Netherlands Imposes Limits on Turbos from October 1
The Dutch Authority for the Financial Markets (AFM) announced on Wednesday that it will impose limits on the retail sale of Turbos from October 1st, 2021.
According to the regulator, the restrictions include leverage limitation, mandatory risk warning and a prohibition of bonuses. The latest regulatory action is expected to bring better protection for retail investors against the risks of trading Turbos.
The restrictions will apply to the offering of turbos in the Netherlands, regardless of the Member State in which the provider is located and will enter into force on 1 October 2021. However, the restrictions do not apply to turbos offered from the Netherlands in other Member States.
Turbo certificates are leveraged investment products, similar to contracts for differences (CFDs). Though these products are not so popular internationally, they have a significant market share among other derivative products in the Dutch, German, Belgian and Austrian markets. The decisions were backed by a regulatory survey that revealed 68 percent of the retail turbo investors lost their money with an average loss of €2,680.
The European Securities and Markets Authority (ESMA) expressed its support to the proposed measures of AFM to restrict the marketing, distribution or sale of turbos. The pan-European regulator termed Turbos as ‘high-risk’ and encouraged other local regulators to monitor Turbos on their respective markets and assess the risks of these instruments to retail traders.
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