Malta financial regulator MFSA has issued a warning addressed to retail investors regarding the risks associated with what it calls ‘speculative products’, including Forex, CFDs and Binary Options.
It is unclear what prompted this latest ‘general’ warning, as no specific broker or scam was mentioned. The MFSA has in the past been fairly active in issuing warnings against specific brokers or specific scams it sees such as clones of regulated brokers, or brokers falsely claiming to be licensed by the MFSA.
The full MFSA warning note reads as follows:
Notice addressed to the general public, namely to retail investors, regarding the sale of speculative products [Contracts for Difference; Binary Options; Forex and other speculative products] and their associated risks
MFSA WARNING
Notice addressed to the general public, namely to retail investors, regarding the sale of speculative products [Contracts for Difference; Binary Options; Forex and other speculative products] and their associated risks.
The Malta Financial Services Authority (“MFSA”) wishes to once again alert the general public, in particular retail investors, regarding the high risks associated with investments in contracts for difference, binary options, forex and other highly speculative products.
The European Securities and Markets Authority (“ESMA”) has stated that these type of products give rise to investor protection concerns, mainly due to the marketing strategies of the firms selling the products and the manner in which they are presented to retail investors who may not understand their highly risky, complex and speculative nature. These products are often advertised via online platforms and are sold without investment advice which has resulted in significant detriment and loss to retail investors. Unauthorised and unregulated entities are also offering these products which is of particular concern as it significantly increases the risk for investors who may become victims of fraudulent scams.
The MFSA strongly advises investors and potential investors to exercise caution and be vigilant when seeking to invest in these speculative products and to ensure that the provider is duly authorised to offer services in relation to these products. Consumers should also seek professional investment advice and ensure that they have thoroughly understood the risks involved prior to investing in these complex instruments.
Communications Unit
Malta Financial Services Authority
MFSA Warning 02-2017
2nd March 2017