The European Securities and Markets Authority issued a statement reminding firms to assess whether newly offered products fall within the scope of existing product intervention measures on contracts for differences (CFDs). The reminder follows increased offering of derivatives marketed as perpetual futures or perpetual contracts that provide leveraged exposure to underlying values, including crypto-assets such as Bitcoin, and which ESMA notes are likely to be caught by national CFD product intervention measures adopted by national competent authorities. Where such derivatives meet the definition of a CFD, firms must apply the relevant product intervention requirements, including leverage limits, a mandatory risk warning, a margin close-out and negative balance protection, and the prohibition of monetary and non-monetary benefits. ESMA also emphasises that these complex derivatives require a narrow target market with an aligned distribution strategy, that appropriateness assessments must be carried out for non-advised services in line with requirements for complex financial instruments, and that firms should take steps to identify, prevent or manage conflicts of interest arising from offering these products.
European Securities and Markets Authority 2026-02-24
European Securities and Markets Authority reminds firms that leveraged perpetual derivatives may fall under national CFD product intervention measures
The European Securities and Markets Authority (ESMA) urged firms to assess if new products, like derivatives marketed as perpetual futures, are covered by existing product intervention measures for contracts for differences (CFDs). ESMA noted these derivatives, including those linked to crypto-assets like Bitcoin, likely fall under national CFD measures, necessitating compliance with leverage limits, risk warnings, and other protections. Firms must ensure a narrow target market, conduct appropriateness assessments, and manage conflicts of interest when offering these complex products.