Ban on binary option spreadbetting extended in Europe

A EUROPE-WIDE emergency ban on selling complex spreadbetting services to consumers has been extended.

The EU’S financial watchdog introduced the ban in July to protect ordinary punters from potentially large losses on so-called binary options services. It has been extended by a further three months to run until at least the end of this year.

Binary options involve betting on the price of a stock or commodity in a short period of time, and allow people to speculate without owning the underlying asset.

The trades are often highly leveraged, which means people can gain or lose far more than they originally put in. The European Securities and Markets Authority said it “considers that a significant investor protection concern related to the offer of binary options to retail clients continues to exist”.

It has exempted two types of binary products it deems less risky from the ban, including longer-term binaries and those that guarantee payouts at least equal to the initial outlay.