blacklist of unauthorized brokers, which currently features 65 forex and 189 blacklisted binary options providers.
Its most recent effort is to propose a legislative provision which will be granting the AMF the legal capacity to ban advertisements for such risky products, i.e. for highly speculative financial instruments, such as trading Forex, CFDs and binary options, because the AMF is convinced that trading advertisements mislead the general public and that their false promises of huge and easy gains is what attracts large numbers of private investors to the Forex and binary options markets.
The AMF is more determined than ever to curb such practices and protect the public, not least because it also carried out a “mystery shopper” test, through which it had asked a service provider to open some accounts, carry out some transactions and then attempt to withdraw what remained of the money deposited, in order to allow the regulator to gain a fuller understanding of the marketing strategies employed by companies offering this type of trading. Not surprisingly the results of these tests clearly show that prospective clients of such firms are not only victims of reprehensible practices, but that they are also often on the receiving end of unscrupulous sales approaches and that websites offering trading in Forex or binary options do not respect the basic rules for protecting investors.
The AMF’s greatest concern it that despite its own efforts as well as those by other stakeholders, the advertisements used by forex and binary options brokers do not follow any of the principles of sound, balanced information which draws users’ attention to the significant risks involved with such financial instruments, insisting instead that speculating on the forex or binary options markets would give a private investor an almost guaranteed increase in their income.
The AMF is also concerned that such advertisements also falsely promote the notion that it is possible to learn to trade in just a few minutes and that they also include pseudo-testimonies of winning traders, thus creating and conveying the illusion that trading can really improve one’s lifestyle or even change their lives.
According to the AMF “this is a completely unrealistic hope, the sole aim of which is to attract initial fund transfers from unsuspecting people and then to lead them to renew their “investments”, often more aggressively. Funds which, all too often, they will never see again.” And it exactly because it wants to prevent this from happening and to protect the unsuspecting investors that the AMF has requested the capacity to forbid advertisements for trading services.