European Securities and Markets Authority Decision (EU) 2018/795 Article 1: Temporary prohibition on binary options in respect of retail clients

Article 1 - Temporary prohibition on binary options in respect of retail clients

Article 1

Temporary prohibition on binary options in respect of retail clients

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1. The marketing, distribution or sale to retail clients of binary options is prohibited.

2. For the purposes of paragraph 1, irrespective of whether it is traded on a trading venue, a binary option is a derivative that meets the following conditions:

((a))

it must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;

((b))

it only provides for payment at its close-out or expiry;

((c))

its payment is limited to:(i)a predetermined fixed amount or zero if the underlying of the derivative meets one or more predetermined conditions; and(ii)a predetermined fixed amount or zero if the underlying of the derivative does not meet one or more predetermined conditions.

((i))

a predetermined fixed amount or zero if the underlying of the derivative meets one or more predetermined conditions; and

((ii))

a predetermined fixed amount or zero if the underlying of the derivative does not meet one or more predetermined conditions.