The European Securities and Markets Authority issued a statement on 3 July warning that so-called “event contracts” or prediction markets still qualify as binary options under MiFID II regulations, regardless of branding. ESMA clarified that any contract offering a fixed payout or nothing based on a yes-or-no outcome of a future event is considered a derivative instrument subject to the EU’s binary options ban for retail clients.
The regulator emphasized that firms cannot circumvent the 2018 prohibition, later made permanent by member states, simply by rebranding products. Companies must conduct thorough legal analysis of product structures, and ESMA specifically noted that “coupon” or “reward” features on deposited funds don’t alter the binary classification. The authority also stressed that any firm offering these contracts, even exclusively to professional clients, requires full MiFID II authorization to operate within EU jurisdictions.
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** EU-based retail brokers marketing prediction markets face immediate regulatory risk and should audit product offerings now, while unauthorized platforms targeting EU clients may face enforcement action from national regulators.
Source: Finance Magnates