ESMA Clarifies CFDs Regulations for Perpetual Futures and Crypto-Linked Derivatives

The European Securities and Markets Authority (ESMA) has issued a statement clarifying the application of Contracts for Differences (CFDs) regulations to perpetual futures and crypto-linked derivatives.

In response to an increased offering of derivatives marketed as perpetual futures or perpetual contracts, ESMA emphasized that firms must assess whether newly offered derivative products fall within existing product intervention measures on CFDs. This assessment is not optional and applies to all new derivative offerings, regardless of their branding or marketing.

ESMA's statement specifically addresses the issue of crypto-linked perpetual contracts, which enable ongoing, leveraged exposure without a fixed expiry date. The authority clarified that these products are likely to fall within the scope of national product intervention measures on CFDs adopted by national competent authorities.

The ESMA statement also reminds firms about their wider conduct obligations, including the need for an appropriateness assessment when providing non-advised services involving complex derivatives. Firms must verify whether clients have the necessary knowledge and experience to understand the risks associated with these products.