EU · MiFIR · TITLE VII SUPERVISORY MEASURES ON PRODUCT INTERVENTION AND POSITIONS · CHAPTER 1 Product monitoring and intervention
Article 40 MiFIRESMA temporary intervention powers
Lets ESMA temporarily prohibit or restrict across the EU the marketing, distribution or sale of financial instruments, or a financial activity or practice, where there is a significant investor protection, market integrity or financial stability concern that existing rules and national action do not address, the measure is proportionate and creates no regulatory arbitrage. Measures may be precautionary, must be published, are reviewed at least every six months (annually after two renewals) and prevail over national measures.
Amendments and application dates
| Amending act | Change | Applies from |
|---|---|---|
| Regulation (EU) 2019/2175 | Text amended | by 1 Jan 2022 |
Level 2: delegated and implementing acts
- Delegated actIn forceLegal basis
AI summaryMiFIR delegated regulation covering the criteria for a liquid market in shares, depositary receipts, ETFs and certificates, market data on a reasonable commercial basis, systematic internalisers' quoting and execution obligations, portfolio compression, and the conditions for ESMA, EBA and competent authorities' product intervention and position management powers. Amended by Delegated Regulation 2026/482 after the 2024 MiFIR review.
Level 3: ESMA Q&As, guidelines and opinions
- Q&AAnsweredInferred · 90%
AI summaryUnder ESMA's CFD measures, initial margin payments are cash payments to enter into a CFD, excluding commissions and fees; cash credited against other client assets used as collateral does not count.
- Q&AAnsweredInferred · 90%
AI summaryThe CFD risk warning must be prominent, at least the predominant font size and in the communication's language; online it should stand out through size or position, taking account of the audience and product, and Article 44 of the Delegated Regulation also applies.
- Q&AAnsweredInferred · 90%
AI summaryESMA's CFD product intervention measures apply to rolling spot forex that is not an option, future, swap or forward rate agreement, that is, a forex derivative referencing the spot price that rolls over automatically and can be terminated other than on default.
- Q&AAnsweredInferred · 90%
AI summaryTurbo certificates are outside ESMA's CFD product intervention measures because they are not margined, carry no contingent liability, are transferable securities and are usually traded on a regulated market or MTF, though ESMA warns firms to watch the leverage offered to retail clients.
- Q&AAnsweredInferred · 90%
AI summaryStructured finance products, as defined in Article 2(1)(28) MiFIR, are outside ESMA's binary option and CFD product intervention decisions, since they pay out from the cash flows of underlying assets rather than on price differences.
- Q&AAnsweredInferred · 90%
AI summaryUnder ESMA's CFD measures, negative balance protection limits a retail client's total liability for all CFDs on a trading account to the funds in that account (cash plus unrealised net profits on open positions), excluding money held for other purposes.
- Q&AAnsweredInferred · 90%
AI summaryESMA's binary option prohibition covers any option paying a fixed amount or zero depending on predetermined conditions, including payouts contingent on several events or rising in steps if further conditions are met, not just two-outcome contracts.
- Q&AAnsweredExplicit reference · 90%
AI summaryCFDs on futures take the initial margin percentage for the future's underlying under ESMA's CFD decision, so a CFD on a USD/EUR future is treated as having a major currency pair as its underlying (3.33%).
- Q&AAnsweredInferred · 90%
AI summaryESMA's binary option and CFD measures apply to services provided by EU-authorised firms to retail clients wherever those clients are located and whatever their nationality.
- Q&AAnsweredInferred · 90%
AI summaryESMA's binary option prohibition and CFD restrictions apply from the date they come into application: CFDs sold earlier need not be brought within the measures (though firms may extend the protections), clients must be told of changes in good time, and closing existing positions early without consent would not be in clients' best interests.
- Q&AAnsweredInferred · 90%
AI summaryESMA's CFD margin close-out rule applies per account at 50% of the initial margin required for all open CFDs, including positions with guaranteed stops or limited-risk protection, so such positions may be closed before the stop is reached; firms must explain clearly to clients how this affects their accounts.
- Q&AAnsweredInferred · 90%
AI summaryFor ESMA's CFD margin close-out protection, the funds in the CFD trading account are cash only, excluding other assets, and the unrealised net profits are the sum of unrealised gains and losses on all open CFD positions in that account.
- Q&AAnsweredInferred · 90%
AI summaryESMA's CFD measures ban monetary and non-monetary benefits that encourage retail clients to trade CFDs or trade more, such as account-opening bonuses and volume-based fee rebates; lower fees for all retail clients that are not volume-linked remain allowed.
- Q&ALegacy Q&A documentESMA rulebook
AI summaryESMA's legacy Q&A document (ESMA35-36-1262, last updated November 2018) on applying its 2018 temporary ban on binary options and restrictions on CFDs for retail clients, such as leverage limits, margin close-out, negative balance protection, risk warnings and incentives; its Q&As now sit in ESMA's Q&A tool.
Commentary
No law-firm commentary is linked to this provision yet.
219 more documents relate to MiFIR as a whole without naming an article.
UK counterpart
- Article 40 UK MiFIR · ESMA temporary intervention powers
Revoked from 31 Dec 2020 by The Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018.
No UK counterpartExplicit referenceOmitted from the UK version at onshoring by S.I. 2018/1403.
Version history
- From 1 Jan 2022
- From 2 Jul 2014 to 1 Jan 2022
Each entry is a consolidated version of the act on EUR-Lex in which this provision appears. The text itself is on the official site.