Dutch government reconfirms classification binary options as a financial instrument
By Frank Tolboom, lawyer at Kalff Katz & Franssen, and Joost van den Bogaerd
On 4 April 2016, the Minister of Finance (also on behalf of the State Secretary of Secretary and Justice) published its answers to parliamentary questions on the qualification of binary options as a financial instrument. MPs of the Christian Democratic Party (“CDA”) again questioned whether binary options should not be qualified and regulated as games of chance rather than financial instruments. In its response the Minister referred to its previous answers of 30 October 2015 in which he already held that binary options are qualified as financial instruments in accordance with the European Markets in Financial Instruments Directive (MiFID). As such the Netherlands Authority of Financial Markets (“AFM”) is responsible for supervision of binary options, according to the Minister of Finance.
After consultation with the Netherlands Gaming Authority, the State Secretary of Security and Justice furthermore declared that the answers to the parliamentary questions of 30 October 2015 and the answers to previous questions shed enough clarity on the subject. “According to the MiFID binary options are qualified as financial instruments, thus leaving no room for binary options to (also) be qualified as games of chance in accordance with the Dutch Betting and Gaming Act.”
“Should the future prove that consumer protection on the basis of existing financial regulation is inadequate, efforts can then be made on agreements at European level. The same applies in case a decision by the Dutch Trade and Industry Appeals Tribunal should give rise to additional policy. As of this moment a case is pending in which the court could assess whether binary options are (also) to be qualified as games of chance. The decision is expected during the course of 2016.”
For more details on this case we kindly refer to the article of Frank Tolboom “The Netherlands: New licensing jurisdiction for binary options brokers?” which can be found here.
It can be derived from these answers that there is absolutely no appetite to bring binary options within the realm of the (forthcoming) regulatory regime for remote gaming. Regarding the latter, please note that it’s likely that the plenary debate on the remote gaming bill will be postponed until after the May recess of Dutch parliament.
