Wednesday 26 June 2019

Restriction on risky bets that sank Sean Quinn now permanent

Director general of financial conduct Derville Rowland. Picture: Collins
Director general of financial conduct Derville Rowland. Picture: Collins

Shawn Pogatchnik

Trading in the risky financial products, including contracts for difference (CFD), famously used by Sean Quinn to build up a stake in Anglo Irish Bank that ruined the one-time billionaire, are to be permanently restricted for retail investors.

The Central Bank of Ireland says it will impose a ban on the retail sale of so-called 'all-or-nothing' financial options and maintain heavy restrictions on the CFDs, which have been subject to temporary controls imposed by the European Securities and Markets Authority (ESMA), the EU's regulator for financial markets.

Central Bank director general for financial conduct Derville Rowland said the restrictions will protect retail investors from products she described as "no more an investment than betting on a horse".

The Central Bank is acting under new powers to restrict financial products in place since last year.

It means Ireland will retain the investor protections when ESMA's temporary restriction expire at the end of next month.

Binary options, also known as all-or-nothing options, pay out if an investor makes a correct prediction about a market price, but holders suffer total losses otherwise. Ireland had permitted the trade until ESMA's intervention last year.

The CFD restrictions mean the derivatives can still be traded but with limits on associated borrowing and guarantees investors cannot lose more than their deposit.

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