Most European supervisors responded to retail CFD complaints with leverage caps and risk warnings. The Financial Services and Markets Authority in Belgium went further and adopted a regulation prohibiting the distribution of certain over the counter derivative contracts to retail clients, together with restrictions on aggressive or intrusive distribution techniques. For anyone planning European distribution, Belgium is the case study in what a national measure can do to a business model that was otherwise fully compliant.
What the prohibition actually does
The measure targets distribution to retail clients in Belgium of specified over the counter derivative products, the category that covers binary options and contracts with very short durations or leverage characteristics that the supervisor concluded were unsuitable for retail investors. Alongside the product prohibition sit restrictions on how such products may be pushed at consumers, aimed at unsolicited contact and high pressure techniques.
The mechanism matters more than the label. This is not a licensing rule you satisfy by holding a better licence. It is a distribution prohibition attached to the client and the market. A firm authorised anywhere in the EEA, with a valid passport and clean conduct record, still cannot distribute the prohibited products to Belgian retail clients. That is the point founders miss when they treat the EU as one market.
Passporting does not override a host state measure
Passporting transfers prudential supervision to the home state and lets you provide services cross border. It does not disapply host state rules of general good, and it does not override national product intervention. A member state can restrict or prohibit a product for its own retail investors, and the EU framework contains an explicit route for national competent authorities to take product intervention measures. Belgium used it early and kept it.
If your EU plan assumed twenty seven identical markets, this is the correction. Read the passporting rules next to the EU wide leverage measures, and then assume that individual states will add to both. France, the Netherlands and others have each layered national restrictions on marketing or distribution at different points, and the pattern has been one direction only.
Belgium also shows how a national measure spreads through the rest of the stack. Once a product cannot lawfully be sold to a class of client in a market, every counterparty that underwrites you starts asking the same question, and the honest answer has to be the same one you gave the supervisor. Firms that keep two versions of the story, one for the regulator and one for the acquirer, are the ones that lose both.
The operational consequence: geoblocking is a control, not a setting
If a product cannot lawfully be distributed to retail clients in a market, your systems have to be able to prove it was not. That means country of residence captured and verified at onboarding rather than self declared, product availability driven by that field, marketing suppressed by geography including affiliate traffic, and an audit trail showing what a given client could see and could open on any given date.
Affiliates are the weak point. A firm can be fully compliant in its own funnel and still have an affiliate running Belgian language ads for a prohibited product, and the supervisor will ask about the firm, not the affiliate. Affiliate compliance rules covers how to control that, and it is a contractual and technical problem at the same time.
Descriptive only. The exact scope of the Belgian measure, the products caught and the exemptions available are legal questions with real consequences. Get Belgian advice before you decide any product is outside the prohibition.
What this does to banking, payments and advertising
The FSMA publishes warnings about firms operating irregularly, and warning lists are the connective tissue of financial compliance. Bank and payment provider onboarding teams check them. Acquirers check them during underwriting and again during periodic review. Being named is a category change, not a bad day, and it follows the ultimate beneficial owners rather than the company, which is why re-registering the entity elsewhere does not clear it.
Card acquirers underwriting European consumer flow assess whether the product may lawfully be sold to the customer in question. A prohibited product being sold into a market where it is prohibited fails that test outright, and the exposure is not just the merchant account: it is chargeback liability, since a customer disputing a transaction for a product they should not have been sold has a strong case. Chargeback ratios against scheme thresholds are how acquirers police this in practice, and chargebacks explains why crossing a threshold costs far more than the disputed volume.
Ad platforms and app stores apply their financial services policies per market, generally requiring authorisation valid where the user is and prohibiting products that are banned locally. So the distribution ban propagates automatically into the acquisition channel. There is no version of this where the ban applies to the product but not to the advertising of it.
The position worth taking
For a firm serving EU retail clients, treating national product intervention as an edge case is a structural mistake. Build the market by market matrix before you build the funnel: which products, which client categories, which leverage, which marketing, per country. It is unglamorous work that prevents the expensive version of learning the same thing. The client portal has to enforce that matrix rather than document it, which is where a rules driven broker CRM earns its cost. Leveraged trading carries a high risk of loss for retail clients, and Belgium's measure exists because the supervisor concluded some products were not suitable for them at all.
"Belgium is not an exception you route around. It is the preview. Build the country matrix first and the funnel second."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- The FSMA prohibited distribution of certain OTC derivatives to retail clients in Belgium and restricted aggressive distribution techniques.
- An EU passport does not override a host state product intervention measure, so the prohibition applies regardless of where you are authorised.
- Country of residence has to be a verified, enforced field driving product availability and marketing suppression, including affiliate traffic.
- Selling a locally prohibited product fails acquirer underwriting and creates strong chargeback exposure, on top of the regulatory consequence.
Frequently Asked Questions
What did Belgium's FSMA actually ban?
It adopted a regulation prohibiting the distribution to retail clients in Belgium of certain over the counter derivative contracts, the category covering binary options and products with characteristics the supervisor considered unsuitable for retail investors, alongside restrictions on aggressive distribution techniques.
Can a passported EU broker still offer these products in Belgium?
No. Passporting moves prudential supervision to the home state but does not disapply host state rules or national product intervention measures. A firm authorised elsewhere in the EEA is still caught by the Belgian distribution prohibition for Belgian retail clients.
How do firms enforce a country level restriction in practice?
By verifying country of residence at onboarding rather than accepting a self declaration, driving product availability from that field, suppressing marketing and affiliate traffic by geography, and keeping an audit trail of what each client could access on each date.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.